Money: how much of it is around?
It is not, in my opinion, going to last. But before we keep or get rid of money, we should at least be able to imagine it.
I have my own views on money, some of them are quite controversial — my best friends have told me I am wrong, wrong, wrong. But even they are fascinated when I make them contemplate what we mean when we talk about very large sums of cash — something we do nonchalantly every day.
Now I want try it on you: let us say you ask some random person: “How much money do you have, how much are you currently worth?” There is a chance that he will pull out a credit card and say: “Actually I am in debt, I owe $6000;” or he’ll say: “I have assets but also a mortgage that is twice as much.”
On the other hand our friend may have positive assets, in total perhaps 10,000 dollars. If he puts everything into a stack of $100-dollar bills he could easily store it in his coat or pant pocket, and carry it around with him wherever he goes.
Now let us assume the person happens to be fairly successful in life. He has a good job, a nice house and great savings. Let us say he and his family are worth a million dollars. In 100-dollar bills, he could fit this amount into a duffel bag. It weighs just over 22 pounds. He could easily carry it around or transport it in the booth of his car. At home he could stack his entire fortune on a coffee table.
What the man in this image is standing next to is a pile of one million 100-dollar bills. This amount, a hundred million dollars, will allow him and his family to live the rest of their life in great comfort, in a luxurious house, with beautiful holiday trips, extravagant meals in the best restaurants, the best college education for the kid, expensive hobbies. His fortune, in cash, weighs over a ton and would require a fork lift to heave it into a pick-up truck. If he used the entire 100 million dollars to buy gold, the man would have a cube about half a meter (just under 20 inches) in size. But he would need stronger equipment to move it — the cube would weigh around four tons. The above image, like others on this page, were crafted by Demonocracy.info.
An aside: you might be interested to know that, in his heyday, the infamous head of the Medellin Cartel, Pablo Escobar, earned 100 million dollars in cash in just one and a half years. No, wait, let me correct that: Escobar earned that in one and a half days. I have written about the problem of the gargantuan all-destroying drug economy in my article Dealing with drugs — what must be done.
Before I continue I need to tell you about a linguistic idiosyncrasy I often have to wrestle with. The next very large number, in English, is a billion, which is one thousand millions — mathematically 1,000,000,000 or 10⁹. That is what it is called in the so-called “short scale notation.” In the European — and especially German — “long scale” nomenclature we call the number a “Milliarde,” or sometimes simply a “thousand million.” And after that, everything is misaligned: a trillion in the short scale is a billion in the long scale. Both denote 10¹² or 1,000,000,000,000. After that multiplying each number by a thousand gives you, in the short scale, trillions, quadrillions, quintillions, sextillions and septillions; while in long scale it is billion, thousand billion (or billiard), trillion, thousand trillion (trilliard) and quadrillion.
Now that we have got that out of the way, we can proceed to a first really big number (in short scale notation) that we nowadays keep hearing: a billion dollars. Some people earn and possess that much, and I have written about it as well: How I did not become a billionaire.
Occasionally being a billionaire is the result of inflation: I was once given five hundred billion Yugoslavian dinars by a friend, which had been only worth a few hundred dollars when it was still a valid currency. The article I wrote about that was entitled The world’s poorest billionaires.
But what about real dollar billionaires? What does their wealth look like, stacked in 100-dollar bills? Let me (actually Demonocracy) show you:
There are currently around 2,600 billionaires in the world today, people who have to shoulder the burden of owning these kinds of assets. A quarter of them are in the USA — over 700 — and their total wealth exceeds that of the billionaires of the next eight wealthiest countries. The billionaires in China, Germany, Russia, the U.K., etc. have a combined total of $2.9 trillion, while U.S. billionaires have over $3 trillion.
Which brings us to the T-number. What does a trillion dollars in 100-dollar bills look like?
Here’s $1,000,000,000,000 stored in an area which you should compare to the green standard-sized American football field in the background, with one of the world’s biggest transcontinental airliners, the Boeing 747-400, standing on it. To further frighten you, the ruthless creators of the image have placed the White House, with both wings, to the right. The twenty-wheel pickup truck in the front puts things into additional perspective.
A trillion dollars is not just some theoretical sum. Maybe no single person owns that much money, but last year Apple became the first company to cross the $1 trillion mark in market capitalization. That is more than the GDP of Argentina, Holland or Turkey. It is also more than the US spent, in current value dollars, for the whole of World War I, or for any of the wars in Korea, Vietnam, the Persian Gulf, Afghanistan or Iraq.
And in the meantime Apple is not even the biggest. Last week Saudi Arabia’s Aramco launched the world’s largest initial public offering and is now valued at two trillion dollars. That’s twice what you see above.
So far we have been talking physical money in circulation. In the USA that amount is close to two trillion dollars, in Federal notes and coins. You can check the individual numbers here. I believe they will never go substantially higher, as money moves from physical reality to electronic transaction. We can see it happening today.
My friend Kenneth Rogoff, a well-known and respected Professor of Economics at Harvard University, told us in a lecture a few years ago that the world is drowning in cash, something that makes us poorer and less safe. In his book, The Curse of Cash, Ken says that we need to get rid of most paper money — definitely all $100 and higher banknotes (small-denomination bills and coins can stay in circulation indefinitely). You can read the reasons he gives and other details in my article Ken Rogoff and the Curse of Cash.
Now even if there are two trillion dollars of physical money floating around, as stated above, the amount of virtual money in circulation is far higher. Let us take a look at the budget of the US. The 2019 Budget, submitted in February 2018, requested $3.4 trillion, with the intention of spending $4.4 trillion — which meant the government had to borrow a cool trillion to meet deadlines and pay its bills in one fiscal year. The 1-trillion image above, with the 747 and the truck, shows graphically how much the US is borrowing, and will have to pay back (or default) this year. If that is not enough to give you nightmares let me tell you what the total debt of the USA currently is: over twenty trillion dollars. Allow me to show you what that looks like:
“The 20+ trillion debt ceiling the USA has reached” is the title of this graphic taken from Demonocracy, which aptly comments: “The Statue of Liberty seems rather worried as the United States national debt is soon to pass 20% of the entire world’s combined economy.” Here’s a nice video illustrating the proportions of very large sums of money. And if you are masochistic and want to see the debt progress in real time, you can do so here:
Now this is certainly not what the founding fathers intended. Here are a couple of quotes from them:
“I place economy among the first and most important virtues, and public debt as the greatest of dangers to be feared.” — Thomas Jefferson
“If ever again our nation stumbles upon unfunded paper, it shall surely be like death to our body politic. This country will crash.” — George Washington”
I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.” — Thomas Jefferson
“If the American people ever allow private banks to control the issue of their currency, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered.” — Thomas Jefferson
“All the perplexities, confusion and distress in America arise not from defects in the Constitution or Confederation, so much as from downright ignorance of the nature of coin, credit and circulation.” — John Adams, at the Constitutional Convention (1787)
“It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world.” — Thomas Jefferson
I have my own thoughts on this, but I will leave it for another time.
