HOW MONEY WORKS: Dollar Creation & Fed Money Printing 101
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- เผยแพร่เมื่อ 8 ก.ย. 2024
- In this episode, Nik Bhatia and Ritik Goyal present an in-depth graduate seminar on money creation. With over a dozen examples of monetary operations, watch this episode to learn how money is created by banks, the relationship between banks and central banks, the interaction between reserves and deposits, and an overview of repo. For those looking for over an hour of balance sheet mechanics and T-chart examples, this episode is for you. Grab your pens and pencils!
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I cant believe this is free content. So much here to dig into and will definitely need a few watches/listens to absorb it all... but thanks for sharing. This channel is amazing!
So gracious of you to put this together in appropriate detail. (For rookies, do realize that for entity assets the left side is an increase and right side a decrease. For entity liabilities/reserves the left side of the T accounts are decreasing the item and the right side shows the increase in liabilities/reserves.)
thank you for adding this comment, sorry for not labeling assets/liabilities here
-Nik
I will have to watch a few times and take notes. ;-) Thanks to both Nik and Ritik!
Great public service. Thank you for your unique perspectives.
Amazing work...
Best explanation on money creation ever!
Nik this was outstanding. I spent the last four years of my life studying and reading to understand this. Had I had this video back then things would have been much easier. Huge props to Ritik for his excellent explanation! One small question though. Around 43:30 - when Primary Dealers sell USTs to the FED, I am pretty sure they do in fact have an account at the fed where they hold reserves directly. Why did Ritik include Commercial Banks here? (maybe because many PD have vertically integrated commercial banks?)
Fantastic! This is exactly the kind of content we have all been waiting for.
YOU ARE THE BEST!
Thank you Nik. 👍
wow that's a lot to digest, really good content. Thank You :)
Thank you both! 💵
What I want to understand is how the interest payments plays a role in their balance sheet?
In the 'Repo Lending' slide, for the example of 'Non-Bank A lending to Non-Bank B', should the debits and credits be flipped on the Bank A T-chart in this case? i.e. Debit Deposit and Credit Reserves?
Nik!
Great content. Thank you both.
What is a “repo”? I hear this term thrown around a LOT in media, I’d settle for a simple etymology of the contraction: “A “repo” is a short contraction of the word “repossess”, taken from the operation of a seedy business employed by lenders of money to collect the collateral associated with the loan.
Now I know that 99% of the listeners of this video will guffaw at this definition of terms, “Hah! This guy’s been watching too many episodes of ‘Repo Man’. He is an idiot and SHOULD implicitly know that “repo” refers to a “repurchase agreement” in a financial transaction.
I’m an idiot because I’m stupid. I don’t know what the contraction refers to. I don’t know what a “repo” means in relation to the operation of banks and the Fed/Treasury. That’s the reason why I listen to TBL - to reduce the ambiguity in my mind of terms, actions, processes and context.
So, wtf is a “repo”? What is it NOT. What is the context of this definition? How does it relate to other objects in your “preso”? What actions are performed on it? What processes are performed on it (inputs, outputs, etc).
I appreciate the free content. It’s fabulous. I’d appreciate it more if the teachers would ask themselves prior to the preso, “What are likely ambiguities in the minds of the student that we’re not clearing up. What ambiguities have we introduced?”
Thanks again for this presentation. It’s great - but could be better.
I am just starting this video and it’s been great so far. Nick, where can I find the syllabus for your course which you mentioned at the beginning of the video?
thank you for watching!
classes.usc.edu/term-20241/classes/fbe/
my course is FBE 535 (fixed income)
-Nik
Love the content but would be great if you guys used non-white backgrounds. My eyes are on fire.
thank you for your feedback! we will consider this
-Nik