Home Economics Visualizing Exter’s Liquidity Pyramid (In Physical $100 Bills)

Visualizing Exter’s Liquidity Pyramid (In Physical $100 Bills)


All the money and all the assets in the world, shown in physical cash form, in one graphic.

(click image for huge legible version)

Source: Demonocracy

The Liquidity Pyramid was created for visualizing the organization of asset classes in terms of risk and size. As Demonocracy explains, the Liquidity Pyramid was created during the time in United States, when each dollar was backed by Gold. Gold forms the small base of most reliable value, and asset classes on progressively higher levels are more risky. The larger size of asset classes at higher levels is representative of the higher total worldwide notional value of those assets. While Exter’s original pyramid placed Third World debt at the top, today derivatives hold this dubious honor.

As financial risk increases, money tends to move from the more risky assets (Derivatives), to the least risky assets (to physical cash and then gold). Nothing is without risk, but risk is relative.  The issue is that there is very little physical cash and even less Gold compared to the more risky assets, this makes for a crowded trade in times of high risk when everyone wants to jump into cash and gold, pushing up the price.

The little yellow rectangle on the left front is all the gold in the world in physical form.

Source: Demonocracy

All the gold in the world is NOT all in “financial investment grade” form. World Trade Center, Empire State & bunch of too-big-to-fail Bank HQ buildings are in the background to help illustrate the size. You are eye-level to the WTC top floors. The $1 Quadrillion Derivatives cash wall fades into the distance, because $1 Quadrillion is an estimation by the best analysts and truth is no one really knows the true size of the Derivatives Market.

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