Economy – Super Facts

Esther’s writing prompt: October 15 : Money

This is not a super fact but a collection of interesting facts regarding money.

A one hundred US Dollar bill sailing through a cloudy sky | Ten Money Facts — US 100 dollar bills falling through the air Shutterstock Asset id: 2555911235 by Caito

Money is a Shared Fiction, a Myth

Money is a fiction that depends on the trust that we collectively put in it. In his book Sapiens, History Professor Yuval Noah Harari argues that money is a “myth”, or a “shared fiction” because its value is not an objective, physical reality but a collective belief. This imagined order allows for mass cooperation by creating a universally accepted, albeit artificial, medium of exchange that can bridge the gap between strangers who don’t know or trust each other personally. When people cease to believe in the value of money it ceases to have value.

Money is Not the Root of All Evil

The “root of all evil is money” is a common phrase that is a misquote of the biblical verse in 1 Timothy 6:10. According to the King James Version of the Bible it says, “For the love of money is the root of all evil: “. However, this is also not correct because it is a mistranslation. According to the New American Standard Bible – NASB 1995 (NASB1995), the New Century Version (NCV), the American Standard Version (ASV), the New King James Version (NKJV), the correct translation is “For the love of money is a root of all kinds of evil”. The latter makes a whole lot more sense. Not all evil is because of the love of money, but a lot of it.

The Wealth of the World is 500 Trillion Dollars

The world’s total net wealth in 2025 is estimated to be around 500 trillion, but there are other estimates. More than half of this, $260 trillion, is in stocks and bonds.

The Wealth of the United States is 160 Trillion Dollars

The United States has an estimated total wealth of approximately $160 trillion. The top 50% of the US population own 98% of that wealth. The bottom 50% of the US population owns 2% of that wealth. In Q3 2024, the top 1.3 million had a wealth of 49.2 trillion (31%), the next 65.2 million had a wealth of 106.8 trillion (67%), and the next 66.6 million had a wealth of 3.9 trillion (2%).

The Second Most Important Currency is the Euro

The Euro is the second most important currency after the US Dollar, which is the most important currency for borrowing, lending, and reserves.

US paper money is not paper

US paper mone is not made of paper; it’s a blend of 75% cotton and 25% linen to make it more durable.

Cacao Was Once a Currency

The ancient Aztecs used cacao beans as a form of money. Some Aztec taxes were paid in Cacao, and it was even used to pay workers. A single bean could buy you a tamale, while a few dozen might get you a rabbit.

Cash is Not Very Common

On the topic of digital money, it turns out that only 8% of the world’s currency is actually physical, the rest is online or card transactions.

In God We Trust

“In God We Trust” is the official motto of the United States. It was adopted by the U.S. Congress in 1956, replacing E pluribus unum (“Out of many, one”). The first paper money to feature the motto was the one-dollar silver certificate, which entered circulation on October 1, 1957.

However, that was not the first time “In God We Trust” appeared on American money. “IN GOD WE TRUST” first appeared on the obverse side of the Two-cent piece in 1864.

The backside of a copper colored coin featuring the text “1864” and “IN GOD WE TRUST” | Ten Money Facts — Image courtesy of Heritage Auctions, Public domain, via Wikimedia Commons

US Banknotes Have Multiple Security Features

US banknotes / “paper currency” (along with other currencies) contain security features that can be used to authenticate the banknotes and thereby avoiding accepting counterfeit currency. If you feel the paper (well it is not paper) it should feel slightly rough. All denominations higher than $10 have color shifting ink in the numeral on the lower right corner of the note. On current notes it should change from copper to green. The current style of $100 notes also includes two new security features that you can check by tilting the note: the color shifting in the inkwell and the 3D security ribbon (in the middle across the note). The images of the bells and the text of “100s” should shift as you tilt the note.

In addition, hold the note to light and check the watermark and the security thread that are included on denominations $5 and higher. When held to light the security thread should be visible when held to light. The watermark on a bill should match the portrait of the banknote. The two watermarks on five dollar bills should match the numeral five. The security thread is in a different location for each denomination and glows in a unique color when exposed to UV light. To watch a video explaining how you can check if a bank note is authentic click here or on the YouTube Video below.

If you sort the banknotes or use a machine to check for counterfeiting, there are additional features. The different denominations have a unique magnetic ink signature, as well as a serial number that is unique to each banknote. However, that is for machines and complex systems to discover. The serial number helps in identifying and tracking individual bills.

Me Being a Money Printing Engineer

At one point in my life (2013, 2014, beginning of 2015), I was working for a British company, which at the time was called DeLaRue Cash Systems, now DeLaRue Currency Solutions. DeLaRue Currency Solutions provide more than half of the world’s currencies for a lot of countries around the world. I was working there as a senior software engineer (and electrical engineer) and I was handling and developing the machines that printed banknotes or sorted banknotes. Both of these machines needed to be able to detect the security features described above and therefore they featured various detectors such as cameras, UV lights, magnetic detectors, etc. In the first case to make sure the banknotes were printed correctly and in the second case to check for counterfeit banknotes.

Through my work at DeLaRue I got the opportunity to travel to Great Britain and India. In Great Britain (Gateshead) I visited a banknote printing facility, which when I visited contained huge stacks of banknotes to the value of several billion dollars. Security was pretty tight, and you were not allowed to bring in or out any money. In Bangalore in India, I was introduced to an actress at the Bangalore Palace. My guide told me she was the Jennifer Aniston of India. I looked it up and she was not. Anyway, below is a picture.

Young Indian woman on the left. Me in a yellow T-shirt on the right — Me and allegedly Jennifer Aniston of India, at the Bangalore Palace. They were making a movie at the palace. It was very nice of her to agree to a photo, but my guide’s claim that she was Jennifer Aniston of India was perhaps a slight exaggeration.

Finally, ABBA’s Money, Money, Money

To see the Super Facts click here

Superfact 3 : Economic Externalities Are Spoilers of Free Markets

Economic externalities are spoilers of free markets. So called externalities result in unfettered free markets being non-optimal and can render the correct government intervention more effective even from a purely economic perspective. This comes as a big surprise to the market fundamentalists who believe that an unfettered free market is always the best approach for the economy.

An economic externality or external cost is an indirect cost or benefit to an uninvolved third party that arises as an effect of economic activities. They are unpriced components of market transactions.

An example is the gasoline you buy. Burning the gasoline causes pollution that harms other people including those who do not own cars, future generations, and it harms the environment including animals. Society incurs a cost from that pollution that you don’t pay for at the pump. The gasoline producers and vendors do not pay for it either. Unless you add a tax or make other adjustments the act of polluting is free of charge, even though there is a real cost associated with it. It is a cost that is invisible to unfettered “free markets”. It is a market failure.

Note I am putting “free markets” in quotes because the free market does not exist all by itself. It exists within a framework of laws, a banking system, and entities such as limited liability corporations, etc.

Economic Externalities

The existence of economic externalities is entirely uncontroversial among economists, including laissez-faire (libertarian) economists such as Milton Friedman, Friedrich Hayek, and Ludwig von Mises, even though Ludwig von Mises said that they arise from lack of “clear personal property definition.” In fact, Milton Friedman, Nobel prize winner in economics, and a leading anti-tax champion, stated that pollution met the test for when government should act, but that when it did so, it should use market principles to the greatest extent possible — as with a pollution tax. The unfettered free market is not optimal.

This simplified supply and demand graph shows two different graphs in blue. One for the private/production cost per unit of a goods and a second that also includes the cost of the externality.

However, in my experience the existence of economic externalities is unwelcome news to less educated market fundamentalists, including many libertarian leaning politicians. I don’t have a Gallup poll to back this up, but I believe it is correct to say that economic externalities are controversial among a significant portion of the public despite being a universally accepted and a fundamental concept of economic science. Externalities are known to exist and that is not an easy pill to swallow for some.

Woman with a pill | Economic Externalities Are Spoilers of Free Markets — The existence of externalities is sometimes a hard pill to swallow. Photo by Artem Podrez on Pexels.com

This simplified supply and demand graph also shows two different graphs in blue. Again, one for the private/production cost per unit of a goods and a second that also includes the cost of the externality. In this case the cost for production goes down as quantity increases but the cost of the externality goes up per unit perhaps because increasingly damaging production methods are used as the quantity increases.

In the simple supply-demand graphs above we see how the price of a product per unit (private cost / or production cost) varies with the increased quantities produced. In the first graph, as the production quantity increases the production cost per unit goes up perhaps because labor and other resources get increasingly rare. In the second graph, as the production quantity increases the production cost per unit goes down perhaps because production becomes more efficient with increased quantities.

In both cases demand goes down with quantity (the red demand curve/line) because fewer people want to buy more of the product as the quantity increases. In both cases the externality adds a cost. In this case the externality cost per unit goes up because increasingly damaging production methods are used as the quantity increases. There are many possible examples of these graphs, but the point is that the externality adds a cost that reduces quantity sold in a free market, assuming the cost of the externality is accounted for.

Economic Externalities In The Real Word

Unfortunately, in the real world, externalities are often not accounted for, and figuring out the real cost of an externality is a thorny issue. However, if we know the cost of the externality and have a way of accounting for it, perhaps via tax or a fee, then we would reach a new equilibrium, a new optimal price for the product that will include the social cost. I can add that in the 1920’s an economist Arthur Pigou argued that a tax, equal to the marginal damage or marginal external cost on negative externalities could be used to reduce their incidence to an efficient level.

Notice this tax is not for redistributing wealth or bringing revenue for the government but to reduce economic harm to society. There are other ways to address the problem, but this type of tax is called a Pigouvian tax.

A picture of dollar bills | How a Pigouvian tax can reduce economic harm to society. — How a Pigouvian tax can reduce economic harm to society. Photo by Pixabay on Pexels.com

Finally, I would like to give a few examples of negative and positive externalities. Negative externalities could be :

Pollution
Climate Change
Depletion of fish due to overfishing
Depletion of other resources
Overuse of antibiotics
Spam email

Some positive externalities are :

A beekeeper keeps the bees for their honey, but a side effect or externality is the pollination of surrounding crops by the bees.
Education (societal benefits beyond the individual).
Research and development.
Innovations
Scientific discoveries
Vaccination

This is a picture of a beehive — When a beekeeper keeps bees for their honey, a side effect is the pollination of surrounding crops by the bees. This is an example of a positive externality. Photo by Pixabay on Pexels.com

Category: Economy

Ten Money Facts