this is super helpful, thanks for your good work

In case 3 of the banks and money supply example, wouldn't the money supply be 90 (not 190) assuming that the initial deposit was in a currency form? Because shouldn't we subtract the initial 100 dollars from the money supply, considering that currency is a part of the final money supply?

@justinjarvis5681

4 жыл бұрын

Great question! So, we DID actually subtract the 100 from the currency part of the money supply. But then we added it back to the deposit part, so there is no change in the money supply at first. But then the bank makes a $90 loan, and that goes into the currency because someone now has it as cold. hard cash. Money supply is the sum of currency (which is 90) and deposits (which is 100), so the total money supply is $190. In your question, you are forgetting to add the $100 back into the deposit side, if that makes sense...

I cannot find the full lecture of this video. someone please help I have my final tomorrow

@justinjarvis5681

Жыл бұрын

You know, I don't think I have it anymore. Sorry 😔

wouldn't more reserves means decrease the money supply? Why at 20:15, it says the opposite?

@justinjarvis5681

5 ай бұрын

Great question. When I say "increase reserves", I do NOT mean that the bank pulls money out of circulation (from loans, deposits, etc.) to store it in reserves. That WOULD DECREASE the money supply. Instead, what I mean here is that the Fed is paying the banks for the bonds they just bought from the banks. They pay by inserting "printed" money into their reserve accounts. Thus, the banks feel richer, and then in turn make more loans, and increase the monetary supply.

When you say banks, do you mean banking companies such as chase, wells fargo, etc. Or do you literally mean individual bank building structures. For example, on the federal funds rate slide you said banks will loan from other banks. Does this mean chase will loan from other banks like wells fargo or another chase building that has excess reserves. Not sure if this is a stupid question or not but I'm just trying to get a better overall understanding.

@justinjarvis5681

Жыл бұрын

Not a bad question at all! Banks borrow from other banks. Often via third party institutions so they don't know exactly whom they are borrowing from. But for the purpose of understanding, imagine that Chase Bank is borrowing from Wells Fargo bank. As in, the whole big banking company. Or, to make it simpler, you could imagine that each "bank" has only one building...

@alecrhim3376

Жыл бұрын

@@justinjarvis5681 Got it. Thanks so much!

can we take money market mutual funs ( business) included in m2 plz reply me as soon as possible

@justinjarvis5681

4 жыл бұрын

Yes, money market retail funds are included in m2! www.stlouisfed.org/financial-crisis/data/m2-monetary-aggregate

@sasi-bv4dm

4 жыл бұрын

but if we have money market mutual funds as individual and moneny market mutual funds as business which should i choose to calculate m2?

@justinjarvis5681

4 жыл бұрын

@@sasi-bv4dm I'm not 100 percent sure what you mean but if they are separate accounts they would both be included.

@sasi-bv4dm

4 жыл бұрын

ok thank you alot