
A visualisation of all of the money in the world - onion2k
http://money.visualcapitalist.com/all-of-the-worlds-money-and-markets-in-one-visualization/
======
retube
The derivatives piece is totally wrong of course. Gross Notional is a
completely meaningless number - it does not represent what value is owed or
how much risk there is.

E.g GS could have 1tr of gross notional of derivatives with JP but with zero
risk or monies owed if the positions all offset (as indeed in real life they
do, banks run very little net exposure).

But of course newspapers and grotty rags like to perpetuate this narrative
that derivatives are going to blow up the world.

~~~
JumpCrisscross
Good, concise illustration from Reddit:

"If Powerball sells 1 million tickets at 2$ each, where the jackpot is worth
200,000,000$, is the size of that market 2M$ or 200 trillion $" [1]

[1]
[https://www.reddit.com/r/Economics/comments/3xb2xh/all_of_th...](https://www.reddit.com/r/Economics/comments/3xb2xh/all_of_the_worlds_money_and_markets_in_one/cy3b623)

~~~
vinceguidry
That's not a market at all. That's a $198,000,000 giveaway.

~~~
xixi77
Well, not quite -- if odds of winning are in fact around 1 in 200MM or less,
there is no market failure here.

Their point would still stand if they sold 100MM tickets though, so as not to
confuse the two issues (ie. the notional amount and the expected value),
perhaps it would have been a better example that way.

------
cs702
Fun mental experiment:

Should the world ever value the global stock of Bitcoin similarly to gold,
Bitcoin's market capitalization would increase by around 1,300 times, from ~$6
billion to ~$7.8 trillion, and the price per Bitcoin would increase from
around $460/BTC to around $600,000/BTC, give or take.

If this sounds "crazy," consider that in many ways, Bitcoin is more convenient
than physical gold: it's cheaper to secure, transport, and hide; and unlike
gold, it's backup-able.

\--

On a related note, here are some additional thoughts on Bitcoin I wrote four
years ago, when its price was $9/BTC:

[https://cs702.wordpress.com/2011/05/29/on-the-potential-
adop...](https://cs702.wordpress.com/2011/05/29/on-the-potential-adoption-and-
price-appreciation-of-bitcoin-in-the-long-run/)

~~~
blibble
noone actually transports physical gold, they just transfer the certificates
of ownership (physically or electronically)

~~~
cs702
Those certificates are issued by third parties who must secure, transport, and
hide the physical gold.

Those third parties spend quite a bit to store the gold in secure facilities
guarded around the clock, transport the gold from/to those facilities in
armored vehicles, and keep the gold hidden from view, e.g., in underground
vaults.

Guess who ends up paying fees to cover all those costs?

Certificate holders.

~~~
phillmv
It's not like bitcoin is free, either.

A lot of someones burn a lot of electricity 24x7 in order for bitcoin to hold
any value, too - and bitcoin holders pay for it just the same.

~~~
RockyMcNuts
Divide the number of bitcoin transactions by the power spent mining, and each
transaction consumes enough power to run an American household for a day and a
half.

[http://motherboard.vice.com/read/bitcoin-is-
unsustainable](http://motherboard.vice.com/read/bitcoin-is-unsustainable)

~~~
FatalLogic
The biggest flaw with that calculation is that most Bitcoin miners are not
located in American households.

They're naturally located where electricity is much cheaper: they're using
environmentally-generated or surplus power, close to the source, at bulk
industrial rates. The author even said it in the same article, but did not
factor it into the clickbaiting comparison.

------
andrepd
In a similar vein, going more in-depth:

[https://xkcd.com/980/](https://xkcd.com/980/)

~~~
alejohausner
I like xkcd's visualization better, because the quantities are displayed
logarithmically: each part of xkcd's visualization uses squares which
represent 1000 times more money than the previous part's squares.

------
graham1776
As the commercial real estate guy, I am wondering where resisdential real
estate is.

Also think there are quite a few asset classes left out of this chart
(although it is awesome!).

CalPERS (one of the largest worldwide pension funds) does an awesome annual
report showing thier holdings. For me it is an awesome way to see all the
different ways one can invest. Link: [https://www.calpers.ca.gov/docs/forms-
publications/annual-in...](https://www.calpers.ca.gov/docs/forms-
publications/annual-investment-report-2014.pdf)

------
nopinsight
Considering that the nominal value of above-ground gold reserves is comparable
to that of commercial real estate worldwide, it looks overvalue to me.

There is so much productive use of commercial real estate, while gold is at
best a medium of exchange and quite an inconvenient one relative to coins and
banknotes. (Gold's industrial value is much lower than this and arguably its
psychic value would not hold up well without its liquidity as money.)

~~~
djhn
If it looks overvalued to you, you should short it and test your intuition.
Any amount that fits your risk profile.

------
xixi77
Nice chart, although it would be really important to see references to the
data sources and more notes on methodology (at the very least, they should
have included dates on which the valuations were measured! Also, how exactly
do we define "debt" and how is it computed/where is it referenced from?)

Also, the "Rest of the World" stock market capitalization is much larger than
I would have expected, since it seems to exclude the largest exchanges
(US+Europe+China+Japan). It would be nice to see a more detailed breakdown of
that; perhaps I should do one :)

I would guess India+Brazil should be pretty large combined, and there are
probably companies with tiny & illiquid float trading on obscure exchanges,
but large capitalizations.

And yes, as another commenter noted, using the notional for derivatives
valuation is really quite misleading -- I guess this is the easiest number to
compute, and is probably the one supporting the point they are trying to make,
but there should at least be more of a note telling people about it.

Still, nice work! It's good to see things in perspective.

------
Raphmedia
xkcd did it before

[https://xkcd.com/980/](https://xkcd.com/980/)

------
simonswords82
When I scrolled down and saw that derivatives were so large by an order of
magnitude I was reminded of this awesome 2010 Oscar winning documentary that I
only watched a couple of weeks ago:

Inside Job:
[https://archive.org/details/cpb20120505a](https://archive.org/details/cpb20120505a)

It's about how US executives created the financial crisis back in 2008 and is
pretty relevant here. I'd well recommend watching it...some of the information
provided is uniquely depressing and terrifying.

------
hodwik
Read this critique on Reddit this morning. Thought it was interesting.

Sharing here:

"Ah, this misleading derivatives stuff again... In two steps: Firstly, I'll
use as an example something called an interest rate swap. If you have a loan
with floating rate interest payments, then this lets you change that to a
fixed interest rate of say 4%. As follows:

The lender requires you to pay floating rate interest. The swap is an
agreement with a third party derivatives guy that you should receive a
floating rate from him and pay fixed to him. So every month you will receive
whatever the floating rate is from the derivatives guy, and pay a fixed rate
to him - and the floating you receive pass on to the guy charging interest on
the loan. For example: the loan has a floating rate payment which at the
moment is 4%, and you agree with the derivatives guy that you should pay him a
fixed rate of 4% and will receive whatever the floating rate is. If the
floating rate rises to 8%, then you pay the derivatives guy 4% and receive 8%
and pass those 8% on to the lender. If the floating rate falls to 2%, you pay
the derivatives guy 4% and receive 2% and pass those on to the lender.

But 4% of what? For the calculation to work, you need a monetary amount to
calculate 4% of. That is the notional. You receive cash of the floating rate *
the notional, and pay cash 4% * the notional. You need some way to translate
the percent into actual cash payments and that happens through the notional.

If your loan is 10m, then the notional amount you want is probably 10m. If you
only want half fixed half floating, then you can set the notional amount to
5m. But the notional amount is just the basis used for calculation. It's not
"money". It's a figure plugged into a formula. The notional isn't put into the
bank and can't be withdrawn from it, and at the end of the period of interest
payments the notional isn't there anymore because its only purpose was to
calculate those interest payments.

If someone wanted to they could break that entire counting system by simply
making a swap with a notional of 1 centillion dollars and deciding the payment
isi equal to 5% * notional / 1 centillion. If you wanted to swap 100m USD you
would need 100m of these contracts for a notional of 100 million centillion
dollars. The actual money changing hands is nowhere near the notional.

Secondly: Sometimes people use derivatives for speculation. What they can do
is enter a contract and then after prices change they enter the opposite
contract. For example: contracts for oil 6 months from now are $50 per barrel.
Someone buys contracts for 50 million barrels. Then the price changes to $60
per barrel. He then sells contracts for 50 million barrels.

The only practical effect of this trade is that he receives a cash sum today.
In 6 months nothing happens - they are automatically matched and offset. In
this case the notional amount would be the price of 50 million barrels of oil
times 2.

Now, it's possible to do this at high speed. So rather than wait until the
next day, he enters a contract and then the opposite seconds or milliseconds
from each other. As long as the buying and the selling is for the same amount,
this could make for an arbitrarily high notional.

There are absolutely risks in derivatives. For example, what happens if one
party loses enough money to go bankrupt and all the bonds they placed as
security for that event isn't enough to cover the loss. But the notional
amount is not a good place to start to understand risks. Like, every type of
derivative will have its own rules for how the notional translates into actual
cash - e.g. for an oil contract it would be the full value of the oil, and for
an interest rape swap it would just be the amount that's multiplied by the
percentage.

Not someone who works with this daily, but covered it quite well in studies."

~~~
peter303
Debt can be considered money, but not all kinds of derivatives, especially
swaps. Debt usually has some kind of collateral: physical, business cash flow
etc. Insurance will have direct interest, an actuarial basis and reserves.
Swaps may have neither of these. A metaphor is a blackjack table. The players
place real money bets. The house/dealer pays on known statistics. Swaps are
like bystanders betting on the players and hands they see and expecting the
house to pay off.

------
byteorder
My experience is that big tech company jobs are much better than at the
typical startup.

I got my first job working for one of the big 3 tech companies a couple of
years ago after a long string of startups that failed or fizzled going back to
the dot-com days. I always felt like I was making reasonable-to-good base
salary at startups with the potential to hit it big with stock options.

Starting my job as a regular IC at big tech company was immediately an eye
opener. Out of the gate my base salary was 10% higher than I made as a manager
at my most recent startup. With bonus and publicly traded stock value after a
year, I was making ~50% more and stock becoming even more valuable over time.

My first startup was great as I went in at 25 with no college and only self
taught tech skills. In hindsight, this was a great (probably only) way to
start but pivoting to big tech would have been a better move instead of trying
to strike it rich at a startup.

~~~
nsajko
Wrong thread.

------
david927
According to this, there are 1 billion ounces (35,000 tonnes) of silver and
186,000 tonnes of gold. But... I thought gold was rarer than silver.

Edit: I wonder if it has something to do with the fact that silver (unlike
gold) is consumed in manufacturing processes such as photography.

------
LoSboccacc
I imagined for whatever reason that if one would account the 'global economy'
as a closed system then debt + value would come at a balance. Didn't consider
derivates as holding such a huge value. That also mean most of the debt is
backed by gambling with production yield, which is scary.

------
Someone1234
I'm surprised Bill Gates is the richest individual again. I thought he gave
away so much money that it pushed him off the top #5 list a while ago?

Is his fortune largely tied to Microsoft's share price?

~~~
pmelendez
Actually no... most of his fortune is split in several other investment since
a while ago. I guess being friends with Warren Buffett helps :)

~~~
logicallee
it would be funny if Bill Gates' bridge hobby ended up making him
$30,000,000,000 over his lifetime.

(he was buffett's bridge partner.)

------
kazinator
So now if we just square that, we get all evil in the world!

------
MichaelGG
Wow, really puts into perspective the quote on Starfighters.io:

Willie Sutton: "I rob banks because that's where the money is."

You: "Amateur."

------
swiley
Can't zoom.

------
DennisP
Interesting that there's more debt than money. Apparently a lot of money is
borrowed to lend out.

~~~
jackcosgrove
Debt is backed by assets, which were undercounted by this graphic. I'd be very
interested to see the estimated value of residential real estate compared to
the derivatives market.

~~~
DennisP
Yes but if I get a mortgage, the amount of debt issued is equal to the amount
of money I get by taking on that debt. The fact that the debt is secured by
the real estate doesn't change that.

------
ChicagoDave
Once you taste the life of self-employment, you will never go back to working
as an employee.

