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I hope to ask a what-if question... (What if some money disappeared all of a sudden..?)

 
 
Reply Thu 17 Nov, 2016 10:11 am
Say.. what would happen if the ten richest men's money disappeared overnight?
What economic problems would be caused? would it be an inflation or deflation?
And what other economic concerns would people have?
I hope to know this imaginative scenario
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Type: Question • Score: 1 • Views: 498 • Replies: 18
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Ragman
 
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Reply Thu 17 Nov, 2016 10:35 am
@u35059098,
If that occurred, depending on whatever macro-event was going on in the financial world, it more than likely wouldn't even cause a blip in the economy . Mainly because their money wouldn't have disappeared in the economy- it would have just been relocated elsewhere- just not in their pockets. No inflation or deflation would result.
cicerone imposter
 
  1  
Reply Thu 17 Nov, 2016 12:07 pm
@Ragman,
Pretty good answer, Ragman. Also, I'll add that most money doesn't circulate in our economy; they're sitting in bank accounts and in investments. That's the reason why banks do not need to have 100% cash on deposits.

https://en.wikipedia.org/wiki/Reserve_requirement
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u35059098
 
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Reply Thu 17 Nov, 2016 12:55 pm
how about if those money are stolen (by a group of filthy thieves), destroyed, or burnt?
I am just curious about this situation.
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u35059098
 
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Reply Thu 17 Nov, 2016 12:57 pm
or to put in this way...
In what situation (whatever reasonable or fictional case) will a mass of money suddenly disappear and result in deflation?
contrex
 
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Reply Thu 17 Nov, 2016 01:04 pm
Why don't you read some economics books, and come back and tell us?
u35059098
 
  -1  
Reply Thu 17 Nov, 2016 01:17 pm
or to put it in this way (whether its reasonable or fictional),
in what way would the money disappear and that resulted in deflation?
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u35059098
 
  -1  
Reply Thu 17 Nov, 2016 01:28 pm
@contrex,
haha... I have no economic knowledge. That is why I ask this question... lol
dont be mad at me. And this forum is supposed for a discussion, right?
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cicerone imposter
 
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Reply Thu 17 Nov, 2016 01:32 pm
@u35059098,
There is no way for any individual or group to access all the money in circulation and in investments.

As of July 2013, currency in circulation—that is, U.S. coins and paper currency in the hands of the public—totaled about $1.2 trillion dollars. The amount of cash in circulation has risen rapidly in recent decades and much of the increase has been caused by demand from abroad.
How Currency Gets into Circulation - Federal Reserve Bank of New York
https://www.newyorkfed.org/aboutthefed/fedpoint/fed01.html

The US economy is almost $17 trillion dollars. That's based on $1.2 trillion dollars in circulation.
u35059098
 
  -1  
Reply Thu 17 Nov, 2016 01:37 pm
@cicerone imposter,
so... If Bill Gates withdrew all his money and burnt them all, this had nothing bad caused to the market?
If then it is the case ... is Bill Gates owning the money at all..?
cicerone imposter
 
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Reply Thu 17 Nov, 2016 01:39 pm
@u35059098,
No. Your assumption belongs in fiction, not reality.
The fact is banks limit the amount any one person can withdraw. Banks cannot print money.
I have learned long ago never to deposit huge amounts into one bank. That's because a run on the bank can cause problems of liquidity.
u35059098
 
  -1  
Reply Thu 17 Nov, 2016 01:47 pm
@cicerone imposter,
thx for your answer anyway... it implies you are super-rich lol
And I have inboxed you a scenario
contrex
 
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Reply Thu 17 Nov, 2016 02:49 pm
@cicerone imposter,
cicerone imposter wrote:
I have learned long ago never to deposit huge amounts into one bank. That's because a run on the bank can cause problems of liquidity.

In Britain, the government guarantees all bank deposits up to £75,000 (93,000 US dollars) on a per-account basis, but there is a catch, the guarantee applies to all accounts in banks, building societies (savings and loan institutions) etc owned by the same organisation. Since a number of UK banks are now owned by big groups e.g. the Royal Bank of Scotland owns Natwest and Ulster Bank, if you had £75,000 in each of those three banks, and two or more failed, the government scheme would only give you £75,000 altogether. People with over that amount to save have to consult lists of bank ownerships to see how to spread their money to get protection for the whole lot.

I don't mind telling you folks that this is not a problem that is looming on the horizon for me right now. It would if I sold the house I bought 25 years ago.
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cicerone imposter
 
  0  
Reply Thu 17 Nov, 2016 02:50 pm
@u35059098,
We are not super-rich, but my wife and I have deposits in different banks. We also have investments with Vanguard Funds, because they have one of the lowest fees in the industry.
roger
 
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Reply Thu 17 Nov, 2016 04:33 pm
@cicerone imposter,
Aha! You don't have any money. All you've got are electronic entries on somebody's hard drive.
cicerone imposter
 
  -1  
Reply Thu 17 Nov, 2016 04:39 pm
@roger,
I get an auto deposit to my bank account every month from my investments for $2k less income taxes, so my actual cash income is around $3,200 that includes my social security, but I don't have any fixed expenses, because my wife pays for all household expenses and food. I pay for all of our vacations, and we've already had two this year. One to Hawaii, and one to Yosemite National Park.
roger
 
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Reply Thu 17 Nov, 2016 04:42 pm
@cicerone imposter,
Yeah, right. The numbers move from one place to another. You go to Hawaii and they move from your hard disc to someone else's.
cicerone imposter
 
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Reply Thu 17 Nov, 2016 05:15 pm
@roger,
No. I pay for everything that's over $25 with my American Express credit card.
My credit card balance is paid in full every month through auto pay.
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u35059098
 
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Reply Fri 18 Nov, 2016 03:31 am
I seems this discussion has deviated from what it is supposed to be
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