Where has all the money in the world gone?

With all the doom and gloom about the economy these past few years, someone on the forum Reddit.com asked a very valid question –

“Where has all the money in the world gone?

I hear nothing but bad news about financial crisis all over the world, and it seems that there is a shortage of cash – like it is some sort of natural resource.

People haven’t stopped buying stuff. They still need food, clothing, medicine, shelter. Taxes are still collected. Fines are still levied.

So where is all the money? I mean, labor has been produced to make things and wages paid to the laborers. The things are purchased by other laborers, who were paid for producing goods or services, etc. It’s a closed loop, right?

Can someone explain it like I’m five or something?”

 

Reddit user ‘otherwiseyep’ came to the rescue with a long but simple explanation. Short answer: money is a simple idea, but it gets complicated fast the more people use it in new and different ways.

More about Money at Spectrum IEEE : A Brief History of Money. Or, how we learned to stop worrying and embrace the abstraction

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