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1 Trillion dollars $$$

August 2, 2011

In the 1997, Austin Powers film, the bad-guy, Dr evil and his second in charge had this memorable exchange about the demand they should request in exchange for not destroying the world :

Dr. Evil: …….We get the warhead and we hold the world ransom for… ONE MILLION DOLLARS!
Number Two: Don’t you think we should ask for *more* than a million dollars? A million dollars isn’t exactly a lot of money these days. Virtucon alone makes over 9 billion dollars a year!
Dr. Evil: Really? That’s a lot of money.
[pause]
Dr. Evil: Okay then, we hold the world ransom for…
Dr. Evil: One… Hundred… BILLION DOLLARS!

These days even the One hundred Billion dollars doesn’t appear a lot when we hear the US discussing how to cut trillions of dollars of spending from its budget over the next decade. In ether case it’s difficult for most people to comprehend how much money all that is.

There is a number of websites that give you a visual representation of how much a trillion dollars would look like, if it’s stacked-up with $100 bills.

One such site is http://www.pagetutor.com/trillion/index.html

1 Trillion dollars in $100 dollar bills stacked next to a person

It illustrates how much room a given amount of money would take-up. It starts with a packet of $10,000 then a million & progressively increases in size to 100 million, a billion, and then finally a trillion. Using a person (bottom left corner) as a reference makes it clearer to see just how large these sums are.

I was curious to find out how much money there is in circulation in the US & Australia. When I was doing my Googling research, I realised that the way money is measured is more complex than I thought. That’s also evident by the quote of Alan Greenspan , the former head of the US Federal Reserve who said, “We don’t know what money is, any more.”

What I learn was that money is measured in an inverted pyramid-like way, with the most liquid (easily accessed) money being on the bottom, what people consider as physical currency and building up to a greater and greater volume as you count all the other types of money such as cheque accounts, savings accounts and term deposits etc.

Anyway according to this site in July 2009 the US had $908.6 billion dollars in currency. Currency defined as “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”.

To my surprise that figure was smaller than the trillion dollars that is shown in the previous picture, but it is close. The other interesting fact the site points out; if the money is divided equally among all US citizens it equates to only around $3000 dollars per person, but according to the Federal Reserve, of that currency about ½ to 2/3 of that is somewhere overseas.

The physical currency (blue) is rather small compared to the total amount of US money in existence. Which was $8.3 trillion as of July 2009 (blue + green + red). See the chart.

So how about Australia? How much physical cash is floating around. I was also curious to know, so I looked around. Here’s a chart, which is a bit old, but still gives an indication. The vermilion coloured line at the bottom of the chart is how much physical Australian currency there is (AU$39.4 billion as at February 2008 ) in existence, which seems tiny compared to the other forms of money that is classified as M1 (currency + bank current deposits) & M3 (currency + bank current deposits + other deposits)

A good explanation how to read the chart is found HERE. But the take away is that the amount of currency Australia has floating around in pockets is tiny compared to the overall money that exists in Australia which is over a trillion dollars.

Its not surprising considering these days more often we use electronic money rather than cash. Personally I only carry maximum $50 dollars on me, at any one time, having all my money in an electronic offset account, and a couple of hundred in the bank account if I need to withdraw some.

References:

Types of money explained

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

Money supply

http://en.wikipedia.org/wiki/Money_supply

http://cij.inspiriting.com/?tag=m1

One trillion dollars

http://www.pagetutor.com/trillion/index.html

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One Comment leave one →
  1. April 5, 2012 6:04 pm

    MY THIRDPARTY MONEY

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