In the United States, there was approximately $1.29 trillion in circulation as of October 1, 2014, of which $1.25 trillion was in Federal Reserve notes. Interesting enough, this was nearly matched now by the Euro. According to the European Central Bank , which publishes its balance sheet every week, circulating euro banknotes has just crossed the €1 trillion euros, exactly €1.0172 trillion euros.
What is fascinating is that the amount of currency is INCREASING despite the fact that the GDP is declining. The amount of notes in circulation increased 6.4% in 2014 while GDP in Euroland increased only by about 1.3% in nominal terms. This confirms one thing – Europeans are beginning to hoard cash outside the banking system. That corresponds to the same trend in ancient times. Hoards of coins are discovered from periods of stress and uncertainty. As people did not trust banks, then buried their cash. History repeats because human nature is always the same.
Reprinted from Armstrong Economics.
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