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Oct 30, 2009 I.Money(con’t) II.Banks A.Money Creation Process B.Understanding the Causes of the Financial Crisis.

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Presentation on theme: "Oct 30, 2009 I.Money(con’t) II.Banks A.Money Creation Process B.Understanding the Causes of the Financial Crisis."— Presentation transcript:

1 Oct 30, 2009 I.Money(con’t) II.Banks A.Money Creation Process B.Understanding the Causes of the Financial Crisis

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4 Banks and Money Creation The process by which banks create money is so simple the mind is repelled. --John Kenneth Galbraith

5 Basic Accounting: T Account Assets Something of value the bank owns Currency Loans (student, car, mortgage) Bonds Liabilities Something of value the bank owes to someone—a claim on the bank Checking accts (demand deposit) Savings account Debt or loans from someone equity Assets = Liabilities + New Worth

6 FDIC

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