What’s a billion?

Sent along by my wife who gets riled by the way our governing class goes through our money and our wealth. I have no idea what the original source for this is. Seems from the text to be a couple of years old but it still provides a bit of seasonal news as retailers try to work out where their Christmas sales have gone.

Quoted from Ross Greenwood of Money News.

What is a Billion?
How many zeros in a billion???
This is too true to be funny…
The next time you hear a politician use the word ‘billion’ in a casual manner, think about whether you want the ‘politicians’ spending YOUR tax money.

A billion is a difficult number to comprehend, but one advertising agency did a good job of putting that figure into some perspective in one of its releases.

A. A billion seconds ago it was 1959.
B. A billion minutes ago Jesus was alive.
C. A billion hours ago our ancestors were living in the Stone Age.
D. A billion days ago no-one walked on the earth on two feet.
E. A billion dollars ago was only 8 hours and 20 minutes, at the rate our government is spending it.

NOW THIS IS UNDISPUTABLE!!!
NO MATTER WHAT YOUR POLITICAL LEANINGS.

Quoted by: Ross Greenwood of Money News..

Right now the Federal Government is at pains to tell everyone – including us the mug-punters and the International Monetary Fund, that it will not exceed its own, self-imposed, borrowing limits.

How much? $200 billion. And here’s a worry.
If you work in a bank’s money market operation; or if you are a politician; the millions turn into billions and it rolls off the tip of the tongue a bit too easily. but every dollar that is borrowed, some time, has to be repaid. By you, by me and by the rest of the country.

Just after 5 o’clock tonight I did a bit of math for Jason Morrison ( Sydney radio presenter). But it’s so staggering its worth repeating now.

First though; here’s what Ex-P.M. Rudd has been saying about – what he calls – these temporary borrowings

Remember Those Words : Temporary Deficit.

The total Government debt could end up around $200 billion.
So here’s a very basic calculation ….. I used a home loan calculator to work it out….. it’s that simple..
$200 billion is $200,000 million.

The current 10 year Government bond rate is 4.67 per cent. I worked the loan out over a period of 20 years. Now here’s where it gets scary ….. really scary.

The repayments on $200 billion, come to more than one and a quarter billion dollars – every month – for 20 years. It works out we – as taxpayers – will be repaying $15.4 billion in interest and principal every year .. $733 for every man woman and child – every year.

The total interest bill over the 20 years is – get this – $108 billion.

Remember, this is a Government, that just 18 months ago, had NO debt. NO debt.

In fact it had enough money to create the Future Fund, to pay the future liabilities of public servants’ superannuation, and it had enough to stick $20 billion into the Building Australia Fund last year …..

Alan Jones Comment…… this is frightening: Hmmmmm??

He continues… a note that was sent to me which explains that the six leading members of the Government, from Mr Rudd down, the top six have a collective work experience of 181 years, but only 13 in the private sector.

If you take out of those 13 years the number that were spent as trade union lawyers, that total 11, of the 181 years, only two years were spent in the private sector.

So out of those 181 years:

– no years spent running their own business
– no years spent starting their own business
– no years spent as a director of a family business or a company
– no years as a director of a public company
– no years in a senior position in a public company
– no years in a senior position in a private company
– no years working in corporate finance
– no years in corporate or business restructuring
– no years working in or with a bank
– no years of experience in the capital markets
– no years in a stock-broking firm
– no years in negotiating debt facilities with banks
– no years running a small business
– no years at the World Bank or IMF or OECD
– no years in Treasury or Finance.

But these people have plunged Australia into unprecedented debt, and now threaten to torpedo employee share schemes, which they plainly don’t understand.

Well, in a way you can’t blame them.
It’s clear the electorate did not do their homework, because the Gov’t is there by right.

Are but they are Labor and people vote for them because Labor is good for the working family right???

If you have read this you may like to pass it on to your friends to help educate a little…as you, them and I, will be repaying the above.

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47 Responses to What’s a billion?

  1. val majkus

    the link for this is http://coffsoutlook.com/?p=4798

    BTW the figures might need updating, the article is dated 22 August 2011

    But totally agree with Steve’s wife

  2. Broadie

    Thanks, we know where we are heading.

    Well, in a way you can’t blame them.
    It’s clear the electorate did not do their homework, because the Gov’t is there by right.

    The problem being the politicians are not elected they are appointed. The cosey relationship between bureaucracy, media, judiciary and political parties to feast at the trough ensures safe people are appointed by pre-selection.

    Until this happy arrangement is broken by preventing Political Party’s access to tax-payer funds to buy advertising and purchase politicians.

  3. ar

    A bit gee-whiz, but not bad for a bit of distraction reading your emails.

    I’m not sure when billions became the new millions, but it sure suited the purposes of the stimulus boosters.

  4. rodney

    $1billion is perhaps about 1 million pounds in 1911 money.
    Do not wory about govt debt. It will soon evaporate, along with your savings, if any.

  5. Capitalist Piggy

    Robert Carling at the CIS writes:

    “Our gross debt is now almost one quarter of GDP, which is where Ireland’s was in 2007. The fact that Ireland is now above 100% shows just how much and how quickly things can go wrong.”

  6. John

    The original post must have been written around 1991, since 1 billion seconds is about 31.5 years.

  7. m0nty

    Reprinting stupid viral emails, the Cat is in silly season I see.

  8. MaurieJ

    Agree. I did something similar on the NBN (not even in the budget) Roughly take $40 billion over say 4 years. Easy to say, but that’s $27 million a day, digging trenches for cable. Will there be waste? You betcha.

  9. William

    People get the government they deserve.

    Putting it into context, government debt is merely a transfer payment from taxpayers to bond holders. The real imapct is the opportunity cost on future budgets.

  10. JohnA

    “- no years running a small business”

    And never oh never have they had any experience in a business that went into liquidation, to understand what it feels like to be “killled” financially by factors outside your control.

    Yes, I know that management/control weaknesses are the major factor in business failures, but what tips them over the edge is often some external factor, like a large debtor going bust, a protracted dispute over a major contract which ties up your cash flow and costs big lawyer money, loss of a load of stock on the high seas.

  11. pete m

    As scary as that email reads, it doesn’t come close to this page on the US debt situation, which I’m sure you’ve seen before:

    linky

    Since the debt is now about to hit $250 billion, and predicted to hit #300 billion, that interest bill just got a whole lot worse!

  12. George K

    And yet where has the money gone, apart from the useless throw away cash schemes, no major infrastructure. Does anyone know where these billions are going everyday.
    Even further what irrititates me is why do they compare the debt as a % of GDP, it should be compared against the governments income, which is approx $300B p.a. Looking at this as a % is more frightening.

  13. JC

    Our gross debt is now almost one quarter of GDP, which is where Ireland’s was in 2007. The fact that Ireland is now above 100% shows just how much and how quickly things can go wrong.”

    that’s why I keep saying that building up recurrent expenditure with frothy tax receipts is seriously fucking dangerous.

  14. wes george

    That’s sounds really, really bad. But is it?

    Well, it wouldn’t be if our government had invested that money in developing new infrastructure like ports, dams, railroads and highways, especially in the under developed regions of our nation.

    Many of us carry debt that is greater than our personal gross annual income, or we should if we are young, believe in the future and have invested that debt into a roof over our heads or a business or other investments with growth potential. Taking responsible risks with your earnings is the only way NOT to end life dependent upon a government pension.

    Debt, in and of itself, is NOT the problem. Mindless waste of tax payer money is. This government has the kind of debt teenagers run up on their first credit card.

    It’s wrong to create the impression that governments should in all cases never manage a responsible deficit. (Although you might well argue ‘responsible government debt’ is an oxymoron.)

    Note: Howard’s government didn’t run infrastructure investment-related debt because it would have overheated the economy which was already at peak capacity.

  15. H B Bear

    Lucky Rudd is a fiscal conservative eh?

  16. Judith Sloan

    And lucky he decided to stop the reckless spending. Oops, he didn’t.

  17. JC

    That’s sounds really, really bad. But is it?

    Yep for he most part.

    Well, it wouldn’t be if our government had invested that money in developing new infrastructure like ports, dams, railroads and highways, especially in the under developed regions of our nation.

    Umm I see you’ve been struck with the infrastructure fetish. Most of our infrastructure is first world stuff. There’s no reason to replace until it needs it. Doing otherwise is wasting money like pulling out the copper wires.

    Many of us carry debt that is greater than our personal gross annual income, or we should if we are young, believe in the future and have invested that debt into a roof over our heads or a business or other investments with growth potential. Taking responsible risks with your earnings is the only way NOT to end life dependent upon a government pension.

    Stop being an idiot as it’s not the same comparison.

    IF you want a comparison between an individual and the government , you ought to look at it like this.

    Individual has $100,000 is disposable income
    Individual $104,000 spends $100,000 per year.

    Individual borrows $4,000 per year to maintain that level of spending in year 1.

    Following year individual borrows $8,000 to maintain the spending which can’t be easily reduced.

    Individual works in a very cyclical industry like advertising where he could lose his job one year to next and if he does he is likely to lose 30% of his income.

    Would you lend to this fucker, Wes? Ummmm.

    Debt, in and of itself, is NOT the problem. Mindless waste of tax payer money is. This government has the kind of debt teenagers run up on their first credit card.

    Yes and?

    It’s wrong to create the impression that governments should in all cases never manage a responsible deficit. (Although you might well argue ‘responsible government debt’ is an oxymoron.)

    Yes it is.

    Note: Howard’s government didn’t run infrastructure investment-related debt because it would have overheated the economy which was already at peak capacity.

    And? what eggsactly is your point?

  18. Infidel Tiger

    Australia has the finest school lunch sheds and bike racks in the whole of Oceania. And yet you lot still complain.

  19. JC

    Individual $104,000 spends $100,000 per year.

    Oops

    That should read:

    Individual borrows $4,000 spends $104,000 per year.

  20. Infidel Tiger

    JC, not for the first time I think you’ve shot first and asked questions later. Wes’s comment looked very reasonable to me.

  21. JC

    99% of the time shooting first is the right way to go.

    Governments should never ever be allowed to borrow unless it’s project specific and non-recourse to the project concerned. In other words, lenders won’t get their fucking money back if the project isn’t viable. This is a good way to measure viability of projects if we must go the government route.

    Furthermore this nonsense about infrastructure is bullshit.

    One of the reasons we are the richest nation of earth is because we have decent infrastructure and putting more money into that shit is just a waste.

    You like Wes’s comment because you’re a socialist like he is 🙂

  22. Charles Bourbaki

    But all of them have extensive experience in scientific fields. So when they tell us that the
    science of the climate is settled, we feel secure.

  23. Charles Bourbaki

    On second thoughts, what they collectively know about climate science, I could scratch on the back of a sixpence with a crowbar.

  24. Skuter

    Our gross debt is now almost one quarter of GDP, which is where Ireland’s was in 2007. The fact that Ireland is now above 100% shows just how much and how quickly things can go wrong

    that’s why I keep saying that building up recurrent expenditure with frothy tax receipts is seriously fucking dangerous.

    I’m totally with you on this matter JC, but I wouldn’t call infrastructure spending ‘waste’ per se. However, I do think that that you are partially right that most of our infrastructure is good and thus duplicating or rebuilding it at this time is a waste…The NBN, with it’s accompanying plan to decommission perfectly functional assets is pure criminality!!!

  25. Capitalist Piggy

    In short, before spending our hard-earned dough, the government should do a proper cost-benefit analysis.

  26. Infidel Tiger

    “Weighing benefits against costs is the way most people make decisions — and the way most businesses make decisions, if they want to stay in business. Only in government is any benefit, however small, considered to be worth any cost, however large.”

    Thomas Sowell

  27. jumpnmcar

    Anyone who has heard Katter talk in Millions, 100 millions and thousands of millions knows he’s trying to retain perspective.
    The big “K” is endeavouring to “keep it real”
    I’ve never heard him use the word ” billion”.

  28. m0nty

    Good job by Wes there to expose the oft-used wingnut macroeconomic analogy with household finances for the simplistic nonsense it is. If the economy was run the way households are, we’d have national debt at 538% of GDP (given the average Australian wage of $64641 and average Australian mortgage of $347,505).

  29. JC

    Monster you imbecile. Spending beyond one’s means isn’t a good long term strategy for an individual nor a government. Put you tin foil hat back on you doofi.

  30. pete m

    monty you tool – people usualy have realisable assets they can sell to pay off the debt. The govt does not have anywhere near the assets it is prepared to sell etc.

  31. Kant

    Its more complex than that. First of all, going into debt is a sensible strategy if there are sufficient long term benefits (or it the debt can be transferred to outsiders). Second of all, equating households with governments simply reflects some pretty ignorant economics.

    The article itself isn’t very useful either. People everywhere have trouble with very big or very small numbers – telling us that Jesus was around a billion hours ago doesn’t help much. What matters is the size of debt as a proportion of the means with which it can be payed off. Everything else in the article is just scare-mongering.

  32. JC

    It’s like talking to a pet trying to explain to it the laws of physics. Monster doesn’t have a head for this kid of stuff. He has a ideology , that’s all.

  33. m0nty

    You prove my point, Pete M. The situation is not analogous.

  34. wreckage

    m0nty is entirely right, the government should be compared to a business, not a household.

  35. It seems to me that the governments world over have an easy and simple solution to debt – print lots more money and inflate it away. Yet, many, incl. Australian government strongly fight inflation. Why? It can’t be due to an isolated silo of moral rectitude – they would sell our children if they could. Is it certainty of electoral defeat from high inflation? Surely not – I can’t think of anything Labor has not already done that should guarantee its defeat, except perhaps shooting conservatives behind parliament house, and even then I wonder…
    So what is stopping them? Memory of German hyperinflation? What?

  36. THR

    Yet, many, incl. Australian government strongly fight inflation

    Bipartisan economic policy in all Anglophone countries since the 1980s has been to fight inflation instead on unemployment. This is based on the crankery of the Austrians and Friedman.

  37. m0nty

    Inflation collapses inequality between the cash-laden rich and the indebted poor. No wonder they fight it so.

  38. JC

    Inflation collapses inequality between the cash-laden rich and the indebted poor. No wonder they fight it so.

    FFS monster, your faulty observations and rank ideological adherence to these observations of yours are incredible.

    Look doofus, the rich are NOT as a rule cash rich. If they were they would not be rich as wealth is a factor of asset ownership. They aren’t cash rich as cash is not a growth asset.

    Inflation actually helps the rich for a time and fucks over the poor.

    It’s the very opposite to what you’re suggesting. You’re rank observations combined with rank ideology makes you the biggest troll here after steve.

  39. Fisky

    Inflation is great for people in debt, terrible for people on fixed incomes. And you can’t beat unemployment by unleasing inflation anyway.

  40. Boris

    200 billion=10,000 per capita, or about 40,000 per household, rich or poor. I think that’s lots of money.

    Of course in the US and the UK it is much worse. Not to mention Greece.

  41. Boris

    Inflation collapses inequality between the cash-laden rich and the indebted poor

    Inflation collapses hard-earned savings of working people.

  42. m0nty

    Read what I wrote again. Not all of the rich are cash-laden. Not all of the poor are indebted. My statement is true, though. Don’t be so predictably reactionary.

  43. Boris

    monty what you said is correct but grossly incomplete. I have completed it for you.

  44. Skuter

    This is based on the crankery of the Austrians and Friedman.

    Inflation targeting the fault of the Austrians? Do you even realise how ridiculous and paranoid that sounds? Whatever you think about Austrian economics, it has incredibly little influence over current economic policy anywhere. In fact, most Austrians would have issues with the way ‘inflation’ is defined in mainstream economics. Their main concern is with changes in relative prices…something aggregate price indices do not measure. I suggest you go back to looking for UFOs…

  45. John A

    JC, you said:
    “Most of our infrastructure is first world stuff. There’s no reason to replace until it needs it. Doing otherwise is wasting money like pulling out the copper wires.”

    But in all your anti-infrastructure ranting, did you consider that infrastructure is not forever?

    We need to fix what gets damaged or worn out. I agree that we don’t need to pull copper cables out of the ducts if they are working well.

    However, we need to expand it (more cable in the ground, more roads, bridges, water pipes, sewerage systems, schools, hospitals) to support an increasing population.

    So it still remains a fundamental question – where the hell did all that money go? And the answer still remains: wise spending is the key to economic well-being.

    For these economic illiterates in government at the moment, I am considering restoration of the death penalty. All they can think of is to print more paper, create more zeros in their computers.

  46. wes george

    JC,

    Actually, our infrastructure is totally inadequate going forward.

    Consider the Pacific Highway, for instance. Or the traffic jams at all our major ports or total lack of port facilities where we need them in Queensland and WA. Or the highway/public transit systems of Melbourne and Sydney. Or the lame state of air traffic control. Or the fact that we don’t have the dams for the water supplies we need for Sydney or Melbourne or the emerging Brisbane regional megacity.

    Consider our railroad infrastructure. Pathetic. What about doing something creativity with the top end? If we’re too lazy to develop it and people it, someone might just see it as terra nullius and relieve us of the burden.

    Look, I could go on and on. We have needed to invest more in “nation building” since the Howard era, but couldn’t then because of the risk of overheating the economy. Rudd and Gillard have blown a significant window of opportunity for this country and we will most certainly be a lesser nation for it.

    My point is that we’re selling ourselves short not to invest in our future, to plan for and manage growth as an opportunity rather than as a can to kick down the street. Furthermore, just like it would be silly to pay cash for your house rather than take out a mortgage, it’s nonsense to believe there are no good investments worth leveraging future earning potential against.

    It’s a whole other argument whether one believes it’s possible for ANY government to be clever enough to manage investing for our nation’s future.

  47. This is very old news. the 200 mark was passed some time ago and if you are a Queenslander double it for the state debt running at about $48 billion. So for us Queenslanders double the numbers up the top. But don’t worry the US and Europe are more broke lol.

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