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. But how much cash, how much physical currency is there on earth? First things first, how much cash is inside of bank? Well, according to the FBI, the average successful bank robbery involves 10,000 dollars.
But that’s usually just currency from the tellers tills.
In their vaults, the average bank might have anywhere from 10,000 dollars to a 100,000 dollars with some larger banks at times carrying as much as a few million in cash.
But what about in our homes? How much loose change do we all have scattered on dressers or lost under cushions? Well, it’s tough to accurately figure out the exact number and many of the estimates vary. Last year, Lloyds TSB announced that in the UK the average person has about £14.
15 just lying around.
A recent survey by VISA looked at a bunch of countries and included cash left at home, the office, and in the car.
Their figures are a tad higher, but agree with the US Treasury’s estimate of few years ago that the typical US household has $90 to a $100 just laying around, which means that if just everyone in America scrounged up all of their loose change and put in one place, they would have 15 billion dollars. That’s enough to fund 357 more seasons of Arrested Development.
But we are asking about how much cash there is on the entire planet.
Well, that amount has a special name.It is called M0.
It’s an aggregate of all coins and banknotes.
DollarDays.Org most recent estimate values this total amount, considering all currencies in countries, at just slightly over the equivalent of 5 trillion US dollars.
That number, the value of all of the currency on Earth, M0, is huge.
But believe it or not, it represents less than 10 percent of all of the money we humans have available to spend right away.
To explain, we should look at how money is born. In pretty much every country on Earth, one of the ways new money can be born involves a central bank. Now, let’s say that in our country the bank is run by John. He’s really smart and he pays close attention to our economy.
If he feels that an increase of the money supply would help us, well, he can just make more money. It’s that easy.It doesn’t need to be printed as currency to be born.
The next step involves the commercial banks, like the Bank of Booma. These are the banks that you and I use. All the central bank needs to do is buy some things from these banks using the money it just made and now the commercial banks have more money.
There’s another way money can be born.
It involves commercial banks and gets to the heart of our question.