- Money Creation Formula:
- A single bank can create $ by amount of its ER
- banking system as a whole can create $ by a multiple of excess reserves
- MM X ER = Expansion of $
- Money multiplier= 1/RR
- New vs. Existing Money:
- Initial deposit in a bank comes from the FED/bank purchase of a bond or other $ out of circulation (buried treasure), the deposit immediately increases the $ supply
- The deposit then leads to further expansion of the money supply through the money creation process.
- New Money Formula:
- Total change in MS if the initial deposit is new money:
- Deposit + Money created by the banking system.
- Existing Currency deposited into a checking account will only change the composition of the money supply.
- Total change in MS if the initial deposit is existing money:
- Banking system created money only
Saturday, April 28, 2018
money creation
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absolute vs comparative, input vs output
Specialization Individuals and countries can be made better off if they will produce in what they have a comparative advantage and then t...
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Money Creation Formula: A single bank can create $ by amount of its ER banking system as a whole can create $ by a multiple of excess re...
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Specialization Individuals and countries can be made better off if they will produce in what they have a comparative advantage and then t...
An enlargement of the text would be great because the font is pretty small and the color background of white in some parts of the notes doesn't make it any better. I think you might be missing some few concepts as well such as the liability and assets balance sheet, banking systems and other.Also a great way to lighten things up with out using so much words is to include pictures,
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