source [ht: sg]
From top to bottom: $100, $10,000, $100 million ($1 million is the cash square on the floor), $1 billion (or 10 pallets of $100 bills), and $1 trillion ($2 billion on the truck)
$10 billion is in the square of pallets on the bottom right. So, 100 times that and you have the tower of $1 trillion that is 465 feet (or 142 meters) tall.
This is a nice graphic to make a point about the size of banks’ exposure to risk, but the site on which it originates then goes on (at the bottom) to offer further graphics that similarly pose the debt of governments, without any comment to provide the needed interpretive context. The debts of private banks, and of nations without a currency (whose obligations are in foreign currency, like euro-zone countries) should not be understood in the same fashion as the debts of a sovereign currency-issuing nation like the US, Japan, etc. It’s good to give people a sense of the size of the interlocking obligations on the balance sheets of the too-big-to-fail private entities that (still) constitute a ticking financial time-bomb. But it’s not good to foster an indiscriminate fear of “debt” that treats all debt obligations (private and public, sovereign and non-sovereign) as equivalently “scary.” They’re not.
You’re absolutely right, Bruce. Scary-size representations can be used both to illustrate real problems (as with the derivatives exposure and interlocking obligations of private banks) and to create false problems (such as the necessity of balancing budgets and lowering government debt). My plan, for the week ahead (and as time permits), is to address each of these in turn.
[...] that we know what one trillion dollars look like, we can picture the derivatives exposure [ht: sg] of a bank like JP Morgan chase: $70.151 [...]
Guys, I have a rather silly question so bear with me: these gazillion buck amounts are supposed to be bank assets, right?
What is the corresponding liability (I don’t suppose they go mostly into equity) that balances the banks sheets?