The following posts and textbook were written to provide alternative means to understand money and banking issues. While the post have been revised and edited somewhat relative to what was written in the spring, the textbook is a much better document. The textbook uses the posts but thoroughly edited and expanded them; everything is also formatted so that the material is easier to read.
Throughout the material, the concept of balance sheet is central and used to analyze all the topics presented. Not only are balance sheets relevant to understand financial mechanics, but also they force an inquirer to fit a logical argument into double-entry accounting rules. This is crucial because if that cannot be done there is an error in the logical argument.
The monetary and banking aspects and their relation to the macroeconomy are analyzed extensively in this material by relying on the literature that has been available for decades in non-mainstream journals, but that has been mostly ignored until recently. Gone is the money multiplier theory, gone in the financial intermediary theory of banks, gone is the idea that central bank control monetary aggregates, gone is the idea that finance is neutral in any range of time, and gone is the idea that nominal values are irrelevant. Preoccupations about monetary gains, solvency and liquidity are central to the dynamics of capitalism, and finance is not constrained by the amount of saving.
The posts dealing with monetary systems are also much more developed than a typical textbook and integrated with the rest of the material. As such, the “money” chapter, usually first in M&B texts, only comes much later in the form of three chapters, once balance-sheet mechanics and financial concepts, such as present value, have been well understood. In addition, the link between macroeconomic topics and banking theory is fully established to analyze issue of inflation, economic growth, financial crisis, and financial interlinkages.
- Part 1: Balance Sheet
- Part 2: Central bank balance sheet and immediate implications
- Part 3: Monetary Base, Reserves, and Central Bank’s Balance Sheet
- Part 4: Monetary Policy Implementation
- Part 5: FAQs about central banking
- Part 6: Treasury and Central Bank Interactions
- Part 7: Leverage
- Part 8: The Private Banking Business
- Part 9: Banking regulation
- Part 10: Monetary Creation by Banks
- Part 11: Inflation
- Part 12: Economic Growth and the Financial System
- Part 13: Balance Sheet Interrelations and the Macroeconomy
- Part 14: Financial Crises
- Part 15: Monetary Systems
- Part 16: FAQs about Monetary Systems
- Part 17: History of Monetary Systems
Beginning with Part 18 below, these are new chapters for the upcoming book draft and at this time are not reflected in the ebook below.
- Part 18(A): Overview of the Financial System: A World of Promises
- Part 18(B): Overview of the Financial System: A World of Promises
- Part 19(A): Financial Institutions: An overview
- Part 19(B): Financial Institutions: An overview
- Part 19(C): Financial Institutions: An overview
- Part 20: Pricing Securities
Link to book is here or view embedded below.