This question may seem like a simple question but what lies behind it is the real thing.
What makes the money valuable depends on how few or how many is there.
- How much cash is there ?
The total amount of money in the world according to the bank of international settlements is estimated to be around 5 trillion US dollars. This number is also called as M0(zero). These 5 trillion dollars are nothing but just the actual physical amount of money, all the cash and coins in the world. This is the money which is in circulation in all over the countries throughout the world. Believe it or not but it represents less than 10% of the money that is available for us to spend right away.
The total amount of cash in India is 24.39 trillion rupees which is equal to 328.49 billion US dollars.
- Is the cash only form of money ?
Money around the world is in different kinds of forms, cash is just the traditional form. But using a more inclusive definition of money, “that amount goes much, much higher,” Add in checking accounts, savings accounts, money-market accounts — not quite physical money, but you can make a bank transaction digitally and use that as money. The total amount of money easily accessible in the world economy grows by several multiples. This is called broad money, and according to the CIA World Factbook, and the global total is in excess of $80 trillion. And this number also called as M1 number. There is also a thing known as fractional reserve banking which means that May actually be a less amount of money or cash in the banks vault but any account holders can take as much money as they have in their accounts because it's all digital money.
- Is there anything higher than this ?
Now that we know that the total amount of money in the world is 80 trillion US dollars, but is it the final answer? We all take loans from banks middle class man to a multi billionaire man and if all the loans taken by people around the world are combined the number adds up to be approximately 258 trillion US dollars. From Student loans, credit cards to multi billion loans of countries taken from world banks or maybe other countries.
- Why can't we just print more money ?
All the gold and oil in the world is priced in US dollars. If US wants to print more money they can actually print more money.
But the problem with printing more money is, the more money we print the prices would go higher.
Not just the US but if any poor country wanted to print more money it would just rise up the prices.
This article has been written by Rasik Wadhonkar for The Paradigm
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