Most Have No Idea.
The author of the article below wants to know, “How much money there is in the world?” It’s a great question.
But the author goes on to show that she has no idea what money is.
That’s OK; most people don’t know what it is. In fact, there are so many definitions of “money” floating around, (thanks to corrupt bankers and professors with obsolete theories) that it’s not a stretch to say that society has lost its concept of “money.”
For example, the author says that “purists” would count only cash, coins and bank accounts as money.
Actually, I’m a purist and I would not count bank accounts — those are unsecured liabilities of fragile financial institutions and might not be available when you need them for transactions.
The author also counts gold as part of a “broader” definition, whereas, I would include gold in the primary definition.
From there, things get even more attenuated. The author counts derivatives, real estate, debt and stocks as forms of “money” even though they are nothing of the sort.
Despite this, the article and the infographic that go with it are still useful for visualizing just how much supposed wealth there is in the world supported by a thin sliver of real money.
Here’s the best way to use this infographic: Imagine if all the investors in the world holding stocks, derivatives, bank accounts and real estate all decided on the same day they wanted real money?
It’s easy to see there’s not nearly enough of the real stuff to go around.
Now, what would happen to the prices of all of those other assets if investors tried to sell them to get real money? That’s not a pretty picture.
And imagine governments printing more money to make up the difference. That’s not a pretty picture either.
So despite my disagreements with this author, I recommend her article because it shows you just how bad things will be in a year or so when there’s another financial panic and rush to liquidity as there was in 1998 and 2008.
The difference is the next one will be much worse. You’ll see over $1 quadrillion of claims trying to grab about $13 trillion of real money; that’s over $75 of claims for every $1 of real money.
In other words, the world is leveraged 75-to-1. Make sure you’ve got some gold so you have real money when the whole world is screaming for it. Rickards
Here’s all the money in the world, in one chart
There is $1.2 quadrillion invested in derivatives alone.
Ever wonder how much money there is in the world?
The answer is complicated, which you might expect, but not because of the difficulty of tallying up all the rather large numbers. Rather, it’s more about which parameters are used to define “money.”
“The amount of money that exists changes depending on how we define it. The more abstract definition of money we use, the higher the number is,” said Jeff Desjardins, an editor of Visual Capitalist, who put together an infographic to answer this question.
For purists, who believe money refers only to currencies such as bank notes, coins, and money deposited in savings or checking accounts, the total is somewhere around $80.9 trillion.
But for those preferring a broader interpretation, including digital currency bitcoin, above-ground gold supply, and funds invested in various financial products like derivatives, the amount is in the quadrillions.
This is what a quadrillion looks like written out: 1,000,000,000,000,000.
Funds invested in derivatives alone total $1.2 quadrillion. In fact, there is more money in derivatives than in all the stock markets combined, which is a comparatively paltry $70 trillion. The U.S. accounts for roughly half of the global market cap thanks to companies like Apple Inc. AAPL, -2.14% Alphabet Inc. GOOGL,-0.96% and Microsoft Corp.MSFT, -0.58%
Investment in commercial real estate, often the most visible symbol of wealth, pales in comparison to stocks or derivatives at $7.6 trillion.
As for money owed by every single person and country in the world, the grand total is $199 trillion, with some 29% of it borrowed since the 2008 financial crisis.
The U.S. is responsible for nearly one-third of that global debt, while Europe follows at 26% and Japan at 20%. China, for all the criticism about its debt-fueled economic growth, owes 6% of the total.
And despite the attention bitcoin has received in recent years as an alternative currency, it clearly has a long way to go. The value of all bitcoin in circulation is estimated at $5 billion, a proverbial drop in the bucket.
