Medium of Exchange Used to determine value during the exchange Unit of Account Ability to compare value of g/s Store of Value Holds value if saved and not spent

Durability Portability Divisibility Uniformity Limited Supply Acceptability

Commodity Objects that have value in and of themselves Representative Holder can exchange them for something of value Fiat An order or decree Has value because the government stands behind it

First National Bank Conceived under Federalist Hamilton Held tax money Commerce powers Print single currency Regulate state banks 20 year charter Second National Bank Distrust – popular opinion, Jackson veto Free Banking State-chartered wildcat

Greenbacks Union demand notes Confederacy backed currency with cotton Reunifying Banks National Banking Acts – Reconstruction Charter banks Require reserve Single currency Gold Standard Set value Limit overprinting

Federal Reserve System Not enough gold Central bank to lend $ to member banks Establish a board of governors Control $ supply Great Depression High-risk loans Bank runs, failure Glass-Stiegle Act FDIC Bank holiday Insure deposits Fiat money

Deregulation Removal or relaxation of government restrictions Credit Cards – 1962 Repeal Glass-Stiegle S & L Crisis New competition High interest rates Bad loans, fraud Credit Crisis Credit default swaps Cheap money Stated Income Community Reinvestment Act ARM loans

Mortgage Loan to buy real estate Credit/Debit Promise to pay/withdraw from account Commercial Bank Full service, FDIC insured S & L Saving Banks Credit Unions Finance Company Make money available for consumer borrowing Automatic Clearing House Transfer funds electronically Singular services, Community oriented