Money & Banking

Monetary policy all over the world has followed the advice of the stabilizers.

It is high time that their influence, which has already done harm enough, should be overthrown.

F. A. Hayek, 1932

Money and banking combine as a subject too important to not understand.

Money plays an extremely important role in the operation of any economy. Banking provides the infrastructure and tools for the storing, transfer, and (regrettably) the creation of money. Yet, so few people understand the topics that make up the subject money and banking.

In this section we will examine some of the more complex elements in the topics of money and banking.

Money Basics

Money basics include discussions about economic exchange, the definition of money, the role of money, and the source and measure of the value of money.

Understanding money, of course, requires understanding some basic concepts regarding money. What's the definition of money? What's the role of money? Etc.

Economic Exchange

In order to fully understand money and its role in the market we must first understand the nature of economic exchange.

Definition of Money

A precise working definition of money opens the door to understanding all other aspects of money.

Role of Money

Money plays a critically important, although frequently misunderstood, role in the process of exchange in all markets.

Value of Money

A lot of confusion revolves around the source and measure of value for money. Understanding the value of money leads to better understanding of its role in market exchanges.

The Banking System

The banking system has several components. The structure of individual banks. The Federal Reserve system. And, banking legislation of the government.

The banking system has several components. The structure of individual banks. The Federal Reserve system. And, banking legislation of the government.

Bank Structure

In order to understand what banks can and cannot do, one needs to understand the structure of banks.

Federal Reserve System

The Federal Reserve also his limits as to what they can and cannot do as a part of monetary system.

Banking Legislation

The power of banks and the Federal Reserve system depends on authorities granted to them by banking legislation. Understand how banks operate under federal (and sometimes state) charters.

Money Supply

The supply of money plays an important part in any economic system. Changes in the supply of money creates one of the most disruptive influences in market activity.

We will examine changes in the money supply and its effect on the economic system.

Creation of Money (Summary)

In this section, I describe in detail the process by which money gets created.

Inflation – Deflation

What effects do artificial changes in the quantity of money have on the economy.

Money Myths

Many myths have grown up around the subject of Money & Banking, e.g. money=debt, money must grown perpetually, and more. I will address the myths that seem to have achieved some popularity.

Because of its complex role in the operation of markets, many myths have grown up around the subject of money. I will address many of the more popular myths about money and show why most of them lack logical consistency.

Money = Debt

The idea that money equals debt become one of the more popular myths. This myth seems to have grown out of a misunderstanding of bank accounting. I will explain the logical inconsistency in the idea of money equaling debt.

Perpetual Money Growth

A fairly large number of economists, some of them quite well respected, believe that the quantity of money must continue to grow perpetually. They give several basic reasons for this belief, but none of those reasons make much sense.

Collection of Money Flaws

I have assembled a collection of many of the flawed ideas about money. I will address most of them rather briefly. Others, however, I might expand on in the future.

Money Presentations

I have created some presentations designed to help in the understanding of money and banking.

I have developed a number of presentations on the subject of money. I have posted a couple of them here and anticipate developing and posting some more in the future.

Money Matters Presentation

I developed this comprehensive presentation to demonstrate some of the many ways in which money does matter.

Money & Banking Mysteries

I developed this Prezi presentation in order to clarify some of the mysteries regarding money and banking.

Money & Banking — Goods and processes for market exchanges.