So my understanding is that the cash in circulation (inc. deposits) is only about $40T while the economy (inc. investments, derivatives, and cryptocurrencies) is about $1.3Q.
My question is …is it possible to ‘cash up’ the $1.3QT or is it ghost money? Are we in a virtual economy that would crash if we all cashed out?
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Let’s assume every bank in existence around the world suddenly got the idea they wanted to shut down and close shop. Not only do they all decide to close, they also all get money printers/coin stampers from the governments that be to get people their money. And all the people of the world ALSO decide to balance out their books; they pay off their debts, they liquidate their assets, they shut their accounts. And this somehow magically takes place overnight even though this would probably take **years** in reality.
Then absolutely nothing would happen other than the fact that people now have their money.
Simple fact of the matter is that ‘virtual’ money that is not physical and only exists on the books, is still money. The primary reason so much of it is now not physical is purely a matter of convenience, no one wants to lug around suitcases full of cash whenever they need to make a major purchase.
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