ADMS 1010 Lecture Notes - Fractional-Reserve Banking, Money Supply, Subprime Mortgage Crisis
24 Jul 2014
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Banking dates back to where there were no real currency other than gold. Slide 4: banks then make money off the spread, key about fraction reserve banking, make lot of money off of small amount, basically economic theory. Slide 6: explains why u need don"t lot of money in circulation, rest are basically numbers in a computer recording it. If bank can"t pay out its obligations then central bank can pay the out. Slide 9: ultimate objective- maintain inflation: lot of money in circulation and price of things. Slide 10: money supply is how much money is in circulation, as bank of cda buys or loans money to other banks, they lend money to people and that"s how money supply increases. In u. s if one community tanks or one large customer is lost, bank fails: u. s banks were smaller. Slide 12: cda adopting british system of banking, required much less capital than if branches were individual banks.
