How much printed money in the world

When a federal government finds itself in a bind, it's usually tempted to mint its way out of trouble. While printing money can solve many spending problems in the short term, it tends to present enormous long-term problems. The Zimbabwean dollar is an excellent example of this phenomenon.

In , an exodus of much of Zimbabwe's labor pool led to a collapse of the country's financial system. To support public project spending, the government finance ministry printed surplus Zimdollars — too many, in fact.

Economically speaking, money is like any other commodity: It loses its value when there's an abundance of it. A surplus of readily available money in circulation leads to inflation , where money has less purchasing power. In the first decade of the 21st century, Zimbabwe's economy entered hyperinflation.

Economists watching the startling loss of value of the Zimbabwe dollar estimated that it was losing value so quickly that its decline was equivalent to prices doubling in stores every 1. This puts the annual inflation rate Zimbabwe experienced by the end of at ,,,,,, quintillion percent, the highest in the world [source: Berger ]. The Zimbabwean government decided to fight fire with fire and printed even more money in higher denominations.

The government would go on to abandon its currency entirely, opting instead to adopt the U. But what about all those trillion-dollar notes that the country's finance ministry produced in ? The government never collected the bills or let people exchange them, so no one knows the final tally in circulation.

Indeed, the bills have become something of collectors' items, and traders have stockpiled many, as they can fetch higher prices than what they were officially worth [source: McGroarty and Mutsaka ]. Since then, Zimbabwe reintroduced its own currency in , but the country has been battling high inflation rates and foreign currency and food shortages.

The local unit, which was supposed to be equal to the U. Zimbabwe has shown how difficult it can be to keep track of how much money a single nation has in the global markets, let alone how much money there is in the world. However, this inherent difficulty hasn't stopped some from trying. Perhaps the closest estimate to how much money exists in the world was released by Jeff Desjardins, the editor-in-chief of Visual Capitalist in and updated in That's a lot of moolah.

Things would be a lot easier on Desjardins and foreign exchange market analysts if there was only a single currency used by every country on the planet. So why don't we? The concept of a single worldwide currency has been suggested since the 16th century and came close to being instituted after World War II — yet the idea remains little more than that.

Proponents argue that a universal currency would mean an end to currency crises like Zimbabwe's. A single currency wouldn't be subject to exchange rate fluctuations because there would be no competing currencies to exchange against.

In other words, a universal currency would lose its value as a commodity bought and sold on open markets and would have value only for its worth in buying other commodities. To put it plainly, money would become just money. Its purchasing power would be the result of the adjustment of interest rates and other monetary policy tools in response to inflation or deflation.

Who would be responsible for adjusting those interest rates , though? One of the chief fears among opponents of a universal currency is the creation of a central body formed to oversee the monetary policy for a single world currency.

An extant international body, the United Nations U. Successes like peace-building missions in nations as disparate as El Salvador, Mozambique and the former Yugoslavia attest to the power a unified international body can have to resolve conflict. On the other side of the coin, the U. The Aztecs often used cocoa beans instead of trading goods directly.

However, commodities have clear drawbacks in this regard. Depending on their size, they can be hard to carry around from place to place. And in many cases, they have a limited shelf life. These are some of the reasons why minted currency was an important innovation. As far back as B. Metallic money in the form of coins made from precious metals such as gold, silver, or copper have been commonplace since early civilization.

Other forms of currency that have existed include large circular stone in the Pacific Islands, cowrie shells in pre-modern America, tobacco leaves, measurements of grains or of salt, or even cigarettes and packages of ramen noodles in prisons. More recently, technology has enabled an entirely different form of payment: electronic currency. Today, electronic payments and digital money is not only common, but has become the most important and ubiquitous money form.

However, it retains its worth for one of two reasons. The dollar fell into this category in the years following World War II, when central banks around the world could pay the U. In other words, it holds value simply because people have faith that other parties will accept it. Today, most of the major currencies around the world, including the euro , British pound and Japanese yen, fall into this category. Fiat money moreover derives its value from the trust in the government and its ability to levy and collect taxes.

While currency technically refers to physical money, financial markets refer to currencies as the units of account of national economies and the exchange rates that exist across currencies. Because of the global nature of trade, parties often need to acquire foreign currencies as well. Governments have two basic policy choices when it comes to managing this process. The first is to offer a fixed exchange rate. Here, the government pegs its own currency to one of the major world currencies, such as the American dollar or the euro, and sets a firm exchange rate between the two denominations.

The main goal of a fixed exchange rate is to create a sense of stability, especially when a nation's financial markets are less sophisticated than those in other parts of the world. Investors gain confidence by knowing the exact amount of the pegged currency they can acquire if they so desire. However, fixed exchange rates have also played a part in numerous currency crises in recent history. This can happen, for instance, when the purchase of local currency by the central bank leads to its overvaluation.

The alternative to this system is letting the currency float. Instead of pre-determining the price of foreign currency, the market dictates what the cost will be. The United States is just one of the major economies that uses a floating exchange rate.

In a floating system, the rules of supply and demand govern a foreign currency's price. Therefore, an increase in the amount of money will make the denomination cheaper for foreign investors. And an increase in demand will strengthen the currency make it more expensive.

Suppose the dollar gained value against the yen. Suddenly, Japanese businesses would have to pay more to acquire American-made goods, likely passing their costs on to consumers. This makes U. Most of the major economies around the world now use fiat currencies. While this provides greater flexibility to address challenges, it also creates the opportunity to overspend. The biggest hazard of printing too much money is hyperinflation.

With more of the currency in circulation, each unit is worth less. While modest amounts of inflation are relatively harmless, uncontrolled devaluation can dramatically erode the purchasing power of consumers. Naturally, it becomes harder to maintain the same standard of living. For this reason, central banks in developed countries usually try to keep inflation under control by indirectly taking money out of circulation when the currency loses too much value.

Regardless of the form it takes, all currency has the same basic goals. It helps encourage economic activity by increasing the market for various goods. And it enables consumers to store wealth and therefore address long-term needs. Currency was once limited to the domain of physical coins and bills, but today's digital economy means that money now exists as data stored in ledgers at banks, and is even transcending the possibility of tangibility with the development of cryptocurrencies such as Bitcoin which can never be made physical.

In mid-March , there was a run on liquidity in financial markets worldwide. Yes, most companies in America then had a dependency on debt. But, to market outsiders, the financial markets functioned as well as they do usually.

Still, the March liquidity run involved no obvious specific villains. Treasury securities treasuries. It quickly became clear to the Federal Reserve the Fed that its Primary Dealer banks large global banks lacked the balance sheet capacity to buy and then sell to others these securities quickly; the Fed needed to immediately become the principal buyer of treasuries. The Fed has contributed to programs to directly support Main Street too, although nowhere near as much, or as effectively, as its Wall Street programs.

The net effect of this strategy has been to increase societal inequity within the United States; it has also exposed the average U. With interest rates now close to zero, there is really nothing else the Fed can do.

Worst still, we might see rapidly increasing inflation. Why can the U. In other words, most countries and companies from other countries usually need to transact business in U.

At least in the short-medium term, the Fed could directly purchase all of the treasuries the Government issues.

Under worse case scenarios, the banking industry would contract. All other things being equal, the U. But the United States global position need not decline relative to most other countries.

If, in particular, China were not a variable in this equation all this might be a reasonable bet for the United States to take; however, China is a variable in the equation.