What if I had an infinite ammount of money and didn't spend it or spent say, less than 1% of it?

Question

I often dream and speculate, if I had millions or billions of dollars, I'd do this or that, and speculate what this or that would be, and why I'd do this or that. Everyone does this, especially people like me, who don't have it. But, what if I had say, $50 billion, that's about what Bill Gates has, but, what if I took, say, $5 million dollars and live frugally off the interest, but did nothing with the rest, let it sit in an account collecting interest, and every few months or years checked on it. But I did nothing with it. I spent nothing with the $49,995,000,000 or its interest?
That much money is a big chunk of the economy. What effect on the economy would this idle money, the mere fact of its idleness have on the world economy?

Anonym · Accepted Answer

I don't know of an account that would hold that much money. Most with that much invest it. Its not in a bank.

Spotty J · Answer

1% of infinity is still infinity, so you'd be spending an awful lot money.

But to your point, that would be no big deal. No one person keeps $50 billion in a bank of course, but the American people in aggregate keep far, far more than $50 billion in the banking system. Your pile would just be a drop in the bucket, and it certainly would not be a big chunk of the $14 trillion economy at all.

Meanwhile that money is not going unused. When you put money into a bank, the bank lends it out. The banking system is just a means of distributing capital from savers to entrepreneurs, businesses and consumer borrowers.

In short, you putting $50 billion into a bank would make no difference to how the system is already working -- except for one thing. If you demanded to withdraw your money all at once you'd probably cause your banks to fail and cause a minor credit crisis. The system is not expecting one person to control that much money.  But you wouldn't do that, because nearly 100% of your money would not be FDIC-insured. You'd just force the bank to wipe out your own money.

** To Correct Alvie below, banks do not lend far more money than they get in deposits. They are limited to lending only a large fraction of the money they take in in deposits, and they retain the other fraction. That is what is meant by fractional reserve banking. I've noticed that people are deeply confused on this issue. A reserve ratio of 10% does not mean banks can lend out 10 times the money on deposit. It means banks can lend out 90% of the money on deposit while keeping the other 10% in reserve -- a humongous difference.

Alvie · Answer

The money is never idle, unless you keep it under your mattress.  And you would need an awfully big mattress for an infinite amount of money.  

Every bank has a right to lend  out far more money than it has from its depositors through a system called Fractional Reserve Banking.  Lending money like that is a risky thing to do.  Which is why such lending sometimes leads to bankruptcies of banks and the loss of all uninsured deposits.

FDIC insures only up to $250k per depositor in a bank.  Which means that holding $50 billion in a bank account is a very risky thing to do.  And no one in his right mind would do something like that.

Anonym · Answer

The banks would be lending out your money. This would stimulate the economy.

What if I had an infinite ammount of money and didn't spend it or spent say, less than 1% of it?

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