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