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).

Alexander Muse is a technology entrepreneur with a brilliant summary of where we’re at (and why I started this blog) — the rules have (apparently) changed (and I’m trying to figure out what they are… or, presuming that there are no rules, then I’m still trying to figure out what the best strategy for operating in the world without rules is).

Here’s the meat of his post: 

The biggest risk we face now is that there are no rules.  The government might force you to make loans that you know are bad.  Then again they might not force you to make loans.  The government might punish you for making loans despite the fact that they forced you to in the first place.  The government might punish for not making loans despite the fact that they didn’t force you to make them.  The government might take over your business.  The government might save your competitor and let your company go out of business.  The government might dictate how much you are allowed to earn.  The government might decide whether or not you deserve cancer treatment or a liver transplant. The government might let you keep your house even though you can’t afford it.  The government might pay you NOT to work.  Rules mean the game can go on – they don’t even need to be fair for everyone to prosper.  Of course, without rules everything stops until we all can agree on a new set of rules.  That is the reality of today.

I have this recurring argument with a good friend of mine when we discuss buying gold as a hedge against economic risk in this climate.

He advocates buying “semi-numismatic” or “numismatic” gold (basically rare coins), because when gold was confiscated by FDR back in the 1930s they were exempt from confiscation. So today you see a pretty healthy premium above traditional “rarity” due to demand being paid for those coins by folks who are concerned about the scenario where gold is once again confiscated to stabilize the currency.

My response is that there’s no guarantee that the same rules and limits will apply today. Just because FDR stopped at rare coins, why does that mean that BHO will? So why pay the inflated premium if there’s no guarantee? And if there’s no guarantee, then why not pay less for more gold and have a larger, less precarious investment in the metal and hope for the best?

In this example,  we’re not even talking about something more difficult to change, like economic instincts or regulations. Instead, we’re talking about federal policies, which can be changed on a whim with enough arm twisting, predicitions of impending catastrophe, or demagoguery.

via Remember: The old rules don’t apply. . . | Texas Startup Blog.

Irresponsible, Foolish, and An Excuse For The Same Old Politics And Pork? Or Bold and Decisive Action? You make the call!

Leaving out the earmarks does mean Congress will have less control over how the money is spent. But, Obey says, “So what? This is an emergency. We’ve got to simply find a way to get this done as fast as possible and as well as possible, and that’s what we’re doing.”

via Earmark-Free Stimulus Bill Lacks Spending Direction : NPR.

Peter Schiff has a great interview with Yahoo’s techticker.

The fiscal stimulus bill being debated in Congress not only won’t help the economy, it will make the recession much worse, says Peter Schiff, president of Euro Pacific Capital.

…the difference is that the economy is in a much worse state going into this depression than it was in the 1930s… and without the discipline of gold, we have a central bank that could create massive inflation. So we could have an inflationary depression.

Sharon Astyk’s called 2008 pretty well and, with a couple of quibbles, I agree with her 2009 predictions. Sadly.

I think that she might be underestimating a few things:

• The ability of the US government to pull rabbits out of the hat. When you control the money presses and regulate the financial markets, you can do quite a bit. For a while longer.
• The interest of foreign governments in keeping us afloat until they can untangle themselves from dollar investments.
• The ability of banks and industry to manipulate government policy to their liking in the name of “crisis”.
• The “new coach” mentality changing consumer sentiment. How long Obama has before people lose hope is the big question here.

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.