The late Senator Everett Dirksen (R-Ill.) is famous for allegedly saying, “A billion here, a billion there, and pretty soon you’re talking real money.” It might be apocryphal—the Dirksen Congressional Center has found no evidence that the late Illinois Republican ever made the quip—but it certainly resonates as the political parties spar over sequestration and Americans become even more accustomed to thinking somewhat casually about what should be unfathomably big numbers.
In Japan, however, billions are for amateurs. With public debt more than 200 percent of GDP, the Japanese have long measured their red ink in hundreds of trillions of yen, at least until now. The Japanese crossed into uncharted fiscal territory Friday following news that the country’s gigantic national debt has for the first time just exceeded ¥1,000 trillion—in other words, more than one quadrillion. The country’s outstanding public debt, including borrowings, increased 1.7 percent in the second quarter of 2013, Japan’s Ministry of Finance announced, putting the national debt at a record ¥1,008.6 trillion ($10.46 trillion).
Just how big is a quadrillion? In yen, as Bloomberg News explains, the amount is larger than the economies of Germany, France, and Britain—combined.
Not everyone agrees, however, on what exactly counts as a quadrillion. Americans start from a base of 1,000. So if four digits are to the left of the zeroes, you have a million. Another three digits gjves you a billion. Hence, one quadrillion is 1,000,000,000,000. The British do things differently: According to Quadrillion Corp., in the United Kingdom “the Latin prefix represents the power of a million, thus a British billion is 1,000,000,000,000 (1012) and a British quadrillion is 1,000,000,000,000,000,000,000,000 (1024).” Got that? Fortunately for those who can’t handle exponents so high, Quadrillion Corp. notes that “common usage in most English-speaking countries, including Britain, has now almost completely adopted the American system.” (Quadrillion Corp., by the way, is a data-mining technology company, based in Ontario, that markets a product to “help cut vital hours or days from the time required to solve expensive yield problems.” )
Whether you’re a quadrillion traditionalist or revisionist, the term doesn’t come up in the news that much. There was the story last year about a crater in Russia with diamonds potentially worth quadrillions of dollars. The elusive number made an appearance last month when PayPal mistakenly credited a Pennsylvania man with a balance of $92,233,720,368,547,800. Learning that he had $92 quadrillion and change in his PayPay account “was quite a big surprise,” Chris Reynolds told the Philadelphia Daily News. ”I’m just feeling like a million bucks.” That was low-balling the bonanza by many zeroes, of course, but his windfall didn’t last long. ”This was obviously an error and we appreciate that Mr. Reynolds understands this was the case,” PayPal said in a statement to the BBC the next day. The company corrected the error and offered to make a donation to a charity of Reynolds’ choice.
Now that Japan has smashed through the quadrillion ceiling, Prime Minister Shinzo Abe will likely feel even more pressure to raise the country’s consumption tax. “Ballooning public debt underlines the need for Abe to push for a sales-tax increase,” Long Hanhua Wang, an economist at Royal Bank of Scotland in Tokyo, told Bloomberg News. “This is a minimum policy requirement for his government.”
Moody’s yesterday highlighted one of the threats of Japan’s red ink, which is more than double the country’s GDP. The rating agency warned of “a tipping point for creditworthiness” that could destabilize the Japanese financial system. Without sustainable economic growth, “the government’s willingness to expand its deficit and attempt to inflate the economy into a recovery will be of limited effect,” Moody’s warned. “At some point, investors may demand a premium for funding Japan’s growing debt.”