i’m just going through some basic financial philosophy discussions and i’m just trying to clarify the basics.

how much money is there in total, in the world?

up until yesterday i had assumed that the total amount of money in the world is zero ($0) because what one person has in bank account, another person has in debt at the same time, since money is literally nothing else than a codified form of debt.

now i’m wondering, is this even accurate? if a big bank takes out a loan from the central bank, say, it takes $1B in loan, then it has $1B in money on the account but also $1B in liability at the same time, so the sum is zero. However, there is an interest on the loan, let’s say 2%. Then the bank owes $1.02B actually, while only having $1B on the account. So the total amount isn’t zero, it’s negative. Is this correct?

  • Aniki@feddit.orgOP
    1·
    23 hours ago

    yeah i’m actually asking not so much with inflation in mind, more out of general interest into how things work. i’m just trying to understand the distribution of money and wealth throughout the world, for which it would help to understand the total sum of all money, and of all wealth (which is not the same!) in the first place.

    money and wealth is not the same btw. by money i mean money issued by the central bank (i.e. USD) while wealth is the sum of all assets, which can include ownership of land and real estate, for example.

    i suspect that the total amount of money in the world is close to zero, because what the central bank gives out in loans, becomes liabilities to the loan holder to pay back, so the sum of money + liability is zero. since you (at least formally) have to pay back what you took out as loan. meanwhile the amount of total wealth in the world is larger than zero, because the amount of total real estate in the world is larger than zero. so these two terms are not the same at all.

    • CapuccinoCoretto@lemmy.world
      2·
      23 hours ago

      sum of money + liability is zero

      Not everywhere practices the same forms of loaning money into existance, plus quantitative easing/tightening.

      Do you consider gold money?

        • LwL@lemmy.world
          1·
          8 hours ago

          Money is fundamentally made up. It’s whatever the other party is willing to accept as a token that they trust will in turn be accepted by someone else they want a service or item from. Fiat currency just has its backing from being used in transactions with the state.

          It also follows that the total value of global money is entirely dependent on people’s trust in it. The nominal value of global money supply, whether it is 1 quintillion USD or 100 trillion USD, doesn’t directly affect the worth I, or anyone else, ascribe to having 1 USD myself. It’s the things that I perceive myself to be able to trade that 1 USD for that do.

          What I’m trying to say is that the philosophical idea you’re looking for might be more along the lines of “how much of their own resources (time and belongings) is the combined global populace willing to trade for a promise of trading it for someone else’s resources in the future”.