I always thought this was money:
Call me simplistic, but I always imagined that at the end of the day - all money comes back to the printed stuff. That when you deposit money in the bank, they take it, and in return you get the ability to access that money from where ever, whenever you need it.
In turn, when you take out a loan at a bank, I would expect that some of these printed notes have been "delegated" to you, so to speak.
Over the recent years, with people starting to look at our financial system from a different angle, I had the inkling that maybe, there was some money that was beyond the system of printed money.
I figured it would be, on the grand scheme of things, a small percentage. I expected that cash would still account for most of the money out there.
So imagine my shock when I discovered this the other day...
According to the Reserve Bank of Australia, here, they state the following:
At the end of June 2017, there were 1.5 billion banknotes worth $73.6 billion on issue in Australia.
I'm making an assumption that banknotes will make up the overwhelming majority of cash in Australia, so for the purpose of simplicity, let's forget that coins even exist.
$73.6 billion sounds like a lot doesn't it?
Well..... Let's see what we can buy with $73.6 billion.
How about one of the larger Australian Companies? BHP Billiton
At the time of writing this, the market capital of BHP Billiton is $98.86B.
So let me get this right...
All the cash in the entire country of Australia, cannot even buy 1 of the bigger companies?
Granted that BHP would have a lot of international investors - but then shouldn't that push the AUD up if all this overseas money is coming in, and the value of BHP remaining relative to the supply of AUD?
And remember, we're just talking about **1 company. **
The entire market cap of the ASX is A$1.663 trillion
So the Australian share market is valued at 22 times the supply of Australian currency.
That doesn't include other assets like property - doesn't include liquid cash that would flow throughout the economy.
No wonder banks and governments don't like cryptocurrencies with their FIXED SUPPLY.
AUD$73.8B doesn't even cover the top 20 richest australians - only the top 17 using figures from 2016
In the world of cryptocurrency, the value of an asset cannot exceed the supply of the currency in which it is being sold. It pretty much blows all these unrealistic, ridiculous valuations out of the water.
(images sourced from RBA)
The M1 money supply for Australia is about $351 billon AUD or $281 billion USD.
https://fred.stlouisfed.org/series/MYAGM1AUM189S
"M1 comprises notes and coins held by the public and demand deposits of the private nonbank sector in banks."
yeah but demand deposits are counted seperately to notes and coins - which is essentially double counting in my opinion.
Even so... $351B is still a rather small percentage of the total sum of assets that the country purports to contain.
I love crypto at least there is a limited number. though whales can manipulate the price atlas they can't print fake btc.
A necessary evil that you will spend your life in the pursuit of. To keep it in perspective however, what are the alternatives? A bartering system of exchange? How messy. Assigning value to unrelated and inflexible goods and services creates an unnecessarily cumbersome task. That's what i think about money ! @farq
the concept of money is fine - In the end of the day bitcoin is basically attempting to be "money"
It's the butchering of this concept that has happened in today's society that I think is criminal.
For the value of 1 asset to exceed the entire supply of money within that country, is wrong, no matter how you look at it.
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wow your amazing post about money and its value is very interesting ...
money is not everything but everything needs money ...