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Developing the Money Tree

As an experiment I have posted (below) a video version of the diagram I used to develop the Money Tree Post. If this experiment works, I might use videos such as this (only a little slicker) to enhance the explanation of additional points related to free markets. Let me know what you think of … Continue reading Developing the Money Tree

person holding black ceramic teapot

The Money Tree

We have seen a lot of craziness in the financial markets recently. A small group of investors, known as the Reddit investors, bid up several low-priced stock prices, squeezing short-sellers. Many people have applauded this activity depicting it as the small guy outsmarting the big guy — in this case, hedge funds. But, there is … Continue reading The Money Tree

Who Actually Makes Money?

In an earlier post, I described a contradiction between popular economic theory and statistical data. In this post, I will describe true premises upon which we can develop more accurate theories. Popular Assumptions Reserves held at the Federal Reserve somehow act as money — so goes popular assumption. When the Fed adds dollars to bank … Continue reading Who Actually Makes Money?

Money Supply and Bank Reserves

Introduction The fact that we perpetuate false or inaccurate theories causes at least one problem for understanding money and its role. For years economic classes have taught that the Federal Reserve controls the supply of money. When they buy government bonds from banks, they pump reserves into the banks’ reserve accounts, and that addition to … Continue reading Money Supply and Bank Reserves