WEBVTT - How Much Money Is There in the World?

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<v Speaker 1>Welcome to brain Stuff, a production of I Heart Radio.

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<v Speaker 1>Hey brain Stuff. Lauren Vogelbaum here with today's question, how

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<v Speaker 1>much money is there in the world. To make this

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<v Speaker 1>question answerable, let's start by asking how much money is

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<v Speaker 1>there in actual United States dollars in the world. Because

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<v Speaker 1>the statistics for the United States are relatively easy to

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<v Speaker 1>come by, we can examine this question in a couple

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<v Speaker 1>different ways. The first way to look at it is

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<v Speaker 1>how much cash is there in US currency? If you

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<v Speaker 1>took all the bills and coins floating around today in

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<v Speaker 1>the world and added them all up, how much money

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<v Speaker 1>would you have. All that hard and easily liquidated currency

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<v Speaker 1>is known as the M zero money supply or monetary base,

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<v Speaker 1>and this includes the bills and coins and people's pockets

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<v Speaker 1>and mattresses, the money on hand in bank vaults, and

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<v Speaker 1>all the deposits those banks have at reserve banks. According

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<v Speaker 1>to the Federal Reserve, there was five point eight trillion

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<v Speaker 1>dollars in the M zero supply stream as of March

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<v Speaker 1>of twenty twenty one. That sounds like an incredible amount,

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<v Speaker 1>but think about it this way. According to the U

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<v Speaker 1>S Census, there were three hundred thirty two million two

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<v Speaker 1>hundred ninety thousand, nine hundred and sixty four people alive

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<v Speaker 1>in the United States as of May twenty twenty one,

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<v Speaker 1>So if you took all the cash and divided it

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<v Speaker 1>up equally, each person would only have about seventeen thousand,

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<v Speaker 1>four hundred and fifty four dollars in cash on them,

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<v Speaker 1>which is nothing to sneeze at. But obviously there's some

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<v Speaker 1>money missing, but there's an easy explanation for that. The

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<v Speaker 1>Federal Reserve says that at any given time, between one

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<v Speaker 1>half and two thirds of the M zero money stock

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<v Speaker 1>of US dollars is held overseas. The rest of the

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<v Speaker 1>money is in bank accounts of various types, and the

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<v Speaker 1>Federal Reserve has tracked these funds in three different values,

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<v Speaker 1>known as the M one, M two, and M money supplies.

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<v Speaker 1>M three has since been dropped, but more on that

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<v Speaker 1>in a second. M one represents all the currency outside

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<v Speaker 1>the US Treasury, Federal Reserve banks, and the vaults of

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<v Speaker 1>depository institutions. It also includes demand deposits at commercial banks

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<v Speaker 1>excluding a few specific types, the Federal Reserve float, and

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<v Speaker 1>other liquid deposits. As of March one, the M one

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<v Speaker 1>money supply for US dollars equaled another eighteen point seven

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<v Speaker 1>trillion dollars, or so M two is the M one

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<v Speaker 1>money supply plus small denomination time deposits that is less

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<v Speaker 1>than a hundred thousand dollars. Again, as of marche the

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<v Speaker 1>M two money supply was about nineteen point nine trillion dollars.

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<v Speaker 1>M three is M two plus larger certificates of deposits.

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<v Speaker 1>As of March two thousand six, though, the FED stopped

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<v Speaker 1>tracking the M three money stock as an economic indicator

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<v Speaker 1>because it felt it didn't add any information on economic

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<v Speaker 1>activity that wasn't already available from the M two. So

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<v Speaker 1>all told, anyone looking for all of the United States

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<v Speaker 1>dollars in the world as of could expect to find

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<v Speaker 1>approximately nineteen point nine trillion in existence using that M

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<v Speaker 1>to money supply definition. If you just want to count

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<v Speaker 1>the value of notes and coins, there are about two

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<v Speaker 1>point one trillion dollars worth of those floating around the globe.

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<v Speaker 1>But suppose you wanted to know the actual number of

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<v Speaker 1>notes in circulation rather than how much they were worth.

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<v Speaker 1>At the end of the FED estimated that there were

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<v Speaker 1>fifty point three billion notes, ranging from humble one dollar

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<v Speaker 1>bills to mighty ten thousand dollar bills in circulation. This

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<v Speaker 1>information is updated annually. So now that we've figured out

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<v Speaker 1>the U S money supply as much as we can, oh,

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<v Speaker 1>what about the rest of the world That gets a

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<v Speaker 1>little trickier due to the sheer number of currencies there

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<v Speaker 1>are around the world, Even accounting for unified currencies like

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<v Speaker 1>the European euro and the African Eco, each of which

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<v Speaker 1>is accepted in several nations throughout those continents, the problem

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<v Speaker 1>is exacerbated when a federal government tries to mint its

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<v Speaker 1>way out of trouble. Take, for example, the Zimbabwean dollar,

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<v Speaker 1>which saw such dramatic hyperinflation in the twenty odds as

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<v Speaker 1>the government tried to support public project spending by printing

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<v Speaker 1>surplus notes that its inflation rate hit five hundred and

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<v Speaker 1>sixteen quintillion percent in two thousand eight, and it's a

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<v Speaker 1>hundred trillion dollar note was worth just forty cents US.

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<v Speaker 1>The government abandoned that version of its currency entirely after that,

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<v Speaker 1>and it never collected the bills or let people exchange them,

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<v Speaker 1>So no one knows the final tally in circulation. But

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<v Speaker 1>even outside of extreme circumstances like that, anyone trying to

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<v Speaker 1>answer this question in earnest has their work cut out

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<v Speaker 1>for them, but yes, people do try. Perhaps the closest

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<v Speaker 1>estimate to how much money exists in the world was

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<v Speaker 1>released by def de Jardins, the editor in chief of

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<v Speaker 1>Visual Capitalists in and updated in. De Jardins added up

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<v Speaker 1>all of the world's silver, gold, top stock, exchanges, cryptocurrencies,

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<v Speaker 1>and much much more and came out with the amount

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<v Speaker 1>of about two point seven quadrillion dollars. That's a lot

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<v Speaker 1>of mula. He also estimated the value of all the

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<v Speaker 1>coins and banknotes at the world at just six point

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<v Speaker 1>six trillion. Today's episode is based on the article how

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<v Speaker 1>much actual money is there in the World on how

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<v Speaker 1>stuff Works dot com written by Katherine Whitforn and Francisco Gusman.

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