My sister asked me to ask this question: IIRC, Bill Gates is worth app. $100 billion. If he wanted all his assets liquidated, how could he get paid? Is there enough gold to back it up? Enough currency printed? How would they go about giving him his money?
MaryAnn
Sometimes life is so great you just gotta muss up your hair and quack like a duck!
As for the gold issue, there is a LOT of gold out there. The real question is, do banks have enough to funnel the hard cold stuff to him?
Secondarily, the cash issue. While there have been $ 5,000 bills, and whatnot, I would think that if he really wanted to be liquid, and refused to simply accept wire deposits equalling this amount, from one bank to another ( Till he had 100 Billion in show assets in a single bank) that…the Federal Reserve would kinda be obliged to pony up the cash. Does the Fed have laws regulating the AMOUNT that a single depositor can demand? Maybe,and, there may be a waiting period while said cashola is gathered. Still…it’s Billy’s party, he can cry if he wants to.
Typer
Well since the majority of Bill’s net worth is probably in Microsoft Stock. He would have to sell the stock to either current employees or on the open market. If he were to sell that many shares on the open market, the stock price would drop substantially. There would be too little demand for the supply. This would decrease his worth substantially. OTOH, assuming he could sell it and keep the price high, all it would take would be enough people wanting the stock and purchasing it through their brokers to give him the money. Since he would not likely keep the money sitting in the house, but would re-invest or put it in a savings account, the money would not really leave the money supply, just be moved around a bit.
Considering that the current price is around $86 per share, that would mean that Bill has about 1.16 Billion shares, if the $100 billion number is accurate. That would take 11 Million people purchasing 100 shares each. Not that many in my opinion. Especially, if you add in various mutual funds and large investors.
Also, considering that last I heard, there is over $1 Trillion in 401Ks alone, and probably more in the stock market, it would definitely be doable.
Since the volume for today so far has been less than 10 Million or less than 1% of Bill’s shares, if he were to sell them the the price would likely drop from 86 to almost nothing, since why would Bill sell, if there was not a major problem, then everyone would sell. It could become a penny stock and he might not have much at all. You might even be able to purchase all his stock yourself.
Could be done, but would not be wise.
Jeffery
MaryAnnQ, as the person said, his worth is in stocks, IE paper. It’s just a paper thing, it’s not related to real money.
Also, could you imagine what would happen if he did sell, the comp would close? 9 out of every ten computers in the world would have no software. Thus, it would never happen, it would never be allowed by the Securities exchange, Im pretty sure, as they can step in and prevent something like that.
Youll just have to sit around and dream about what you’d do with all that money yourself.
PS: I think that Gates only gets about $400k per year in salary.
Actually, 9 out of 10 computers would have to switch to an operating system that was many times more efficient of resources, had less bugs, and ran the computer more smoothly. Well, maybe this isn’t such a bad idea…
On the downside, it wouldn’t look as pretty, and would require people to actually understand how a computer worked before sitting down to use one. We’d have less idiots using computers, as people will start to become better educated about these devices. Hey, this is getting better already.
There would then be greater competition for operating systems and software, driving down prices and requiring companies to release better products and be more responsive to the needs of their customers. Plus, there’d be more choices, so computers would become more useful as people could actually get there computers to do what they WANTED them to, rather than what some big corporation told them they needed. Also, maybe then even more people will come to realize that they don’t need a computer as much as they thought they did, and might instead go out and experience more of the world. Jeez, the benefits never end!
So I say, go ahead Bill Gates, drive Microsoft into the ground! Dump all your stock, end the company. The computer industry only stands to benefit!
Jason R Remy
“Open mindedness is not the same thing as empty mindedness.”
– John Dewey Democracy and Education (1916)
Couldn’t Gates theoritically liquidate his assetts if Microsoft was bought out by, say, a co-venture by General Motors, IBM, Pepsi-co, Phillip Morris and half a dozen oil-rich Gulf states? A stock buy-out would pay him a price higher than that on the NYSE putting him well into 12 digits.
PapaBear’s idea sounds reasonable at first glance, but I wonder… If all these other guys owned Microsoft, and Gates no longer had the interest in it that he has now, I think THAT would make the value fall! Isn’t Gates himself a big piece of what makes Microsoft valuable?
It’s kind of like what would have happened to the prices NBC was charging for commercials on Seinfeld. Now imagine if he would have left they show and they kept producing it anyway. How much would they get?
I was having lunch with my little ones at California Pizza Kitchen in Bellevue yesterday, when who should the hostess seat right next to me but Mr. and Mrs Gates and the little Gateses!
Though my husband works for the man I’ve never met him. I pointed him out to my kids (all the while telling them to be cool and not gawk . . . they’re 6 and 7, my kids). My daughter, while being surprisingly polite and not gawking, did bring up a question that was surely on everyone in the restaurant’s mind:
“Man, I wonder what kind of tip he’s gonna leave that waiter?”
Leslie said - “Man, I wonder what kind of tip he’s gonna leave that waiter?”
Probably less than 15%. I bartended and waited tables in fasionable restaurants in San Francisco. The executives, the celebrities and the other well-to-do folks were the cheapest bunch of a**holes you ever met! And rude, too. I remember a big Chevron exec. taking out a calculator to figure out the tip on a $450 dinner bill, and then asking for change for a dollar so he could leave the exact amount. It seems the more money you get, the cheaper you become.
Not necessarily. When Frank Sinatra died last year, one of the anecdotes about him was that he once asked the parking valet who brought him his car how much he ever got in a tip. The valet told him $100. Frank peeled off 2 one-hundred dollar bills and gave it to the valet. Then Frank asked him who had given him the $100 tip. The valet replied, “You did sir, when you were here last year.”
Yeah, Jason, Apple and Amiga and Unix and all those others have done so much for the computer industry. Do you think Jobs has anymore respect for people than Gates? He would have done the same thing had it occured to him. Maybe everyone does not need computers, but they seem to help in the education process. There are many titles that can help children learn. I like what Gates has done, I applaud him. IBM could not do better. Gates may not have been an innovator, but he was a marketing genius.
Jeffery
Long live Microsoft
Speaking of generous rich people, let’s not forget the “Malcolm Forbes Lottery” (as I like to call it) of a few years ago. Until his death, no one knew that he had stipulated in his will that all loans to all employees would be forgiven upon his death. Some of them were just an advance on a paycheck, and others were for hundreds of thousands borrowed only a few days earlier.
I think we’ve strayed from the intent of the orginal question, which was I believe what would happen if Bill Gates wanted the full 100 billion dollar value of his stock in cash? That is, what if Gates decided that he wanted his own Scrooge McDuck Money Bin, filled with 100 billion one-dollar bills? Would the Fed have to run the presses day and night for months to oblige him? Or to put it another way, would the amount of money in circulation be able to cover it or not? Granted no sane person would ever want to liquidate interest earning investments to sit on the cash, but in theory what would happen?
OK, then to answer the original question: The government is under no obligation to print more currency to fulfill the whims of a nutjob, even a rich nutjob. The best Bill Gates could get is a letter of credit from a private bank, but I even doubt they’d do that.
Jason R Remy
“Open mindedness is not the same thing as empty mindedness.”
– John Dewey Democracy and Education (1916)
More to the point, the government isn’t under any obligation to give Mr Gates any money at all; the people who want to buy his shares would have to pony up the cash, and if they can’t deliver the money, they can’t have the shares.
US M1 money supply, which includes currency, demand deposits, NOW accounts, credit unions and non-bank travellers cheques, was $1095 billion in July. M0 measures the amount outstanding in notes and coins alone, I cant’t find that number right now, but it will still be way more than what Bill needs. This has been an issue regarding the flight-to-safety Y2K thing, in case people decide to take their money out of banks and keep it in cash. In either case getting the currency wouldn’t be the problem, however banks may have to liquidise a part of their assets and that could be tricky.
As for “On the downside, it wouldn’t look as pretty, and would require people to actually understand how a computer worked before sitting down to use one. We’d have less idiots using computers…”, if we didn’t have millions of idiots buying and using computers and software, we’d still be marooned in the days of a few elitist pointy-heads in white lab-coats chewing on their ball-points and contemplating monolithic computers the size of entire rooms; regardless of what one may think of Gates, making something easy to use and accessible doesn’t have to be a bad thing.
It only hurts when I laugh.
I agree with Moonshine.
I thought I had covered this in my first post, though I did not get into the M1 and M0 stuff. If Bill were to sell his stock (that is where most of his wealth is) then the stockholders would have to come up with enough money to buy it. If you sell more than there is demand available the price goes down (basic supply and demand curve). If Gates offered 1 Billion shares (I calculated this earlier) and the usual trading vol is 20 Million for a day, then the stock price would plummet.
For a couple of reasons, why would Bill sell unless he knew something was wrong? As someone else mentioned MS would not be the same MS without Bill so the investors might not want to pay as much for the stock. If he offers too much supply at once (the scenario presented), the stock would likely drop from the mid 80s to say a $1 per share or less. Then 1 Billion shares could be bought by people quite easily.
As Moonshine and Jason mentioned the Gov’t is not obligated to print money to pay someone. That is between them and their financial institution.
Jeffery
A note about US money. I believe it’s still true. They only guarantee an equivalent in gold, not paper money.
The US went off the gold standard in the 30’s (1933, I think) and off of silver in the 60’s.
The only thing that they guarantee now is that it is “legal tender” (whatever that means) — provided, of course, that it’s not counterfeit (a circular argument if I ever heard one).