News Money / Person Ratio

1. May 16, 2005

Dooga Blackrazor

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. May 16, 2005

Staff: Mentor

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. http://www.j-bradford-delong.net/TCEH/1998_Draft/World_GDP/Estimating_World_GDP.html site provides some discussion on the topic and gives a value of about $6,500 (1990$$). Last edited by a moderator: Apr 21, 2017 3. May 16, 2005 Dooga Blackrazor 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?

4. May 16, 2005

Staff: Mentor

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.

5. May 16, 2005

ray b

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

6. May 16, 2005

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. 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 7. May 30, 2005 Big Papa 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.

8. May 30, 2005

Art

I can't wait for my turn to perform brain surgery. :-)

9. May 30, 2005

Staff: Mentor

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.

10. May 30, 2005

Art

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.

11. May 30, 2005

sid_galt

More like 0.01\$. Production under capitalism is not equal to production under communism.

12. May 30, 2005

Staff: Mentor

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.

13. May 31, 2005

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 [Broken]

Last edited by a moderator: May 2, 2017
14. May 31, 2005

Staff: Mentor

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.

15. May 31, 2005

16. May 31, 2005

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
17. May 31, 2005

Staff: Mentor

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
18. May 31, 2005

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.)

19. May 31, 2005

Burnsys

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........
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"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.
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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.

20. May 31, 2005

gravenewworld

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.

21. May 31, 2005

gravenewworld

I also just noticed that you are from argentina. i don't know how your economy is structured and whether or not you have a central banking system independent of the government. Countries with central banks controlled by their governments have a long history of failure and high inflation. It may be the case in countries where the central bank is not independent of the government that private banks may have too much influence over the supply of money.

22. May 31, 2005

Staff: Mentor

Well, I don't like calling it a "tax" because that implies that the government is taking the money. There was someone in here a few months ago that thought that the government really did profit from inflation, and it doesn't. Wealth lost to inflation just plain ceases to exist.

The other way to look at it though is the motivation angle, which you also mentioned - inflation really does motivate spending and investing, partly in a real way (people calculate what they need to do), but also partly just psychologically.

The main benefit from inflation for government is the lowering of the value of its outstanding loans.
Interesting way of looking at it, but I don't like characterizing investing as an us-vs-them game because in general, it isn't.
In fact, your not investing doesn't help other investors, it hurts them - it makes their investments less successful.

Last edited: May 31, 2005
23. May 31, 2005

Staff: Mentor

That's a matter of opinion and one that varies from one country to the next. In the US, strict controls, mostly put in place due to the great depression, keep banks in check. But there are still problems (the S&L scandal of the '80s)
Again, this may vary from country to country, but in the US, only the Federal Reserve, directed by the government, can print and distribute money.
Now, I'm not sure what you mean by that. Banks don't hand out money - that wouldn't be profitable, would it? I get paid by my boss and I deposit the money in a bank - the bank doesn't give me money. A bank has no control over the distribution of wealth in a country.
I'm not sure why you have a problem with that. that's capitalism and it works.
Sounds simple enough.... but wait - how do you just "create the money"? As my mother used to tell me, money doesn't grow on trees. The government can't just print money, hand it out, and expect it to be worth something.

Burnsys, its no wonder you have such a problem with capitalism - you're operating under some flawed assumptions that people pick up from a cursory examination of communism. Those "wouldn't-it-be-great-if's" that sound nice but don't work in reality. Just ask a Russian if the government can successfully control an economy in the way you suggest.

Economics, Burnsys, is driven by the consumer, not the producer or the government.
Again - how do you just "create the money"? The reality is that the labor is still there, but if no one can buy the car, there is no point in building it.

The great depression happened largely because of a stock market bubble and related economic factors (too many loans).
That's true, but judging from what you said above, I think you misunderstand what that means. If a bank starts handing out money that isn't going to be paid back, then the bank fails. Again: see The Great Depression.

Also, that's different from "creaing the money" - that money still has to come from somewhere.
No offense, but most of the western world is doing just fine the way it is. Countries that aren't need to fix their systems by adopting ours.

RE: Reginald McKenna - a Google reveals that he died in 1943. His opinion on the matter is therefore, irrelevant. What he said was probably true of the conditions that led to the Great Depression, but is not true anymore.

edit: Ironically, this takes us all the way from one extreme to the other: from using precious metals for currency to just printing and distributing it willy-nilly. Even more ironic is that neither work: the economy is going to do its own thing either way.

Take the gold standard, for example. What's the main argument for it? That gold is "worth something". But wait - gold is a commodity - and if you use it as a currency, it takes on a value dictated by the market, same as paper money. So how does that really help you?

Then the other side is just printing money and handing it out. But then what? The fears of the gold-standard people are realized: it really does become worthless.

Last edited: May 31, 2005
24. May 31, 2005

Burnsys

Yes we had a peculiar situation with banks over here, our central bank is a part of the goverment but it takes it's own decitions.. anyway every central banker we had was an agent of private banks, for example:

Presidents of the argentina central bank:

Alfonso Prat Gray JP Morgan chief economist
Mr. Mario Blejer 20 years working in the imf and now director of the bank if england
Jose Luis Machinea Now working for the imf
Domingo Cavallo Memeber of the trilateral comision
Roque Maccarone Ex director of various private banks.
etc...

Anyway private bank has a lot of influence over the supply of money, the Central bank or the fed can't give loans to common people nor corporations, are private banks the one who "Distribute" the money (correct me if i am wrong) so they decide who get wich part of the pie.....
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Thomas Jefferson: I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the government at defiance. The issuing power should be taken from the banks and restored to the people to whom it properly belongs.

Famous Sir Josiah Stamp (President of the Bank of England in the 1920's) Quote:
"Banking was conceived in iniquity and was born in sin. The Bankers own the earth. Take it away from them, but leave them the power to create deposits,
and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine
will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of Bankers and pay the cost of your own slavery, let them continue to create deposits "

25. Jun 1, 2005

Burnsys

Last edited by a moderator: Apr 21, 2017