This course explains the fundamentals of banking systems, including how money is created.
Introduction to how banks make money and the value they (potentially) add to society.
Introduction to the income statement of a bank (and to income statements in general).
Fractional reserve banking and the multiplier effect. Introduction to the money supply.
How "money" is created in a fractional reserve banking system. M0 and M1 definitions of the money suppy. The multiplier effect.
Introduction to bank notes (which you are more familiar with than you realize).
More on how bank notes and checks can be used.
How banks can give out loans without ever giving out gold.
How reserve requirements limit how much lending a bank can do.
Seeing how reserve ratios limit how much lending I can do.
What leverage is. Why it is is good or bad. Leverage and insolvency.
Introduction to the idea of a reserve bank.
Introduction to government debt and treasuries. What it means when we say that Federal Reserve Notes are issued by the Reserve bank but are an obligation of the Government.
Tools of the Central Bank to increase the money supply.
How open market operations effect the rate at which banks lend to each other overnight.
More on the mechanics of the Federal Funds rate and how it increases the money supply.
The rationale for targeting interest rates instead of directly having a money supply target.
Getting off the gold standard. A short discussion of the meaning of wealth.
Pros and Cons of various banking systems. More on gold.
The discount rate and window. Lender of last resort.
Mechanics of repurchase agreements (repo transactions/loans).
Analysis of the federal reserve balance sheet as of Feb 2007.
Understanding the weak points of Fractional Reserve Banking.
More on the weaknesses of fractional reserve banking. The FDIC and deposit insurance and its side effects.
Summary of thoughts in last two videos. Discussion of why Fractional Reserve Banking is a subsidy to banks and allows them to arbitrage the yield curve.
London InterBank Offer Rate