ECON 2 Lecture Notes - Lecture 11: Bitcoin, Barter, Comparative Advantage
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Document Summary
In 2008, a bunch of banks were going bankrupt. The federal reserve leant jp morgan a bunch of money to buy failing banks and the aig (the insurance company that sold insurance on the bad bonds) Us currency is backed by nothing today. Fiat money: money not backed by anything; it"s only here because we agree that it"s worth something. Any asset that can be used to purchase things. Dollars, coins, checks, other country"s currency, bitcoin, etc. Credit cards are loans (not money) because you are borrowing money from the bank at a certain interest rate, which you need to pay back later. Barter: trading goods for goods (with no currency exchanged) Money is easy to trade with, and thus facilitates trade. The more trades that happen, the better off we are. (because of concepts like comparative advantage, which we have discussed in other lectures) Promotes economics efficiency by reducing the time it takes to trade.
