How federal governments allow banks to create the vast majority of the world's money supply, and why that erodes the value of money over time. Photo by Generation Grundeinkommen In this episode you'll learn: What is financial intermediation.What is fractional reserve banking.How banks create money through creative accounting.How banks decide how much money to create through their lending decisions.How central banks try to control the amount of lending.Why federal governments can … [Read more...]
MNY091 Plus: Money Creation, Smart Beta, Howard Marks and Bitcoin
This week on Money For the Rest of Us Plus I review an academic paper on how money is created out of thin air. I also answer some questions on smart beta and how smart beta value ETFs differs from traditional value managers. We look at how investors' emotions drive markets as explained by Howard Marks. Finally, I share why I sold some of my Bitcoin and the current crisis facing the cryptocurrency. The episode length is 34 minutes. MNY091 Plus View and Listen To Other Plus … [Read more...]
MNY042 Plus: Federal Governments Outsource Money Creation to Banks
In this week's Money For the Rest of Us Plus episode, I explain that while governments can theoretically create money by spending that in practice they have outsourced money creation to banks. I also share a paper that helps explain much of what was covered in Episode 42. Finally, I discuss the rebound in oil prices, the strong jobs report and my bond portfolio. The episode length is 12 minutes. … [Read more...]
1: What Is Money?
How money is created out of thin air. Money is digits. It hasn't always been that way. Money used to be gold bullion or silver and later became coins and paper bills backed by gold. Now it's mostly digits. Just bits stored on a computer at your bank. The amazing thing about digital money is it can be created or destroyed simply by changing the digits. It is as easy for governments and banks to create money as it is to change the score on the scoreboard. In this episode, … [Read more...]
