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?
Not everywhere practices the same forms of loaning money into existance, plus quantitative easing/tightening.
Do you consider gold money?
no, i mean in today’s money system.
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”.
It is considered by many to be harder currency than currency, even today.