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Moneypocalypse: What If All the Money Disappeared

Posted by Alex Conde August 23, 2018 • 6 min read

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  • How much money there actually is in circulation
  • Alternative systems for money used throughout the ages
  • What has happened in an actual situation where money has disappeared

An old proverb says “money is the root of all evil.” If this was true, you might think that eliminating all money would make life easy, but the opposite is true. Money, for all of its flaws, is a reasonably efficient way to exchange value and conduct transactions between people. So what would happen if it disappeared?

The obvious first reaction to all the money in the world disappearing would be chaos. It would be like a bad James Bond film plot. However, let’s look past that and see what the other impacts might be.

First, how much money is there in the world? Well, we need to get a bit more specific with that question—are we referring to paper money, electronic money, investments like stocks and GICs that have a money value, or are we even going so far to include cryptocurrencies (digital currencies), and gold. If we keep things simple and just look at coins, bank notes, and money in bank accounts, the total amount of money in the world is about $80.9 trillion USD.

Second, we look at how much money is used in a year. In Canada our gross domestic product (GDP) is about $1.551 Trillion USD. That means, 1.551 Trillion US dollars changes hands each year for purchasing products and services at every layer of the economy. If all money were to disappear, that suddenly leaves us with a lot of transactions that can’t occur—how would you buy the coffee you drink, the shoes on your feet, or the electricity used to read this article?

Assuming that the economy doesn’t collapse (that’s a serious risk) we would need to find a substitute for money.

Let’s start by taking a look at some of the more interesting forms money has had in the past, and what people have done in place of money, or to complement it.

The evolution of money

We’re in a bit of a crossroads when it comes to money. On one hand, we’re still rooted in the world of paper money, but on the other hand, we are strongly moving further into the world of electronic payments. While many of us find the idea of carrying any money at all a bit odd in a world of clicking, tapping, and touching your phone, the Canadian Mint doesn’t look like it will stop making money anytime soon.

So, if paper and digital money were to disappear, what other options have people used in place of money in the past? The variety is awe-inspiring. In the past, money has taken the form of:

Prior to the dates of paper currency, coined money made with precious metals such as gold, silver, and copper were frequently used. Up until the end of the gold standard in 1971, the US dollar (used as the world’s reserve currency), was supposed to be exchangeable for gold at a fixed rate.

The problem with using any kind of commodity is that the economy has grown far larger than commodities can easily support. Estimates of the amount of gold mined over history come out to approximately a trillion dollars. As we mentioned earlier, the Canadian gross domestic product (GDP) is about 1.551 Trillion USD. That means there isn’t enough gold to easily supply all the transactions in Canada, let alone the entire world.

Commodities such as tea, or cocoa are easier to create than gold, but they are poor ways to store value. Organic products can decay or rot, especially if improperly stored. Meanwhile, a durable material like gold can be stored in a wide variety of places without risk. So, our economy couldn’t be switched to a commodity currency very easily.


If all money were to disappear, many people would think of returning to a barter system. However, there are issues with the barter system: barter is generally inefficient, and barter currently only exists in a very limited role.

Barter, as a method of trade, is very useful for skilled tradespeople and unskilled professions. It becomes more complex for white collar professions. How would you value graphic design, or marketing efforts, or teaching in terms of bushels of wheat or some other type of food trade? How would a person who makes a component of a smartphone get valued compared to someone who assembles it, or sells it? And, what happens if you have something like wheat to barter, but the person you’re bartering with doesn’t want wheat? This requires you to keep a running tally of who wants what commodity, what they can offer, and the relative values of each commodity or service. Currency, for all its faults, provides a simple way to understand value that we can all understand.

While wonderful in concept, and very useful in some situations, barter just isn’t an efficient enough form of commerce in the modern world.

Favours/gift economy

A number of smaller social groups have worked off of the idea of a favour or gift economy. Basically, the idea that if you do something for me, I’ll do something for you in the future. Just like barter, some systems of this exist today in parallel to the monetary economy.

This idea of reciprocity makes a lot of sense in smaller groups. If a friend picks up a round of drinks one day, they can be reasonably certain you’ll do the same in the future, balancing out the “debt” that existed. However, this system depends on you knowing and trusting the other person. If you’re working with someone you’ve never met before, and may never meet again, how can you trust them to return the favour? The idea of a gift economy just doesn’t scale to the global economy.

When it happens for real

The idea of all money disappearing might seem impossible and outlandish, but the scary thing is that it happened quite recently.

On November 8, 2016, the Government of India announced that the ₹500 and ₹1,000 banknotes were being phased out and replaced. The stated purposes of this “demonetization” effort was to limit the shadow economy and crack down on the use of cash to fund terrorism and other illegal activities.

This announcement was unscheduled and unanticipated. The impact of it was significant and immediate. The two notes that were demonetized represented 86% of all currency in use—and people had only 50 days to redeem them for new currency. To put this into perspective, about 87% of transactions in India were made using cash in 2012.

The immediate results of this change were predictably extreme. The news of demonetization contributed to the stock market declines in the week after the announcement—approaching or hitting six-month lows. Sales and revenue dropped below expectations in categories such as consumer goods, cars, tractors, and scooters. There were even some reports of farmers being unable to buy seeds to plant because they were unable to convert their now useless cash to notes that would be acceptable.

Even more alarming, there are reports of dozens dying as a direct outcome of demonetization—either from dying while in the extremely long lines waiting to exchange money, or as a result of being denied medical or transportation services which they were unable to pay for with the new currency. Banks were taken off guard by the unexpected announcement and were unprepared for the crowds and chaos that would follow.

While everyone in India experienced some degree of inconvenience or suffering things have started to return to normal a year later. However, the long-term impacts might be less than anticipated. India has experimented with demonetization twice before—1946 and 1978. The fact that it’s the third attempt suggests demonetization might not be as effective at ending tax evasion and the black market as it was hoped.

The true lesson though is that if all money were to disappear, we’d find some way to continue on and something to take its place. Over human history, money has taken many forms, and it has changed over time as the world around it changed. The future of money may change, and money as we know it now might disappear, but there will likely be something that fills the role that money does for us now.

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