Sunday, November 28, 2010

22,727 Golden Geese

A goose egg weighs about 144 grams and is about the density of water.  Gold is 19.3 times the density of water.  So let us postulate that a golden goose lays a 2779 gram or about 89 troy oz gold egg.  At current market prices of about $1360/oz this comes to about $121,000 per egg.  If we figure a goose lays one egg each day then we get $44,165,000 worth per year. The US is printing about $1 trillion per year.  This is equal to the yearly profits from 22,727 golden geese. 

The total value of all US public companies is $14.2 trillion with a P/E of 18.2 and dividend yield of 1.85% which means total earnings of about $0.78 trillion and total dividend of $263 billion.  Bernanke's printing presses make more money each year than the total earnings of all US public companies and about 4  times as much as the total dividends.

The total of individual income taxes in the US is about $1 trillion.  So Bernanke's printing is as much as all individual income taxes.

The total US military spending in 2009 was $711 billion, more than the rest of the world combined. Bernanke is printing well over this amount.

There is an interesting phenomenon called the resource curse where countries exploiting natural resources tend to have lower growth rates than countries without much resources.  The US ability to print the world's money is like a magical resource equal to 22,727 golden geese.    The features of the resource curse seem to be applying to the US.

The total world production of gold was only 2,572 metric tons per year in 2009 which is equal to the production of 2,545 golden geese.  If the US really had 22,727 golden geese the total world gold production would be about 10 times the current rate.   If there were such high production of gold, clearly we would expect the dollars per ounce of gold to go down.  With such high production of dollars, we should expect the value of each dollar to go down in terms of gold.

When the world stops treating US dollars like they were "as good as gold", it will be as if all these golden geese die.  When they are gone the US will miss them.  The US will have to export real things to be able to import oil and stuff from China.   Life in the US will be much harder.

3 comments:

  1. http://www.wilshire.com/Indexes/Broad/Wilshire5000/Characteristics.html... here's the current information, not 2001.

    Makes for a stronger argument. (matches the printing with current earnings).

    For reference which makes your argument have some cred.
    http://www.goldsheetlinks.com/production.htm
    2572 tonnes of gold produced in 2009 = 82691719.642 troy oz. So with a goose capacity of one egg per day for 365 days at 89 troy oz per egg is 2545 geese....

    ReplyDelete
  2. Thanks. I could not find the current data. I even looked around wilshire.com and did not find it. It is much better to have the current info. Thanks much!

    ReplyDelete
  3. QUANTUM BINARY SIGNALS

    Professional trading signals sent to your mobile phone every day.

    Follow our signals today and profit up to 270% per day.

    ReplyDelete

Looking for polite debate on ideas. Never attack a person. Be nice.