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What is the total amount of US dollars in circulation?
 More balanced and value-centered approach to the currency is needed 24.Jul.23 2:59 PM By Abigail Richards Photo AI |
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In 2021, the total amount of U.S. currency in circulation was approximately $2 trillion, encompassing all denominations of U.S. dollar bills and coins used domestically and internationally. However, this value represents only the physical cash portion of the entire dollar mass. The actual volume of dollar-nominated assets held in banks is expected to be several magnitudes larger, far exceeding the physical currency. The significance of the U.S. dollar goes beyond its paper representation. Beyond the cash supply, there exists a vast and intricate financial system comprising dollar-denominated assets, including various forms of deposits, certificates of deposit, and other financial instruments held in banks and financial institutions worldwide. This expands the monetary base considerably, indicating that the value of the U.S. dollar is not solely determined by its physical paper mass. Furthermore, the total size of the U.S. dollar's influence extends even beyond the sum of dollar-denominated assets. It encompasses a complex network of derivative assets, loans, stocks, and other financial products that contribute to the global financial landscape. The sheer magnitude of these combined financial elements far surpasses the physical mass of the U.S. dollar in circulation. To provide a perspective on the scale of this influence, consider the hypothetical scenario of equating a one-dollar note to a gram in weight. Under this speculation, it is suggested that the total annual material GDP (Gross Domestic Product) of the entire world would weigh less than the notional paper dollar mass. This thought-provoking idea underscores the vastness and reach of the U.S. dollar's financial impact, which extends well beyond its physical representation. Nothing is forever, and the dollar may step down and be replaced by some other asset. The same weakness of the dollar is here a strength, however. Let's imagine that we will replace the green buck with gold. The total annual amount of gold mined in the world was estimated to be around 3,500 to 4,000 metric tons. Because valuables are produced at a much slower pace, all things will get cheaper and cheaper. This concept may seem ridiculous, but it is detrimental to the economy because it will cause deflationary pressure and a contraction of the world's GDP. Bitcoins are also produced at a slower pace. Ideally, the speed/value of the measurement assets should be equal to the speed/value of the global GDP. However, when it comes to real value, there is no definitive way to measure it. Critics often argue that bitcoin has 'no real value,' but the same can be said for the dollar. Even the material, paper dollar has little intrinsic value. Gold has its own value, but it is limited and culturally biased. Perhaps the best system should be based on a unit that measures our cost of living. However, even here, there are differences because different countries have different demands and standards of living. The ultimate currency is time and human resources, but it suffers from dramatic regional inequalities. Thus, any hypothetical realistic future currency should be abstract as well, and perhaps more conducive to free circulation. It may take the form of a CBDC (Central Bank Digital Currency) bullion, but it should be based on irreversibility and decentralization. Time will show what will emerge as a replacement for the old buck, but as of now, it is evident that it is not a matter of the nearest future. | |
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