What Is A Trillion Dollars?

By Dan McLaughlin, on March 31st, 2009

Economists are anticipating that the federal budget deficit will be in the trillions of dollars this year. There are estimates that, with all federal efforts combined, the bailout and stimulus packages will be upwards of $7 trillion. I wonder if politicians who are so cavalier about using taxpayer money actually know how much a trillion dollars really is.

According to the Bureau of Engraving, a dollar bill is .0043 inches thick. That means that a stack of 100 new dollar bills would be .43 inches tall. A thousand is 4.3 inches. A million is a thousand thousands, so a million dollars is 4,300 inches. Converted to feet, that is about 358 feet high. A trillion is a million millions, so a trillion dollars would be a stack of money 358 million feet tall. If you convert that to miles, the dollar stack would stand 67,866 MILES high! It would wrap around the equator more than two times.

For another perspective, I saw an ad in the paper just this morning, offering bread for $1.99 per loaf. A loaf is 4 inches tall, so one dollar will buy a 2 inch tall loaf of bread. If, instead of using .0043 inches, the thickness of a dollar bill, we substitute 2 inches, the thickness of a loaf of bread that 1 dollar will buy, we get a much more dramatic view. A stack of bread that $1 trillion can buy would reach up more than 31 million miles. Given the price of $2 per loaf, that would be 500 billion loaves of bread.

Considering that there are roughly 300 million people in the United States, that is enough bread to give about1600 loaves to every man, woman and child in America. It is enough to give each of the 6.5 billion people in the world 77 loaves apiece. Our politicians certainly don’t buy loaves of bread with the money. So where does it go? Where does it come from?

The answer to the second question is that it comes from out of thin air. Modern money is the creation of the monetary authorities, in the case of America, the Federal Reserve and fractional reserve inflationary credit. Money is only as valuable as the goods it can be used to buy. Wealth and prosperity only come from production and never, under any circumstances, from money created by a central bank. When more money is made from nothing, with no increase in production, the primary effect is to increase prices. More dollars in the system changes the ratio of dollars to goods, and prices have to rise.

Prices should be decreasing significantly at this point in the downturn, lowering the cost of living for everyone, making everything easier to buy. They are, however, being propped up by your government. They are also establishing the next big wave of the cycle, and the choice in the near future will be runaway inflation or excruciatingly high interest rates.

Not too many years ago, the outrage was over politicians’ callousness when dealing in terms of billions. Billions lead to trillions, which lead to tens of trillions, then hundreds of trillions. Zimbabwe has put it in high gear with an inflation rate of over 1 million percent per year. Their government destroyed their monetary system and economy by making lots of money out of thin air.

We may never get to the point where we have a million percent inflation rate, but if we don’t start holding our elected officials accountable, they will destroy our economy, even more so than they have so far. From the ridiculous and irresponsible things that they keep doing, that destruction actually seems to be their goal.

The first question above, where does all the money go, is a very good one. It’s all a deep, dark secret. In spite of the rhetoric about transparency, you won’t really see where most of it goes. I’m sure that bailout millionaires will be grateful for your contribution to their investment fund.

A trillion dollars is an incredible sum of money. Incredible sums invite incredible abuse. Maybe something good will come of this whole mess. Just maybe, the people of this country will finally see through the scam that both Republicans and Democrats in congress have been perpetrating for decades. Maybe we will start to see some real change in the next few years when hundreds of crooked Washington politicians are kicked out.

Hey, anything’s possible when people use their heads, isn’t it?



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Newspapers Evaporating At Tremendous Speeds

By Trace Mayer, on March 31st, 2009

ANOTHER ONE BITES THE DUST

There are tremendous changes underway in the journalism industry of epic importance that effect your personal liberty and finances.  I do mention some of my competitors so obviously this article is biased.  Newspapers are like blogs except expensive, dirty and a less efficient form of information manufacturing.  It is difficult for them to ‘go viral’ and annoyingly hard to access while traveling through the backwoods of South America.

The Associated Press reports that the 146-year-old Seattle Post-Intelligencer will end its physical newspaper circulation on Tuesday 17 March 2009 and transition to a web only operation.  In February the P-I website had about 1.8M unique visitors and the print circulation was about 117,000.  Managing Editor David McCumber thinks the P-I will need to trim down from 181 employees to 40 with 20 in the newsroom and 20 selling ads.

OUT WITH THE OLD

Old media such as magazines, book publishers and especially newspapers are facing tremendous financial headwinds.  The New York Times has been borrowing to pay the dividend while gross and net incomes decline resulting in their share price falling 80% in the last year.  In the last year stockholder equity has been cut in half and net tangible assets have imploded from $166M to ($209M).  The New York Times intend to implement 5% wage cuts for most employees.

Gannett, which offers 85 newspapers including USA Today, has fared worse with both revenue and net income falling for the past three years and the share price evaporating from $30 to about $2.50.  They have likewise seen their net tangible assets decline from ($1.75B) to ($2.4B).  But their net income performance is even more dire going from $1.1B in 2007 to ($6.6B).  The Indianapolis Newspaper Guild reports that Gannett is considering 15% wage cuts.

McGraw-Hill, which adopted digital platforms and products earlier, has fared slightly better with their stock falling only 50%.  Nevertheless, they face intense pressure on their revenues and net income.  In 2008 the stock of publicly traded newspaper companies declined 83%.  At least McGraw-Hill had positive net income but their net tangible assets are declining.

The formerly venerable magazine Newsweek, owned by the Washington Post Co., has a rapidly evaporating subscriber base.  As the International Herald Tribune reported, “Thirteen months ago, Newsweek lowered its rate base, the circulation promised to advertisers, to 2.6 million from 3.1 million, and Tom Ascheim, Newsweek CEO, said that would drop to 1.9 million in July, and to 1.5 million in January 2010.”  While the Washington Post Co. has been increasing revenues its net income has fallen by 75% since 2006 and the stock has plunged from 800 to 350.

Even book publishing companies like Pearson PLC, which owns the Financial Times and Penguin Books, is facing steadily declining net income.  Rupert Murdoch’s venerable media behemoth, News Corporation which owns MySpace and Fox, is down over the last year from $20 to about $7.

IN WITH THE NEW

News is a good or service and those both consuming and producing it must derive utility or it will cease.  The Internet is full; not the hard drives but people’s attention.  Information has two costs for the consumer:  time and money. I take no-one’s time or attention for granted.  RunToGold occupies at least thousands of hours per day of people’s attention.  The articles are written with precision, conciseness, and produced when there is actionable information instead of a deadline.  Unlike television with commercials that interrupt, annoy and disrespectful of the consumer’s time and attention the advertising on RunToGold does not interrupt your ability to consume the valuable free information and most importantly is done with your permission.

Blogs such as Seeking Alpha or Citizen Economists are more economical than either magazines or newspapers.  Creative destruction is taking place in the journalism industry at a rapid pace.  It baffles me that people are no longer willing to pay money to learn about Anna Nicole Smith only to have it interrupted by some totally irrelevant and often times inappropriate commercial about treating certain bodily functions with a pill when they could read for free about the problematic ETFs GLD and SLV or Silver In Backwardation for Five Weeks (now nine weeks but climbed out for the first time on March 27).  I guess people are passionate about different topics.

As Minyanville recalled, “One thing we’ve learned while trying to build a financial media platform at Minyanville: Advertisers don’t like it when you say negative things about them.  Several months ago, Washington Mutual pulled an advertising campaign from us after we published a story saying the former banking giant was dangerously close to tipping over the edge and collapsing. Then, they tipped over the edge and collapsed.”

Tom Ascheim said, “If you can’t get people to pay for what they love, we’re all out of business.”  I and millions of other bloggers disagree.  Many, if not most, bloggers generate news and content in unlimited niches as a hobby or for fun.  Generally blog enterprises operate at a loss or are barely profitable.  Without an editor to silence or at least muffle the criticisms when one launches repeated volleys, like the Single Digit Midgets, Problems with the GLD and SLV ETFs, Financial Professionals Infected With Financial Insanity Virus, etc. at potential mainstream advertisers it does not bode well for gross revenue.

While many blogs lack formal editors it may be only grammar and not content that is found lacking as editors censor material issues along with dangling participles.  Why has GATA been almost completely ignored for over a decade by the financial press, newspapers and other heavily censored media?  Consequently, why believe or trust them?

I think a significant portion of the rise in gold’s price over the last decade has been a direct consequence of the rise in the amount of truth in the public zeitgeist.  With real gold there is no way to lie; gold is either in physical possession or not.  Consequently, gold loves truth and fiat currency loves lies.

FREEDOM OF SPEECH

In Kazakhstan Currency Goes Poof I reported even Putin’s amazement with the degree of censorship.  ”I was in Beijing at the time.  I looked through the world electronic media.  Complete silence.  As if absolutely nothing is going on.  It was as if somebody ordered everyone to keep their mouth shut. To those who organized all this; I can only say congratulations.  Congratulations.  You did an excellent job.  The only problem:  your results were poor and this will always be the case because the work you do is unfair and immoral.  In the long run immoral policies always lose.”

But this type of censorship behavior is not new.  Decades ago President John F. Kennedy expressed outrage regarding this topic.  Now the truth is coming to light at a rapid pace causing the evaporation of the derivative illusion and everyone seems to be either upset or completely stunned.

The press is one of the few businesses given specific absolute protection under the First Amendment of the United States Constitution.  ”Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof, or abridging the freedom of speech, or of the press; or of the right of people peaceable to assemble, and to petition the Government for the redress of grievances.”

When those petitions for redress of grievances are met with further violations then another business given specific absolute protection becomes important.  ”A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear arms shall not be infringed.”

It is common for government officials to perpetuate lies.  For example, Section 132 of the Emergency Economic Stabilization Act of 2008 is titled “Authority to Suspend Mark-To-Market Accounting” and restates the SEC’s authority to suspend the application of FAS 157.  But make no mistake about it:  Both gold and truth will cleave their own way with indivisible justice.

CONCLUSION

Th

The Great Credit Contraction is grinding down the top lines of almost all businesses.  There is no bottom line without a top line.  While the costs with operating a website are generally lower than manufacturing a newspaper I think the Intelligencer will have a difficult time operating profitably with 40 employees.  I wonder if these rapidly evaporating state organs will likewise receive bailout funds?

Do not be like the Intelligencer employees and wait for either a pink slip or bailout.  The newspapers need a more profitable business model or risk complete evaporation.

You can hasten this transition and support the vitally important free press.  For example, begin ignoring the old media with its disrespectful advertising by canceling your newspaper subscriptions and redirecting those funds to your trusted friendly neighborhood bloggers or by purchasing some firearms and lots of ammunition.  After all, if you do not know what The Great Credit Contraction is and how it will affect your lifestyle or wealth then you may want to find out as the institutions and organizations, including governments, continue evaporating.

Disclosures:  Long physical gold and silver with no position in the old media companies and is a direct competitor of NYT, WPO, PSO, GCI, MHP, NWS, for advertising dollars.



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