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" looked at a 16K sign wave at -90 I don't think it would exist. Not enough bits.....this is why 24 bits is necessary."
I have sympathy for your general argument but a 16 bit system would allow a -90dB 16K sine wave signal to be reproduced with a little to spare (it has a dynamic range of 96dB), at least it would still exist, this being your point. However that is a text book kind of argument and assumes a perfect 16 bit device. In practice as you have realised it isn't quite that straightforward. However 24 bit systems are way over the top for music reproduction and, as the engineers at Decca pointed out way back in the 1980s, a 20 bit system is perfectly adequate for all of our needs.
BTW, a processor that can deal with a 24 bit word length is not the same as an audio system that can utilise the consequences i.e. to fully exploit 24 bits means a system with a S/N ratio of 144dB. And of course listening in a room with ambient noise at -144dB. Even if you had this the changes to sound at lower levels would still be inaudible as they would be masked by the sound of your own blood flow through your ears.
Digital audio has brought us another "specmanship" race. In the 1970s it was based on ever diminishing distortion figures ( Your amp has 0.0001% distortion, ours is better as it has 0.00001%), now it's word length and sample rates. When I read of 32bit/768Ks/s for audio I laugh. No, cry.
I completely disagree with your thinking that 20 bits is enough. It is the low level signals that are improved the most by more bits. If you look at a -110db 10K signal at 20 bits then it looks no where as good as with 24 bits.
The signal to noise ratio of a system is just its maximum dynamic range.....what we need is pure signal up to the maximum dynamic range of the device. If a device has pure signal at -120db it will sound way better than a device with -130db that is not pure. Pure is not about numbers.....this is where you must listen. Even a single "bad sounding" resistor will wreck the sound of a great signal and yet it has no measurements. This is why some DACs with no filtering "sound better" than those with lots of filtering and great signal to noise ratio measurements........purity is not a number.....but you ear can hear it! Of course, having great measurements and super pure sound are the ultimate....someday we will get there.
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