1 2 barter commodity money 3 money accepted by law this note is legal tender for all debts, public...
TRANSCRIPT
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Federal Reserve Bank of Richmond
Federal Reserve Bank of Richmond
Secretary of the TreasuryTreasurer of the United States
Number refers to 5th district; also corresponds to the letter E
Have you ever stopped to examine
the features of a dollar bill?
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The Great Seal of the United States
the pyramid – a symbol of material strength and endurance
the American bald eagle
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“ANNUIT COEPTIS” - He has favored our undertakings
What does the eye inside the triangle represent?
“NOVUS ORDO SECLORUM” A New Order of the Ages
Why is the pyramid unfinished?
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the former 13 colonies
the former 13 colonies
The Executive BranchThe Executive Branch
The Legislative BranchThe Legislative Branch
The Judiciary Branch
The Judiciary Branch
PEACE and WAR
Out of Many, ONE
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M1 = currency in circulation+ demand deposits+ travelers’ checks+ other checkable
deposits
Transactions money
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Near Monies
M2 = M1+ savings accounts+ time deposits (< $100,000)+ money market accounts+ repurchase agreements
(<$100,000)
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• Fractional reserve banking system
• Reserves
• Legal reserve requirement
• Excess reserves
• Loans
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Illustration of money creation
• Assume 20% legal reserve requirement
Suppose Nina deposits $1,000 in her checking account at Citibank.
T-account of Citibank:
______Assets________________Liabilities____________
Reserves $200 Demand deposits $1,000
Loans 800
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• Kevin borrows $800 from Citibank, and buys a computer at CompUSA.
• CompUSA deposits Kevin’s check at Fleet Bank.
Fleet Bank’s T-account:
_____Assets________________Liabilities_____________ Reserves $160 Demand Deposits $800 Loans 640
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• Vivian borrows $640 from Fleet Bank and buys a new TV set at Sears department store.
• Sears deposits Vivian’s check at Bank of New York.
T-account of Bank of New York:
______Assets____________________Liabilities_______ Reserves $128 Demand deposits $640 Loans 512
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Total demand deposits after lending and re-lending by banks
Banks Demand Deposits
Citibank $1,000Fleet 800Bank of New York 640 + other banks + additional deposits ___________ = $ 5,000 Total