1/29/2009

running (from) the numbers

Overall, I thought that How to Understand a Trillion Dollar Deficit was a pretty good article. The fundamental notion of decomposing a quantity of that magnitude into analogies that have meaning to you in order to be able to visualize it is a rather good mental technique.

Unfortunately, the author went in completely the wrong direction at the end, with his point that the amount of the current economic bailout per person in the U.S. Instead of translating from $45/week to $6/day to a quarter per minute to a half penny per second, I suspect that most people would more naturally consider this amount in terms of $180/month, since that's kind of the basic fundamental time frame that we all have to think about budgeting on given that most major bills are monthly.

Thinking about it that way, $180/month starts to become an amount that many are going to have to scramble to figure out what they could do without in order to pay. Further, if you start thinking about this in terms of a family of four, it becomes $720/month, which is no longer an amount that you can even ask the question whether the average American family is "willing" to pay but whether or not they are "capable" of paying, even if every other budgetary item were reduced to an absolute minimum.

Suddenly, the notion rather flippantly presented of everyone ignoring a penny every other second becomes the rather sobering thought about whether or not your family could possibly afford a second rent payment every month (see here for a reference regarding average U.S. rent)...in order "to have a functioning financial system". My guess is that only a relatively small percentage of the population would be able to say yes, regardless of how they restructured their monthly budgets.

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