Daily Archives: May 7, 2014

Fundamentals of Shadow Banking: Dealer Model

Dr. Perry Merhling presented this seminar at UMKC on 4/30/14. He presented on the Shadow Banking System, in particular, the Dealer Model. The slides are immediately below the video.

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Economists vs What Works: Lessons from the ETF Market

By Brian Andersen

In my previous post I outlined the strategy used by Exchange Traded Funds (ETFs) to create financial assets that offer both price stability and high liquidity. I defined price stability as the ability to hold the asset without gaining or losing purchasing power. And liquidity as the ability to buy or sell the asset on demand. Since this mechanism has been shown to work very well in the equity markets, I think it could be instructive for issuers of fiat currency, because fiat currency are also financial assets that are supposed to offer price stability and liquidity.

To that end I extracted four guidelines for a currency issuer to follow, based on what is already known about successful ETF operations:

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