This post inspired by: There Are Five Times More Claims On Dollars As Dollars In Existence by Tyler Durden, published on Zero Hedge.
If you see this headline somewhere, and you may spend a lifetime looking to find it anywhere else, please know that it refers only to US dollars. This means that every US dollar that you come across anywhere, in a wallet, on a screen, in a newspaper article, caught on a tree, in your bank statement, then there are five different hands holding on to it with the same mistaken thought as you ie. that it is their very own dollar. How will that end up I wonder?
But, get this. I recently calculated and wrote up on Facebook the fact that in terms of worldwide available money, then for each single dollar’s value there are actually 40 different hands grasping and claiming ownership of that dollar. That is a problem of entirely different dimensions.
The post was based on the huge stock market losses almost a month ago now on September 8, and I repeat it here:
So, the global markets have lost 12.8 trillion dollars in around 2 months. Big deal? Well, yes, it is a big deal, even though it is not real money. Our whole society is built on debt. Over $200 trillion of it ($199Tr Q2 2014; 5.3% compound growth; Debt and (not much) deleveraging).
So, $12.8Tr is just a smidgen of total debt. But some part of our global society must be missing that loss; it is after all not a small insignificant sum. The loss will no doubt be felt as a drag in global growth in a society that is already slowly grinding to a messy halt. And a society that ought to be rapidly deleveraging to go way beyond economic stagnation into the world of reverse or negative growth.
Looked at another way, $12.8Tr represents more than double the amount of real money floating around the world, which is given at between $5Tr and $6Tr (I am talking about cold, hard cash here not what you think you have in the bank or in other assets; How Much Money Is There on Earth?).
So, when it all turns to excrement, and people stick their hands out to the banks for what their bank account tells them they are owed, they had better do it quickly, because for every dollar you think is rightfully yours, there are more than 40 other people (200+ divided by 5) who think they own the same dollar …and that is not taking into account the one half of one percent of us who are said to own more than half of everything. It will be a real bun fight, no doubt. It is also not taking into account that a fair proportion of the $5+ trillion available money (real dollars) will already have been socked away by astute persons in preparation for such an event.
Hint: you need to stash some away before it happens. Not that it will be worth anything after a short while …and not that there will be anything much to buy with it for more than a few days.
I am sure that if you were to search diligently you may find slightly different values for global money and debt levels, but not by much, and whatever the real, actual figures are, the picture must remain roughly the same. When push comes to shove, once again, I wonder how that will play out?