Million, Billion, Googol or Boon Doogle

Given the Global Financial Meltdown this idea by Russell CROWE didn't seem half bad (also a little unkind - I mean he didn't vaporize the banks). And his calculation was right but he failed to get the "translation" correct. Giving US$1 million to 300 million Americans would be US$300 TRILLION (or US$300 x 10^12) or the same as 429 x $700 billion in U.S Government Bail-Out Packages! 1

But he is not alone as many people have trouble with such BIG NUMBERS - and for good reason. In America and Global Financial Markets, these are the definitions that count.

• a Million is 10^6 ( 1,000,000) = 1,000 x 1,000
• a Billion is 10^9 (1,000,000,000) = 1 thousand x 1 Million
• a Trillion is 10^12 (1,000,000,000,000) = 1 thousand x 1 Billion (or 1 million x million)
  

But this confusion is well placed as before American-dominated finance invaded Europe, the common scientific usage for large numbers in the UK and Europe typically considered one Billion = 1 Million-Million or 10^12 (1,000,000,000,000) and 1 Trillion = 1 Billion-Billion or 1o^18 (1,000,000,000,000,000,000). Both are 1 order of magnitude larger than common parlance used in the U.S Financial Markets.

Such fascination with large number concepts has a rich history. The ancient Greeks largest term was a Myriad (or 10, 000) but Archimedes was attributed to introducing the term a Myriad-Myriad (100 million or 10^8) when he tried to estimate the size of the universe. This tradition continues to this day in the name of the remarkablly sucessful internet search engine company, Google Inc. - it's name derives from the term Googol which refers to 10^100 as invented by American mathematician Edward Kastner.

Footnotes:

1) Table shows Total Obligations of the U.S Federal Government as $67.3 trillion at April 30, 2007. As such, Mr. CROWE's $1 million plan would represent 5x the combined total obligations of the U.S Government. This is clearly insane and unsustainable.

2) Source: Grant's Interest Rate Letter - July 25, 2008. These figures are drawn from various sources by Grant's, but there is no single disclosure source (that I know of). Components can be found referenced here: A) Total U.S Public Debt o/s - Dec 2007, www.treasurydirect.gov Public Debt Reports: Monthly Statements of the Public Debt. B) Federal Employee & Veteran Benefits, U.S Dept of Health & Human Services - Note 12. Federal Employee and Veterans Benefits: At September 30, 2007, the actuarial present value of accumulated plan pension benefits was $7,575 million, of which $578 million was not vested, and the liability for medical benefits was actuarially determined to be $697 million. C) Expected Expenditures for Social Security. The projected actuarial deficit in the OASDI Trust Fund over the infinite future is 3.2 percent of taxable payroll (1.1 percent of GDP), or $13.6 trillion in present value terms. Current deficit is $4.3 trillion (in 2007). D) Expected Expenditures for Medicare, U.S Dept of Health & Human Services - Note 11. Entitlement Benefits Due and Payable, footnotes refer to "Medicare benefits payable consists of a $35,063 million estimate ($36,628 million in FY 2006) by CMS Office of the Actuary of Medicare services incurred but not paid as of September 30, 2007." E) Ginne Mae Guarantees: na F) FHLB Liabilities: na G) Fannie and Freddie MBS & Liabilities: na H) FDIC Insured Deposits: na