How much money is there?

Discussion in 'Markets & Economies' started by Miksture, Jun 6, 2018.

  1. Miksture

    Miksture Active Member Silver Stacker

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    There was approximately $1.63 trillion USD in circulation as of March 21, 2018, of which $1.59 trillion was in Federal Reserve notes. https://www.federalreserve.gov/faqs/currency_12773.htm . If all loans are based off reserves of physical cash, 1.63 trillion seems a bit small considering the population is 325 million. That would equate to only $5,015 for every man woman and child.

    Does the US government issue currency in any other form? Ie can banks loan electronic money against bonds or some other mechanism? I thought bonds were debts that offest the issue of currency?

    Can anyone clarify this for me?
     
  2. bordsilver

    bordsilver Well-Known Member Silver Stacker

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    There's a fair bit of debate about what is the level of true currency supply. With a fractional reserve banking system supported by a central bank, physical notes are generally regarded as only a small component of the total money supply and need to add in "money substitutes" - that is things that are exchanged to buy goods and services as though physical cash was exchanged (but really it was an electronic transfer from people's demand deposits or travellers cheques etc.). Recent figures I have seen indicate a true USD money supply of just over 12 trillion (of which around 10% is physical printed currency).
     
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  3. Miksture

    Miksture Active Member Silver Stacker

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    There has to be a mechanism for the Accounting of electronic money through banks otherwise banks would lend money they are not entitled to. Something to validate that the numbers are backed by some entitlement.?
     
  4. Ipv6Ready

    Ipv6Ready Well-Known Member Silver Stacker

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    There are definite calculations of money supply.

    You just need to look it up, each bank can definitely state they have x dollars in currency in deposits and y dollars out in loans. If they couldn’t do this, wouldn’t be banks.

    The reserve will know how much money they have printed or minted and replaced etc.

    Money would be very much easier to figure out than actual tradeable gold in a country.
     
  5. bordsilver

    bordsilver Well-Known Member Silver Stacker

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    M2 is a common go to measure of money supply which includes the bank deposits (easily found via google).
    TMS (or true money supply) is a slightly different measure that is argued to be more accurate but unfortunately hasn't had as many people producing the relevant time series (although it can be calculated fairly closely from publically available data from the US Fed. etc.). A complication is that the exact definition of TMS has differed slightly by different authors.
     
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