By Mike Hewitt
As of September 2009, the total amount of physical paper bills and coins throughout the world is approaching US$4.5 trillion. The following figure indicates the countries and monetary unions included in this analysis.
Three of the five monetary unions are clearly seen above. The remaining two are the IEOM which uses the French Pacific Franc in three member countries, and the East Caribbean Currency Union which uses the East Caribbean Dollar in eight member countries.
The following graph shows the growth of global money supply since 1971, a year selected for the reason that the last remaining currency to be convertible to gold (the US dollar) was made inconvertible on August 15, 1971.
Since 1971 the total value of global currency in circulation has been increasing at a rate of 9.09% compounded annually.
The four largest currencies (EUR, USD, JPY and CNY) comprise nearly 75% of all circulating banknotes and coins within the public domain.
It is apparent that the quantities of money are increasing in an accelerating fashion. In 1990, the total amount of currency in circulation passed US$1 trillion. Twelve years later, the total amount exceeded US$2 trillion. This doubled again less than six years later in early 2008.
The author is of the opinion that these substantial increases to the amount of circulating currency will ultimately lead to decreased purchasing power.
Mike Hewitt is the editor of DollarDaze.org, a website pertaining to commentary on the instability of the global fiat monetary system and investment strategies on mining companies. His website also provides a no-cost market data feed service with up-to-date quotes on currency exchange rates, commodity prices and major indices. Mike can be emailed at mikehewitt@hotmail.com.
Disclaimer: The opinions expressed above are not intended to be taken as investment advice. It is to be taken as opinion only and I encourage you to complete your own due diligence when making an investment decision.
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