Should a trillion dollars be enough? How about three or more, depending on how you look at the bailouts being thrown around?

Mint.com and WallStats.com have some stunning visual expressions of what a Trillion Dollars represents.

One trillion dollars; it’s a number that few people can
comprehend, let alone your standard nine digit calculator. There have been attempts to put this number into perspective before. A trillion dollar bills laid end to end would reach the sun or you spend a dollar per second for 32,000 years or one trillion dollars in pennies would weigh as much as 2,755,778 Argentinosauruses (the largest known dinosaur).

Um… why is the Fed pushing this view right now? This sounds a little like a pilot getting on the PA to explain how airplane crashes are good things, “because they reduce airport congestion in the long run… please place your seats in the upright position, stow your belongings, and place your head between your knees…”

Historical evidence doesn’t support the commonly held view that currency crashes are harmful to big economies, according to a Federal Reserve paper.

In fact, as long as they’re not triggered by an outbreak of inflation, crashes can actually have positive economic outcomes including stronger gross domestic product growth, lower bond yields and rising equity prices.

“Sharp exchange rate depreciations, or currency crashes, are associated with poor economic outcomes in industrial countries only when they are caused by inflationary macroeconomic policies,” wrote Joseph Gagnon, visiting associate director of the Fed’s monetary affairs division.

“On the other hand, crashes caused by rising unemployment or external deficits have always had good economic consequences with stable or falling inflation rates,” he wrote in the paper, which had the provocative title: “Currency Crashes in Industrial Countries: Much Ado About Nothing?”

The paper was posted on the Fed’s Web site Tuesday.

Gulp. Batton down the hatches!

via Fed Paper: Currency Crashes Can Have Good Economic Effects – Real Time Economics – WSJ.

The WSJ hits the Bush/Obama bailout mentality hard in their editorial “Barack Obama-san.” Politics aside, it’s a sobering review of what has happened to the Japansese economy after real estate and stock market bubbles burst and the government responded with multiple bailouts.

Here’s the chart that compares Japansese and US government debt as percentages of their respective GDPs:

This is a troubling reminder. Not a road to go down, right?

But we’ve already gone down that road. And I’m not talking about AIG or TARP.

You see, this editorial focuses on government debt. But the total national debt that includes individuals and businesses has already bloated!

A recent Morgan Stanley presentation highlights the spike of total debt in the US (on slide 6). Since the turn of the century alone, it has spiked from roughly 250% to 300% of GDP!

The lesson to be learned is more than the ineffectivity of public stimulus, which the WSJ rightly highlights. It is that, regardless of the source or destination of largess, its tantilizing short term benefits are dwarfed by its subtle, long term poison.

Just like binge eating, the pounds remain after the pleasure, and make it that much harder to cut back in the future.