World Money Supply
The 1998 American College text The Economics of Money, Banking and Financial Markets defines ‘money’ as ‘anything that is generally accepted in payment for goods or services or in the repayment of debts.’ Many things affect money supply, but most significantly are governments, central banks, the World Bank and the Federal Reserve System. The United States’ central bank(s) is the Federal Reserve System, which is called ‘the Fed.’
In ancient and even not so ancient time’s centuries ago, a merchant may have traded goods, cattle or gold for other goods or land; and those things could be easily measured – 100 cattle for 50 acres, or an ounce of gold for $ 200 worth of food and supplies and maybe even lodging. Now nearly every purchase is done with currency, and more often than not – electronic transfers from banks who are connected to central banks which can stimulate the money supply also at will.
Moreover, there are financial markets and exchanges and instructions that add to the difficulty of controlling and measuring money supply. For example, Apple is the world’s largest public company worth about $620 billion end of 2015. Mircosoft is worth about $450 billion and Bill Gates is worth about $ 75 billion or about 18% of Mircosoft. The financial company Berkshire Hathaway, the 4th largest public company in 2016 is worth about $360 billion and Warren Buffett about a sixth of it – third richest person in the world at $60 billion in 2016.
According to Forbes (2016) there are 1,810 billionaires (down from a record 1,826 in 2015) whose aggregate net worth is $ 6.5 trillion (down from about $7 trillion in 2015). As for as the richest companies and banks, Forbes list the Industrial and Commercial Bank of China (ICBC = $3.4 trillion assets, but $200 billion market value) as the largest followed by China Construction Bank and then the Agricultural Bank of China; then there is JPMorgan Chase; the Bank of China and Wells Fargo who is currently in trouble from manipulating loans.
Fortune’s Global 500 reported that the world’s 500 largest companies generated $27.6 trillion in revenues and $1.5 trillion in profits in 2015. They employ 67 million people in 33 countries.
The Federal Reserve became a broker of war bonds during WWI and was the central bank and primarily government lender at that time with assets of about $ 85 million in Gold Settlement Fund in 1916 – (in 12 U.S. private banks). In 2008, their assets passed $1 Trillion and today in 2016, 100 hundred later, their oligarchy has done well for themselves – a broker and lender of Gov. sec. and electronic cash reserves (less than ¼ of its assets in gold) and due to quantitative easing programs have assets over $ 4.5 Trillion which is nearly equal all the coins and banknotes in the entire world – only brilliant central bankers like the Rothschild, Rockefellers, Chase, ect. with weak and corrupt politicians could pull this off.
TOTAL WORLD’s MONEY
The World’s GOLD reserves are estimated at about 184,000 tonnes or about $7 to $8 trillion. The value of the World’s coins and banknotes is said to be about $5 trillion, but when adding checking deposits it increases to about $29 trillion. The World’s stock market capitalization is estimated at about $70 trillion, and a little over half of it is held in the United States.
According to the CIA Factbook the total value of the World’s money is about $81 trillion – coins, banknotes, money market accounts, savings, checking and time deposits. However, this does not include all current and future made up electronic currency and assets by Central banks. Moreover, Global Debt is estimated at about $200 trillion; 29% accumulated since the 2008 financial Crisis. But what are unique to electronic banking generations is derivatives. Global derivative markets, which basically allow gambling with legal market contracts speculating on future performances, could be as low as $630 trillion and as high as $1.2 quadrillion – NO ONE REALLY KNOWS.
Warren Buffet wrote in the Berkshire Hathaway 2002 Annual Report, “I view derivatives as time bombs, both for the parties that deal in them and the economic system… Derivatives contracts are of varying duration, running sometimes to 20 or more years, and their value is often tied to several variables. Unless derivatives contracts are collateralized or guaranteed, their ultimate value also depends on the
creditworthiness of the counter-parties to them. But before a contract is settled, the counter-parties record profits and losses – often huge in amount – in their current earnings statements without so much as a penny changing hands. Reported earnings on derivatives are often wildly overstated. That’s because today’s earnings are in a significant way based on estimates whose inaccuracy may not be exposed for
many years. The errors usually reflect the human tendency to take an optimistic view of one’s commitments. But the parties to derivatives also have enormous incentives to cheat in accounting for them. Those who trade derivatives are usually paid, in whole or part, on “earnings” calculated by mark-to-market accounting… The derivatives genie is now well out of the bottle, and these instruments will almost certainly multiply in variety and number until some event makes their toxicity clear. Central banks and governments have so far found no effective way to control, or even monitor, the risks posed by these contracts. In my view, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.”
MONEY OVER TIME
The earliest civilizations primarily used a barter system; exchanging resources or goods or services for mutual advantage. People used livestock, agriculture and other goods and services to trade for mutual goods and services. A hundred years ago a doctor still may have accepted a chicken in return for services. About 1000 BC bronze and cooper metal was used as money. And about 500 BC silver and other metals were being used as coin money. Empires, such as Rome, would often put their Caesar’s face on the coins. It was not until about 800 AD that China began using paper money – which in time became somewhat easy to counterfeit. It was not until after the 15th century and printing presses that Europe began to use paper currency.
In 1816, gold became the official standard of value in England. In 1900, the United States Congress passed the Gold Standard Act. After the Great Depression of the 1930s the gold standard was not since as reliable after its devaluation. However, under the current electronic money system there is only sinful mankind to limit the production of intangible invisible currency.