The thirty trillion dollar tsunami

It marks one year since the UK was put in to the first national lockdown.

In that year, we’ve been on a wild ride and governments around the world have been supporting economies to the tune of almost $30,000,000,000,000 or $30 trillion. This wave of stimulus is huge. In fact, it’s a tsunami, rather than a wave, and one so big that most of us can’t even picture it. I had to double check the number of zeros when writing it down!

We often talk about numbers in finance that are so large they are almost mythical, so I thought it would be useful to try and put things into perspective:

• If we were to stack each of those thirty trillion one dollar bills on top of each other, we would be able to travel to the moon and back four times.
• Or we could wrap the earth in a 2,000 km thick jacket of dollar bills – although, this might not be the best idea given the current climate change issues we are all trying to combat.

Even these numbers are difficult to visualise, as most of us don’t really have a good grasp of the full size of the earth or the distance to the moon. Let’s try a different way:

• In stacked dollar bills, it’s equivalent to the average height of almost 2 billion people, which is more than the population of China.
• Or if we use $100 bills stacked on top of each other, it’s equivalent to the height of 105,697 versions of The Shard in London.

It’s really difficult to fit the size of this number into something more tangible. That in itself shows how phenomenal the level of stimulus injected into the economy has been. Taking a different angle, what if we look at time:

• Jeff Bezos, the Amazon founder and current richest man in the world, would need to repeat his career 166 times to accumulate that level of wealth.
• For you or me, it’s like winning $25 billion (tax free) every month for the next 100 years. That’s the same as winning the top 50 largest global lottery jackpots every month.
• Perhaps simplest of all, it’s equivalent to everyone around the world receiving $3,820.

What I’m trying to do here is convey the sheer scale of what’s happened, because the words we use to describe such large numbers just don’t help! And scale is the key thing here because we’re now in a period that resembles the end of World War II in the US. In 1945, people had endured several long years of crisis, which led to lower spending and higher saving. However, once the soldiers came home, spending doubled – a combination of the desire to embrace normality plus the huge support from the government.

The situation is similar now, but on a global scale. People have been prevented from living their normal lives, and governments have been turning on the stimulus taps (as we’ve seen above). In the developed world, the average person now has more in savings than a year ago. In fact, people have more disposable income than they did when the world had no restrictions in 2019. This is because, once again, we haven’t been spending as much over the past year. There’s only so much stuff you can buy on Amazon after all!

The scale of support by governments is mind-boggling and we believe this will lead to a similar spending boom. Except what people want now are experiences, collaboration and adventure. This is likely to play to the advantage of many service driven businesses that have struggled over the past year. We see this having a big impact for the economy, which is why our clients’ portfolios are positioned to take advantage of a once-in-a-generation surge in growth.