General Question

DaphneT's avatar

How much money is there in the world?

Asked by DaphneT (5683 points ) April 19th, 2012

Is there some way to calculate the total amount of money in the world? Is this different from the physical objects that represent money such as coins or printed papers? How do we know? What goes into the calculation of this amount? Why would these items be included and not others? Are there many bases of money, such as gold, silver, human labor? Why these and not others? Are there websites that track this information or must I build my own spreadsheet?

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8 Answers

Seek's avatar

Wealth is a social construct. It only means what we allow it to mean.

As soon as everyone gets sick of gold, it won’t be valuable any more. Kind of like how a pound of salt used to buy a small village, and today it’s $1.89 at Kroger.

DaphneT's avatar

@Seek_Kolinahr, while that suggests that the current economic crises are social contructs, that’s not really what I’m asking. The idea that salt was once a basis of economic might is more useful in that it attests to the fluidity of commodities as the basis of an economy.

laureth's avatar

The amount changes faster than people can count. I mean it.

Banks create money, for one thing. When you deposit your paycheck, for example, the bank can lend a certain amount of that deposit out to the next guy – while keeping that amount also available for you in your account. This happens millions of times every day – it’s the magic of fractional reserve banking. (Whether it’s good or not, is another discussion topic.) Suffice to say that the instant that you figure out how much money there is, the next instant it’s a different number.

bkcunningham's avatar

In the US, the term “M3 is the representations of all types of available money, including credits.”

The current amount M3 in the US:

Some additional charts and info I hope is helpful to you.

PhiNotPi's avatar

The best wat to calculate this number is NOT through the the idea of simply summing the total amount of currency and converting it to dollars using standard exchange rates.

You have to take into account the purchasing power parity, which measures the value of a currency based on how much it can buy in a country.

If the salary of every person in Mexico (in US dollars) was immediately halved, but the cost of living also halved, there is not really less money in the world. The exchange rate between pesos and dollars has changed. The Mexicans can still afford buy the exact same things that they did before. A standard conversion into dollars will make it seem that all Mexicans suddenly were much poorer, but by adjusting by PPP will show that they actually have the same amount of money.

Jeruba's avatar

There’s no way to answer that. Money isn’t real.

likipie's avatar

Too much, way too fucking much. We need to ditch the money shit and go back to a barter system. Life would be waaaay more simple. But, it will never happen unless we have no choice.

wundayatta's avatar

In theory, the amount of money in the world should reflect, accurately, the value of all the stuff we own and do. By “we,” I mean humans. The purpose of money is to allow folks to exchange value without having to barter shit. Barter is a horribly inefficient way of doing things, and the world’s economies would collapse if we have to use it. Anyone who suggests barter, probably knows very little about economics. It would most certainly make things far more complicated.

Money is simple. It represents stuff we find valuable. There is not actually the amount of paper denominations necessary to reflect all the goods and services in the world, but that isn’t necessary. In fact, we don’t need paper at all. We just need numbers in a computer. So long as we are all in happy agreement that the numbers in the computer are fair assessments of the value of things, we’re golden.

Money is just numbers and the number applied to the value of something is arbitrary and constantly changing due to inflation, deflation, and exchange rates. You could say that the value of goods and services in the world is 100. Or you could say it is eleventy trillion. You could say it was 90 trillion dollars or 100 trillion pounds or 80 trillion Euros or 200 trillion renmin. It doesn’t matter. It could be any of those things, so long as everyone else agrees that’s what it is.

The answer to your question is “enough.” There is enough money in the world to keep the economies moving. That is the point of money: to make sure that people believe money reflects proper value. As long as that is true, people will buy and sell stuff. Everyone will be happy.

When there is inflation, people believe that there is slightly too much money in the world. More than there is stuff. So it becomes less valuable. Deflation is the opposite. It says there is not enough money for all the stuff, so the money becomes more valuable.

Inflation is considered good. Hyperinflation, though, is bad. Because that says the powers that can print money are printing way too much.

If you want, you can come up with a number. You’ll have to standardize on some currency, since all different currencies value things differently. Then you add up all the stuff and services int he world. Of course, that number will be meaningless. It’s the stuff that counts, not the number you put on stuff.

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