Early bankers Goldsmiths stored heavy gold coins because they already had the facilities. Issued warehouse receipts People began trading the receipts rather than coins Goldsmiths got the idea to lend the coins that weren’t being used

Money Supply Consists of currency, checking accounts and traveler’s checks Savings accounts are not money, but rather near money = anything that can be quickly and easily converted to money Credit cards are not money. They create debt rather than pay it off

Debit cards are used like a check but are an electronic transfer Why is the money supply important to us??

Development of US Banks Eventually other businesses began acting as banks If they went out of business though, depositors lost their money State chartered banks emerged

Many issued their own currency. Imagine how confusing this would be. Several attempts were made to develop a national or central bank to stabilize the economy People were fearful a strong federal government and central banks did not last long In 1913, the Federal Reserve Act created the Federal Reserve System that we have today

Types of Banks Commercial Banks Savings and Loans Credit Unions For profit Savings and Loans 1980s crisis Credit Unions Not for profit