The Value of Money

We all have a good understanding of the value of our income and our capital. Regrettably, our political masters worldwide do not have the same understanding of the value of taxpayer revenue and this is the central reason why government expenditure, certainly in the UK, seems to go hand in hand with poor value for money.

A £billion seems to be the new £million and the £trillion is creeping into every day usage. The size of the UK’s national debt is £1.7 trillion. The cost of servicing this debt, based on current inflation levels, is approximately £44 billion per annum.

A £trillion - 1,000,000,000,000 – came into every day usage with the credit crunch. Media references to a trillion jumped dramatically after the collapse of Lehman Brothers and peaked again during the debate on the US stimulus package. We all struggle to comprehend such a vast number as a £trillion and it is hard to develop informed opinions on public policy if one cannot conceptualise the figures involved. It doesn’t help that a £trillion sounds pretty much like a £million, or a £billion, and those extra zeros do not look like they add much to the sum. However, in relative terms, a trillion is to a million as a million is to one.

To get a further perspective, we can convert numbers into seconds. A million seconds is roughly eleven and a half days, a billion seconds is 32 years and a trillion seconds is 32,000 years. Fortunately, our personal finances are more straightforward and I enclose the tax tables for the fiscal 2018-19. Please contact me should you wish to discuss any points which are not connected with the national debt!