How much money is in the world (in US currency)?

Question

How much money is in the world (in US currency)?

Answer

If you took all the bills and coins floating around today in the world and added them all up, how much money would you have? All of that hard and easily liquidated currency is known as the M0 money supply. This includes the bills and coins in people’s pockets and mattresses, the money on hand in bank vaults and all of the deposits those banks have at reserve banks . According to theFederal Reserve, there was $1.2 trillion in the M0 supply stream as of July 2013 . That sounds like an incredible amount, but think about it this way: According to the CIA, there were 316,668,567 Americans alive that month . If you took all the cash and divided it up equally, each person should have about $3,800 in cash on them (or stuffed under the mattress). Obviously, there’s some money missing, but there’s an easy explanation for that: The Federal Reserve says that at any given time, between one-half and two-thirds of the M0 money stock of U.S. dollars is held overseas .

The rest of the money is in bankaccounts of various types, and the Federal Reserve has tracked these funds in three different values known as the M1, M2 and M3 money supplies. (M3 has since been dropped. More on that below.)

M1 represents all of the currency in the M0 money supply, plus all of the money held in checking accounts and other checkable accounts, as well as all of the money in travelers’ checks. In June 2013, the M1 money supply for U.S. dollars equaled about $2.5 trillion .

M2 is the M1 supply, plus all of the money held in money market funds, savings accounts and CDs under $100,000. In June 2013, the M2 money supply was about $10.5 trillion .

M3 is M2 plus larger CDs. As of March 2006, the Fed stopped tracking the M3 money stock as an economic indicator because it felt it did not add any information on economic activity that was not already available from M2 [sources: Federal Reserve, Federal Reserve Bank of New York].

All told, anyone looking for all of the U.S. dollars in the world in July 2013 could expect to find approximately $10.5 trillion in existence, using the M2 money supply definition. If you just want to count actual notes and coins, there are about U.S. $1.2 trillion floating around the globe.

Even though the Fed can’t say precisely where all the U.S. dollars are in the world, it does try to keep track of how much exists. Find out why it’s so difficult to track exactly how much money exists in the world on the next page.

Source: http://money.howstuffworks.com/how-much-money-is-in-the-world.htm

Why did this come up

Watching ‘Secret Lives’

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