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Money / Person Ratio

  1. May 16, 2005 #1
    If the world's supply of money was divided equally amongst all people, how much money would each person have? Does anyone know the answer?
     
  2. jcsd
  3. May 16, 2005 #2

    russ_watters

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    It depends on what you mean. The actual amount of cash in circulation is far below the actual amout of wealth available. Most developed countries don't even run on cash money anymore anyway - in the US, there is only about $400 Billion in circulation, yet our anual GDP (total quantity of goods and services traded) is about $10 trillion.

    So, the best, most relevant way of expressing it I can think of is the global per capita GDP. THIS site provides some discussion on the topic and gives a value of about $6,500 (1990 $$).
     
  4. May 16, 2005 #3
    So if we had a Communist Government throughout the world each person would have about $6,500 - and that is without government programs such as health care?
     
  5. May 16, 2005 #4

    russ_watters

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    No, GDP includes all government expenditures already. Remember, government only has as much money as we give it. While it can literally manufacture money, that money has no real value.
     
  6. May 16, 2005 #5
    GDP is G=GROSS
    and you can't divide GROSS equaly
    now net could be divided

    but as any one with movie points knows
    THERE IS NO NET

    or in real world terms 6,500.00 gross = 1.25 or less net

    or after you buy the world a coke
    there ain't much left
     
  7. May 16, 2005 #6

    russ_watters

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    ray, that's utter nonsense. But speaking of Coke, the US alone consumes enough coke every year to provide eighteen to every person on earth, at a cost of $10.66. :biggrin:

    http://www.ediets.com/news/article.cfm/cmi_454368/cid_1

    (that's 14 billion gallons times 8 pints per gallon divided by 6 billion people)
     
    Last edited: May 16, 2005
  8. May 30, 2005 #7
    lawful Money Vs. monopoly money.

    Lawful Money is gold and Silver only. paper ins not lawful money when it says U.S. Federal Reserve. It has to say U.S. Treasury to be backed by gold and silver. If you look real hard you will find $2 bills printed in 1963 that say U.S. treasury. Federal Reserve notes are Debt. Ever since 1933 the U.s. Geovernment has declared Bankruptcy and borrowed money from the the Federal Reserve. Te Federal REserve is a private for profit corporation with stockholders who make upwards of a billion dollars pero year.The Federal Reserve notes floating around represetn debt, or borrowed money. Borrowed money has to be paid back.

    When the U.S. Government created new Bills to foil counterfitters, they did not take the same amount of money out of Circulation. When U.S. Military personnel are paid overseas, if thier money is put under a special light to tell if the money is real or not, alot of times it shows up fake. Basically, the united States is Counterfitting it's own money. If they used coins, which is alot harder to counterfit then that would be a different story.

    So the solution is not to give every one in the world an equal amount of money. The solution is to have people work in exchage for solid goods or services without using money. Study ho the non-violent Anarchists did this during the spanish civil war of the 1930's. Aquick example would be this: One day a bus driver threw up his hands and pulled his bus over and waled off the job. Another man, a passenger, got up and drove the bus until his stop. Then another passenger did the same. Now I don't think they were talking big huge buses as opposed to the smaller ones.
     
  9. May 30, 2005 #8

    Art

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    I can't wait for my turn to perform brain surgery. :-)
     
  10. May 30, 2005 #9

    russ_watters

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    Wait, you think US military are paid in cash? Have you ever considered how rediculous that would be? C'mon, apply some critical thinking to this conspiracy theory - don't just accept it.

    Jeez, where do people come up with this crap?

    And conspiracy theory aside, the gold (silver) standard was abandoned for the very reason of what we are discussing in this thread: the quanity of wealth available increases -- but the quantity of gold and silver is finite. That creates a real problem: it stifles economic growth.
     
  11. May 30, 2005 #10

    Art

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    Gold has no set intrinsic value so if wealth increases and the supply of gold remains the same then the value of gold increases. So this is not a reason for abandoning the gold standard.
     
  12. May 30, 2005 #11
    More like 0.01$. Production under capitalism is not equal to production under communism.
     
  13. May 30, 2005 #12

    russ_watters

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    No, it is a reason for abandoning the gold standard because what you are describing is deflation and it is economic disaster. Deflation means the price of goods decreases with time. As a result, people don't spend as much because if they wait, things will be cheaper later. Economic activity slows down. Corporations' profits will decrease with time and employees will have to be paid less. There are other effects as well.

    A healthy economy requires inflation.
     
  14. May 31, 2005 #13
    Deflation theories vs. semiconductor-industry realities

    In the period 1960-2000, the world semiconductor industry experienced a compound annual growth rate (CAGR) of 14.9%. Yet, the world semiconductor industry experienced price deflation over that period.
    http://www.icknowledge.com/our_products/2005ICEconomics2.pdf
     
  15. May 31, 2005 #14

    russ_watters

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    The semiconductor industry is a single industry/market, not a national economy. Further, it is a very unique market, characterized by vast improvements in technology. As a result, its fast economic growth rate (now slowing) can support a deflationary market.
     
  16. May 31, 2005 #15
  17. May 31, 2005 #16
    You said deflation is harmful because, "As a result, people don't spend as much because if they wait, things will be cheaper later. Economic activity slows down." Apparently that is not the case, and that the harm that can come from deflation comes through lenders refusing to charge negative interest. When lenders charge zero interest, the price of borrowing is equal to the deflation rate -- 10% in the case of the U.S. in the early 1930's. 10% is an outrageous real interest rate, so businesses don't borrow and lenders get rich holding onto their capital.

    It would seem that inflation lights a fire under people's capital, encouraging them to invest it. In a deflationary economy, there is less impetus to invest. The money grows all by itself.
     
    Last edited: May 31, 2005
  18. May 31, 2005 #17

    russ_watters

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    edit: that was in response to the article - didn't see your second post.

    I'm not exactly an expert on this, but from what I understand, that's [the banking issue] what causes the "deflationary spiral" - the inability of the economy to recover from the recession induced by the deflation. If people can't borrow money, they can't build/buy things to jump-start the economy. Japan's long term, severe economic problems are a good example.

    Good article.
    Well, the banking issue keeps deflation going (the downward spiral), but what really hurts is the recession itself. You might be annoyed at not being able to get a loan to buy a house, but the guy who really gets nailed is the carpenter who loses his job because he isn't building it. Minor point of semantics though.
     
    Last edited: May 31, 2005
  19. May 31, 2005 #18
    Well, I was skeptical of your "deflation is harmful" thesis, but now that I have thought about it more it seems to me you are, on the whole, correct. Perhaps we can think of inflation as an extremely discrete and effective way to tax people's money stashes. With constant inflation, people are being taxed for the "sin" of holding onto money instead of using it to seed and fertilize enterprise.

    So inflation acts as a sort of very clever "sin tax" -- commit the sin of non-investment of your money-stash and you get taxed, with no way to cheat the taxman. (And where does your taxed money go? It goes into successful investors' pockets in the form of increased purchasing power relative to yours.)
     
  20. May 31, 2005 #19
    I think banks as private institutions has to much power in society and the hability to create money out of air when they want. Also they decide how the money is distributed along society. how much to middle class, how much to the bottom, and to top.... The problem is they are PRIVATE banks. people with the same rights like you and me........
    -----------------------------------------------------
    About Deflation:

    "There are four things that must be available for paid work to take place:

    The work to be done.
    The materials to do the work.
    The labor to do the work.
    The money to pay for the work to be done.
    If any of those four things are missing, no paid work can take place. It is a naturally self-regulating system. If there is work to be done, and the material is available and the labour willing, all we have to do is create the money. Quite simple."

    "Ask yourself why it was that depressions happened. All that went missing from the community was the money to buy goods and services. The labour was still available. The work to be done was still there. The materials had not disappeared, and the goods were readily available in the shops, or could be produced but for the want of money.
    ------------------------------------------------
    Encyclopaedia Britannica, 14th Edition - "Banks create credit. It is a mistake to suppose that bank credit is created to any extent by the payment of money into the banks. A loan made by a bank is a clear addition to the amount of money in the community."

    Mr Reginald McKenna, when Chairman of the Midland Bank in London - "I am afraid that ordinary citizens will not like to be told that the banks can, and do, create and destroy money. And they who control the credit of the nation direct the policy of governments, and hold in the hollow of their hands the destiny of the people.

    None of our problems will disappear until we correct the creation, supply and circulation of money. Once the money problem is solved, everything else will fall into place.
     
  21. May 31, 2005 #20
    it depends on whether or not you are a keynsian or classical economist. both have different views on whether or not banks have any control at all on the supply of money. I would say the FED by far has more control on the supply of money than banks. THe FED can influence the supply of money by altering the required reserve ratios at banks, open market activities, changing the federal funds rate etc. these are extremely powerful tools the FED has over the supply of money.
     
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