Lately I have been intrigued to find out how much money (or economic
value) there is in the world. There are perhaps at least two ways to
go about answering this, and I would prefer you use the second way if
it's not incredibly unreasonable (or a more accurate method if you can
think of one).

METHOD 1:
Find approximate value of all the actual money/currency in the world.
I found an article that valued all of the money in the United States
(M3 in economic terms) at approximately $6 trillion.
http://money.howstuffworks.com/question237.htm
This type of valuation done for the whole world would be a good start.

METHOD 2:
What I would really love - but might be more difficult - is a more
accurate figure where you would basically add up the net worth of
every individual on earth. Thus that would include stock values, home
values, etc that is not reflected in the above M3 type valuation
(unless I am mistaken). Obviously an approximate figure is ok. I just
want a general ballpark like $60 trillion, or $350 trillion, or $1.5
zillion etc.  Maybe round to the nearest 5 or 10 trillion as
appropriate.  Clearly something like "More than $10 trillion" is not
an acceptable answer.

Here is another bit of information that may or may not help:
"About 8.3 million people world-wide have a net worth of at least $1
million (not including their home), up by 7.3% (or 600,000 people)
from a year before, according to the 2005 World Wealth Report issued
last month by Merrill Lynch and consulting firm Capgemini. (See the
report.) The amount of wealth controlled by what the two companies
call "high net worth" individuals grew even more quickly, by 8.2% to
$30.8 trillion."

From the Wall Street Journal (Online)
EYES ON THE ROAD 
By JOSEPH B. WHITE
The New Faces of Luxury
July 25, 2005
http://online.wsj.com/article/0,,SB112205870383893561,00.html?mod=mostpop

The report cited in the WSJ article:
http://www.ml.com/index.asp?id=7695_7696_8149_46028_48149_48228

Thanks!!!

MPR

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Request for Question Clarification by pafalafa-ga on 27 Jul 2005 11:04 PDT

The World Bank pegs the global GDP in 2004 at $40.887 trillion:


http://www.worldbank.org/data/databytopic/GDP.pdf


That might be the closest number you can get as an answer to your
question, without undertaking a large, original piece of economic
research to compute one of the numbers your specified in Method 1 and
Method 2.

Will the World Bank figure suit your needs?


pafalafa-ga

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Clarification of Question by mpr-ga on 27 Jul 2005 11:35 PDT

Thank you pafalafa-ga and also to the two commentors.

The World Bank figure of $40.887 trillion will suit my needs. Since it
has been awhile since I took macro-economics, if you could also
include a very brief explanation of GDP (specifically why it equates
valuation of economic worth) that would be magnificent.

Thanks much,

MPR

Keep in mind that financial (non-real) assets net out to zero when you
look at the entire world. For example, your $10,000 bank account is a
financial asset to you and a financial liability to your bank. Your
stock worth $10,000 is your asset, but it's a liability to the issuing
company. So if you want to find the world's net worth, you just total
every country's non-financial assets.

You have to get everything into the same currency (presumably the US
dollar), so which exchange rate you use will make a difference. In
this case, I would choose market rates over PPP rates. To be most
precise, you would want to use estimated free market exchange rates
for those countries that manage their forex float.

1.  Go here and download the "Economic Freedom of the World 2004" --

Fraser Institute
http://www.freetheworld.com/release.html

2.  Decide whether money is defined by M1 or M2

3.  Total the 100+ countries M1 or M2.

Best regards,

Omnivorous-GA