retirement

How Many Trillion [of your] Dollars Will it take to put Humpty Dumpty Back Together? And What Can You Do About It?

Do you know how much a trillion dollars is?  Admittedly, it is kind of hard to fathom.  According to NASA :

One trillion is written as the number “1″ followed by 12 zeros (1,000,000,000,000). One year of clock time = (60sec/min) x (60 min/hr) x (24 hr/da) x (365.25 da) = 3.16 x 107 sec
One trillion seconds of ordinary clock time = ( 1012 sec)/( 3.16 x 107 sec/yr) = 31,546 years!
Six trillion seconds equals 189,276 years. Now, as an aside, along with the nearly six trillion miles in the light-year, you might be interested to know that there are nearly five trillion dollars in the current U.S. national debt. Is it any wonder that our politicians in Washington are concerned?
(An interesting bit of trivia: If one were to count the national Debt at the rate of one dollar per second, he or she would have to use a mechanical counter to click off the digits. Why? Because, if he or she counted in the usual way, saying “one, two, three, …” etc., there would be numbers whose names are so large, that it would take more than a second of clock time to pronounce them. For example: “Nine hundred and ninety nine billion, nine hundred and ninety nine million, nine hundred and ninety nine thousand, nine hundred and ninety nine,” takes about 8 seconds to pronounce.)

For a really amazing visual representation of a trillion dollars, check out “what does a trillion dollars look like?

Sadly, the rocket scientists at NASA are just a tad out of date.  There’s no longer a five million dollar national debt.  Those were the good old days.  Now, it is over 11 trillion, per the National Debt Clock.  Worse, just the spending on the current federal bail out plan (SO FAR) has been estimated by the Milken Institute at . . . almost 10 trillion dollars.

So, imagine if you will, the final image of a trillion dollars stacked on a giant field of pallets and, another nine of these massive installations of double-stacked pallets of $100 dollar bills, all being spent by our government in order to stop us from falling further into the abyss.

What will happen to the U.S. dollar after these bucks are all flushed down the proverbial toilet?  I don’t have any crystal balls, but I can think of plenty of historical examples where uncontrolled government deficit spending lead to hyper-inflation.  Starting with Germany during the 1920s — the time of Weimar Republic. Think it can’t happen here? People have short memories. Here are some historical interest rates as collected by the U.S. Government:

In other words, we had rates of 13-16 percent on the safest, 30 year fixed rate loans imaginable. For a long time. What can you do about the current situation? Neither the Republicans nor the Democrats appear to have any obvious solution, so you’d better figure out your own, pronto. One answer is to not worry about it, go to work, and stick whatever is left over after you pay your taxes and expenses in “safe” investments, where they are as likely as not to be gobbled up by inflation.  Another is to borrow as much as you possibly can (at fixed rates — please!) and invest it in income producing properties, and pay those loans off with dollars that are worth far less than they are today. I’d be happy to show you how the numbers work out. Suffice it to say that at the end of your thirty year mortgage, your payments will be inconsequential compared to the inflated rents you will be able to command, assuming that this plays out the way it inevitably has in the past.