How Much Money is There on Earth? | Summary and Q&A

TL;DR

The value of money is dependent on our beliefs and the authority given by the people who make it, and its impact can be erased or enhanced based on what we believe.

Key Insights

• 💱 The turnover rate of currency on Earth is high, with one in every 100 pieces of currency in the United States likely being touched by a future murderer.
• 🤑 The total amount of physical currency on Earth is relatively small compared to the total available money supply for spending.
• 💵 Money can be "born" through central banks or fractional reserve banking, resulting in the creation of new money.
• 🤑 The value of fiat money is dependent on our beliefs, and its authority can be erased by force or invasion.
• 🤑 The global money supply includes various categories, such as M1, M2, and M3, each representing different forms of money.
• 🤑 Burning or eating money has little effect on the overall money supply, but it can have germs and traces of illegal drugs.
• 🤑 Commodity money, such as gold, holds intrinsic value, while fiat money relies on our beliefs for its value.

Transcript

Hey, Vsauce. Michael here. On Earth the average piece of currency changes hands about 55 times a year. That's about once a week. With that kind of turnover, it's safe to say that statistically in the United States out of every 100 pieces of currency one was most likely touched in the last year by someone who within the next year will commit murder.... Read More

Questions & Answers

Q: How much physical currency is currently in circulation on Earth?

The estimated total amount of physical currency (M0) is slightly over 5 trillion US dollars, taking into consideration all currencies in different countries.

Q: How is money created through fractional reserve banking?

Fractional reserve banking allows banks to lend out more money than they actually have in reserves. For example, if someone deposits 5 pounds, the bank can lend out 3 pounds to someone else, resulting in the creation of new money.

Q: What are the different categories of the global money supply?

The global money supply includes M1, which represents physical currencies and money in checking accounts, M2, which includes savings accounts and CDs under a hundred thousand dollars, and M3, which is the broadest definition and includes all currencies, banknotes, coins, checking accounts, savings accounts, small CDs, and long-time deposits.

Q: How can fiat money lose its value?

The value of fiat money is dependent on everyone believing in its value. If the authority behind the fiat money is erased, such as through force or invasion, the value of the money can be diminished.

Summary & Key Takeaways

• There is an average of 55 turnovers of currency on Earth per year, and statistically, out of every 100 pieces of currency in the United States, one is likely touched by someone who will commit murder within the next year.

• The total amount of physical currency on Earth (M0) is estimated to be slightly over 5 trillion US dollars, representing less than 10% of the money available for immediate spending.

• Money can be "born" through central banks or fractional reserve banking, and the global money supply (M3) is equivalent to 75 trillion US dollars.