Where is all the money in the world?
Overview of the global money supply
Money is the lifeblood of the global economy, flowing through various sectors, industries, and institutions. Understanding where money is located provides valuable insights into the structure of the global economy, wealth distribution, and financial trends. In 2023, the global money supply is spread across financial institutions, governments, businesses, and households, reflecting diverse economic activities.
Economic actors
Financial Institutions are entities like banks, insurance companies, and investment firms that manage money through lending, saving, and investing. For example, JPMorgan Chase and Allianz are key players facilitating loans and managing funds globally.
Governments collect money through taxes and public borrowing to fund public services like schools, healthcare, and defense. The U.S. federal government, for instance, uses its budget to maintain infrastructure and social programs.
Non-Financial Corporations are businesses that produce goods or provide services, such as Apple in technology or Toyota in manufacturing. They use money to run operations, invest, and generate profits.
Households consist of individuals and families managing income for daily expenses, savings, or investments. For example, a family saving for education or buying a home reflects household economic activity.
Global Money in 2023
The total global money supply (M3, which includes cash, deposits, and other liquid assets) in 2023 is estimated at $160 trillion. This figure includes money held by governments, businesses, and individuals. Here’s a breakdown of how this money is distributed globally:
| Category | Estimated Amount (Trillions $) | Share of Total (%) |
|---|---|---|
| Financial Institutions | 70 | 44% |
| Governments | 25 | 16% |
| Non-Financial Corporations | 40 | 25% |
| Households | 25 | 15% |
Money in the U.S. Economy
The United States, as the world’s largest economy, has a significant portion of global money. In 2023, the U.S. money supply (M2) is around $21.5 trillion. The distribution reflects the country’s advanced financial system and robust consumer market:
| Sector | Estimated Amount (Trillions $) | Share of U.S. Total (%) |
|---|---|---|
| Financial Institutions | 8.5 | 40% |
| Non-Financial Corporations | 6.5 | 30% |
| Government | 3.0 | 14% |
| Households | 3.5 | 16% |
Physical vs Legal Entities
Money can also be classified by ownership, distinguishing between individuals (physical persons) and businesses or governments (legal entities). Globally, individuals hold about 45% of the total money, while legal entities own the rest.
| Ownership | Global Amount (Trillions $) | Share of Total (%) |
|---|---|---|
| Individuals (Households) | 72 | 45% |
| Businesses (Legal Entities) | 64 | 40% |
| Governments | 24 | 15% |
Money Across 11 Economic Sectors
To further understand the distribution of global money, it is useful to analyze it across the 11 primary economic sectors defined by the Global Industry Classification Standard (GICS). In 2023, the estimated global money supply is distributed across these sectors as follows:
World Money by Sector
| Sector | Estimated Amount (Trillions $) | Share of Total (%) |
|---|---|---|
| Financials | 50 | 31% |
| Technology | 20 | 12% |
| Healthcare | 18 | 11% |
| Energy | 15 | 9% |
| Consumer Staples | 12 | 8% |
| Consumer Discretionary | 14 | 9% |
| Industrials | 13 | 8% |
| Utilities | 5 | 3% |
| Materials | 6 | 4% |
| Real Estate | 7 | 4% |
| Communication Services | 10 | 6% |
U.S. Money by Sector
| Sector | Estimated Amount (Trillions $) | Share of Total (%) |
|---|---|---|
| Financials | 8.0 | 37% |
| Technology | 3.0 | 14% |
| Healthcare | 2.8 | 13% |
| Energy | 1.5 | 7% |
| Consumer Staples | 1.2 | 6% |
| Consumer Discretionary | 1.4 | 6% |
| Industrials | 1.8 | 8% |
| Utilities | 0.8 | 4% |
| Materials | 0.7 | 3% |
| Real Estate | 1.1 | 5% |
| Communication Services | 1.2 | 6% |
Key Insights
- Financial Institutions: These entities dominate the money landscape, especially in developed economies, managing cash flows through savings, investments, and loans.
- Individuals: Households, especially in high-income countries, hold a significant share of the money, primarily through bank accounts and investments.
- Governments and Corporations: Governments and businesses are major players, reflecting their roles in managing economies and driving growth.
Conclusion
Money in the world is not equally distributed, with financial institutions and businesses holding the largest shares. The United States remains a central hub for global finances, while households and governments play critical roles. Understanding these dynamics helps policymakers, businesses, and individuals make informed decisions about wealth and investments.