These headline points summarized what we have covered in this presentation:

Money: The Commodity

We have defined money as:

Money consists of any economic good, or any claim on such a good, that serves as a general medium of indirect exchange and that acts as a final means of payment.

Inflation/Deflation
(Expansion/Contraction of Quantity of Money)

We have seen that inflation and deflation (expansion and contraction of the quantity of money, as distinct from generalized changes in prices) influence prices separately from the levels of production and market supply.

Artificially induced changes in the quantity of money creates misleading information for market participants because they distort market prices.

Mechanisms of Monetary Expansion and Contraction

We have examined the mechanisms of monetary expansion and contraction.

Monetary expansion and contraction, as we know them today, occur as a result of market transactions between banks and their customers within the framework of the fractional reserve banking system.

The Federal Reserve System Role in Money Markets

Although we should not ignore the influence of the Federal Reserve System, we should not let anyone fool us into believing the Fed controls much of anything.

Influence On Reserves

The Federal Reserve exercises influence on bank reserves and thereby on the quantity of money. It does not, however, control either bank reserves or the quantity of money. Furthermore, extremely low reserve requirements have greatly reduced the influence of the Fed on monetary reserves.

Influence On Interest Rates

As with bank reserves, the Fed influences, but does not control, market interest rates. You cannot ignore the influence of the Fed, for its fiat powers make it the Big Gorilla in the financial markets. It can influence rates just by the threat of buying or selling securities.

The Importance of Money

Money plays such a significant role in markets and the market pricing mechanisms that you misunderstand money at your own economic peril.

I encourage you review any of the sections that you find unclear or difficult to understand.

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A few handy references...