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Capitalism: Success, Crisis and Reform (PLSC 270) Professor Rae explores the creation of incentives and disincentives for individual action. The discussion begins with the Coase Theorem, which outlines three conditions for efficient transactions: 1) clear entitlements to property, 2) transparency, and 3) low transaction costs. Professor Rae then tells the story of a whaling law case from 1881 to highlight the power of incentives and prope...more
Introduction to how banks make money and the value they (potentially) add to society.
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.
Introduction to the income statement of a bank (and to income statements in general).
