I'm rather proud of it, because I did something that to the best of my knowledge had never been done before. I added up the Money supplies in every country in the world, using information that I was able to download from a very useful site called Trading Economics, and used that data to show that the current debt-based money system is truly unworkable.
Trading Economics provides tables for the four main measures of money supply for every country for which the information is available. You can find M0 which basically includes all cash, notes and coins. There is also M1, which includes M0 plus the balance of all deposit accounts which can be instantly converted into cash of equal value. Then there is M2, which is M1 plus all other depositor accounts that can be readily (within 30 days) converted to physical cash of equal value (known as "near-cash"). Finally, there is M3, which includes M2 plus other investment instruments that can be converted into cash, but may have even larger restrictions on the delays for convertion.
Five years ago, I found that by taking the numbers for all the countries in the database, using M3 wherever possible, and M2 if not, and converting the numbers into dollars using the current exchange rates, the total came to $78.8 trillion. I was struck that this number was much smaller than the total amount of debt, which at the time stood at $199 trillion. Debt was 2.5 times larger than the amount of money. I concluded that it would actually be impossible to pay off the debt, even if every single bit of money in the system was collected together and used to try and pay off that debt. So much for the idea that countries could get out of debt by imposing austerity on their citizens.
It appears that I wasn't the only person to find the numbers interesting. That piece is one of the most widely viewed on my blog, with over 10500 views.
Since I'm currently stuck at home because of the corona virus pandemic, I thought I would take the opportunity to do the numbers again.
So, I repeated the excercise. You can find all the gory details of how I did the numbers on a public Google Sheet that you can find here. You will find separate sheets for M0, M1, M2, M3. There's another where I put all of them together (that allows you see that Trading Economics is missing quite a few numbers for particular countries). Then there is the sheet where I have converted all the numbers from local currencies to US dollars using today's data from another very useful site - the XE Currency Convertor site that appears to be able to provide a number for every currency on the planet.
As an illustration, here are the numbers for the biggest countries (those with Money supplies of $300 billion or more). And I give the overall figures for the other 102 countries as well.
The biggest economies are China, followed by the United States and Japan who take gold, silver and bronze. And then from #5 you find Germany, the UK, South Korea, and France, which seems reasonable. But the country at #4 seems like it must be an error. Could Venezuela really be the country with the 4th largest money supply? Apparently, the numbers are correct, so clearly there are some strange things going on here.
The bottom line is that adding all the numbers together produces a total for the global money supply of over $102 trillion ($102,274,383,341,064 to be precise). That's up over $20 trillion since I last looked in 2015. But, as I commented recently, Global Debt has also soared. According to the Institute of International Finance's Global Debt Monitor in January of this year, debt reached nearly $253 trillion in Q3 2019, as shown in theis figure.
And that means that the ratio of debt to money supply is almost exactly the same as it was five years ago - very nearly 2.5 to 1.
I suppose that you could say that the situation hasn't got any worse. But the fact is that with 20% more debt (coupled with 20% more money supply), there is even more interest to pay. Let's assume that the average interest rate on global debt is about 2.5% a year. That would means that we (the people living on our planet) have to cough up over $6 trillion a year just to keep the system going. Who benefits from those interest payments? I'll let you work that one out. But I think that you can be sure that it's not 99% of the population.
As you may be aware, it doesn't have to be this way. Create money debt free by Central Banks and you can pay off the debt and change our planet for the better. As I said a couple of days ago, the UK is no longer constrained by the Lisbon Treaty. Boris Johnson's government could, if they wished, decide to change the system so that the Bank of England could create money directly, debt free, and pump it into the economy to cope with the Corona Virus pandemic.
It could be the start of a real revolution that would bring the current, unworkable, system to an end.
Added 27/03/2020 : Here are some other discussions on global debt
- Reuters: Global debt shattering records : IIF
- CNN: The world is drowning in debt
- CNBC : Is a global debt crisis coming?
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