Thursday 827

 

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
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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.
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Although credit cards are not a form of money they are important in monetary system analysis.
People who use credit cards
- can pay many of their bills together at the end of the month rather than throughout the month as they make purchases
- hold less money on average in their checking account than those who do not use credit cards
Thus, the use of credit cards reduce the amount of money people hold in bank accounts reducing the economy’s money stock.
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credit card and debit card
kurejittokādo to debittokādo
クレジットカードとデビットカード
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In what years did Visa and Mastercard come into widespread use? GGPT:
Both became widely used in the 1970s, although their predecessors began earlier.
Visa: Began in 1958 as Bank of America’s BankAmericard.
It expanded nationally during the 1960s, became increasingly common by the early 1970s, and was renamed Visa in 1976.
Mastercard: Began in 1966 as Interbank, soon using the Master Charge name.
Its use spread rapidly in the late 1960s and 1970s and became MasterCard in 1979.
By the 1980s, Visa and Mastercard were firmly established as the dominant nationwide bank-card networks.
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What percent of consumer purchases are made using credit cards rather than cash, check or debit card? CGPT:
According to the Federal Reserve’s national consumer-payment data, about one-third of U.S. consumer payments are now made with credit cards.
The latest detailed figures show approximately:
Credit cards: 35%
Debit cards: 30%
Cash: 14%
Checks: 3%
ACH/bank-account payments: 13%
Other methods: about 5%
These percentages are based on the number of transactions, not the dollar value spent.
The change over time is striking.
Credit cards accounted for only 18% of payments in 2016, compared with 35% in 2024.
Over the same period, cash fell from 31% to 14%.