Scot Wick Blog

  Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 10 Money and Prices in the Long Run Chapter 29 of 36 The Monetary System Section 7 of 22 … Why aren’t credit cards included as part of the economy's stock of money? Since they are used to make purchases they seem to be a method of payment. Credit cards are excluded from all measures of money quantity because they are not really a method of payment but rather a method of deferring payment. When you use a credit card to buy a meal the bank that issued the card immediately pays the restaurant. At a later date you repay the bank from your checking account. The balance in your checking account is part of the economy's money stock. Debit cards automatically directly withdraw funds from a bank checking account to pay for a purchase. So, a debit card is more similar to a check than a credit card. … Although credit cards are not a form of money they are important in monetary system analysis. People who use c...

  Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 10 Money and Prices in the Long Run Chapter 29 of 36 The Monetary System Section 6 of 22 … Figure 1 – Two measures of the money stock for the U.S. economy The two most widely followed measures of the money stock are M1 and M2. Data for year 2007. ... How do we measure the amount of money, the money stock, in the U.S. economy? The most obvious money is currency, the paper bills and coins circulated by the public. Currency is not the only asset you can use to buy goods and services. Stores commonly also accept personal checks. So, to measure the money stock you would include checking accounts. After including checking accounts as part of the money stock we are led to consider the large variety of other accounts people hold at banks and other financial institutions. … Bank depositors usually cannot write checks on their savings account balances. But they can easily transfer funds from savings to checking a...

  Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 10 Money and Prices in the Long Run Chapter 29 of 36 The Monetary System Section 5 of 22 … Commodity money is money with intrinsic value. Intrinsic value means the item has value besides as money. Gold is an example of commodity money. Gold has intrinsic value because it is used in industry and making jewelry. Today we no longer use gold as money. In the past gold was a common form of money because it is easy to carry, measure, and verify purity. When an economy uses gold as money or uses paper money that is convertible into gold on demand the economy is said to be operating on a gold standard. … Cigarettes is another example of commodity money. In prisoner-of-war camps during World War II prisoners traded goods and services using cigarettes as money. Even nonsmokers accepted cigarettes as money, knowing they could use cigarettes to buy goods. … Fiat money is money without intrinsic value. Fiat money is...

  Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 10 Money and Prices in the Long Run Chapter 29 of 36 The Monetary System Section 4 of 22 … Money has three functions in the economy -1- a medium of exchange -2- a unit of account -3 - a store of value ... -3 - A Store of Value A store of value is something people can use ¬to transfer purchasing power from the present to the future. When a seller accepts money today in exchange for a good the seller can hold the money and become a buyer of another good later. Nonmonetary stores of value include gold, stocks and bonds. … The term wealth is used to refer to the total of all stores of value including both money and nonmonetary assets. Economists use the term liquidity to describe the ease with which an asset can be converted into the economy's medium of exchange. Because money is the economy's medium of exchange, it is the most liquid asset. … Most stocks and bonds can be sold easily, so are relatively ...

  Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 10 Money and Prices in the Long Run Chapter 29 of 36 The Monetary System Section 3 of 22 … Money is the set of assets in the economy people use to buy goods from each other. The cash you carry is money because you can directly use it to buy groceries at the market. If you own shares of Microsoft Corporation, this asset is not a form of money, you cannot buy any consumer product directly with shares of stock, it must be sold first. Money includes only the few types of wealth regularly accepted by sellers in exchange for goods. … Money has three functions in the economy -1- a medium of exchange -2- a unit of account -3 - a store of value These three functions differentiate money from other assets in the economy, such as stocks, bonds, and real estate. … -1- A Medium of Exchange A medium of exchange is something buyers give to sellers when they purchase goods. This transfer of money from buyer to seller al...

  Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 10 Money and Prices in the Long Run Chapter 29 of 36 The Monetary System Section 2 of 22 … When you eat at a restaurant, whether you pay by cash or check, the restaurant owner is happy to receive these pieces of paper. Paper money has no value in itself such as a silver coin. But the restaurateur is confident some third person in turn will accept it in exchange for something the restaurateur values. That third person is also confident some fourth person and so on will accept the paper money. … The use of money for transactions is extremely useful in a large, complex society. If there was nothing in the economy widely accepted in exchange for goods people would have to rely on barter, which is exchanging one good for another, to obtain things they need. An economy that relied on barter would have trouble allocating scarce resources efficiently. In a barter economy trade requires the double coincidence of...

Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 10 Money and Prices in the Long Run Chapter 29 of 36 The Monetary System Section 1 of 22 … Chapter 29 topics: The meaning of money The functions of money The kinds of money Money in the U.S. economy Credit Cards and Debit Cards The Federal Reserve system The Fed's organization The Federal Open Market Committee Banks and the money supply The simple case of 100% reserve banking Money creation with fractional reserve banking The money multiplier The Fed's tools of monetary control Problems in controlling the money supply Bank runs and the money supply The Federal Funds Rate Pros and Cons of a Return to the Gold Standard ... … credit cards and debit cards kurejittokādo to debittokādo クレジットカードとデビットカード … … ChatGPT chapter 29 summary: Introduction Chapter 29 explains the nature of money, how banks create money, and how the Federal Reserve influences the money supply. Money makes exchange easier than barter a...

  Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 9 The Real Economy in the Long Run Chapter 28 of 36 Unemployment Section 21 of 21 … Chapter conclusion Here we have reviewed the measurement of unemployment and reasons economies always experience some unemployment . We have noted how job search, minimum-wage laws, unions, and efficiency wages help explain why some workers are always unemployed. Economists differ in which of these causes of unemployment they consider most important. … This chapter offers an important lesson: Although the economy will always have some unemployment, its natural rate changes over time. Many events and policies can alter the unemployment amount in the economy. The natural rate of unemployment changes as · the internet speeds up the job search process · Congress and states increase the minimum wage · workers join or quit unions · firms change their use of efficiency wages The way we organize society is the main factor drivin...

    Note, I post everything on Facebook now. I keep reading stories of people being permanently banned from FB for some unknown reason, perhaps by a lower-level manager who didn't like the politics or philosophy of someone. I was suspended by FB once and warned it might be permanent, didn't say why other than against "community standards." Fortunately, it turned out to be temporary. If I'm ever permanently banned from FB I'll continue at X and keep posting copies here. HAT Manifesto Part 3 of 3 Appendix - additional writings, updated as written.  Mostly comments about articles and books. Note, these are in chronological order aoldest to newest. Some are re-written at a later date further down.   240723 Quote from book Fear Itself - Exposing the Left's Mind-Killing Agenda; “Overcoming the weaponization of fear first requires recognizing it. Once we’re no longer in the dark, defeating it becomes second nature as we take back control of our lives and the dest...