I just encountered another book about Modern Monetary Theory (MMT.) When I first encountered MMT several years ago I never thought such a boneheaded idea would achieve so much traction. Even within the growing environment of socialism, I believed that people would see through the flaws and fallacies of MMT. I actually believed that by … Continue reading Danger – The Growing Popularity of MMT

Synopsis When someone asks, "How Does the Federal Reserve Create Money?" they base that question on the false premise that the Fed actually does create money. Consistent with the subjective theory of value, only individuals in the market can determine what to use as money. Those individuals have chosen to use various dollar-denominated instruments, but … Continue reading Does the Federal Reserve Create Money?

Introduction In my earlier newsletter, in which I discussed business finance, I explained that I worked as a credit analyst in a local bank. In that position, I analyzed the financial statements of the bank’s business customers. I did not realize until later that it did not prepare me to understand the balance sheet of … Continue reading Explain Bank Finance

Synopsis Some people have said that fish do not know that they are in water. I don’t know the truth of that statement. I have never had extensive conversations with any fish. Most people do know that they live in “air.” Beyond that knowledge, they know little about something without which they cannot live. In … Continue reading Introduction to Money & Banking Series

Because of recent turmoil in financial markets I have decided to republish this article with a few amendments. I suggest that readers keep in mind the importance of changes in the quantity of money. When the quantity of money increases, increasing prices signal shortages (that don't really exist). In response producers increase production creating goods … Continue reading The Shrinking Money Supply Revisited

This question should be easy to answer. Money gets its value from the same source that any other good does; it gets its value from individuals. That means that the value for every individual is different from that of every other individual. But many don't fully understand that fact. Source of All Economic Value Frequently, … Continue reading How Does Money Get Value

Money consists of any economic good, or any claim on such a good, that serves as a general medium of indirect exchange and that acts as a final means of payment. Although people widely use what they refer to as money, they don’t seem to have a clear understanding of its purpose in the market. … Continue reading The Purpose of Money

The following succinctly states the definition of money. Money consists of any economic good, or any claim on such a good, that serves as a general medium of indirect exchange and that acts as a final means of payment. Although simply stated, this definition requires further explanation to clarify the precise meaning of the terms … Continue reading Money Definition Explained