money(法定货币).pptVIP

Chapter 25 Money and Commercial Banking Over all history, money has oppressed people in one of two ways: either it has been abundant and very unreliable, or reliable and very scarce.  John Kenneth Galbraith, The Age of Uncertainty (1977) A. Money and Interest Rates The Evolution of Money The History of Money ----Barter Consists of the exchange of goods for other goods. ----Commercial Money Money as a medium of exchange first came into human history in the form of commodities. By the nineteenth century, commodity money was almost exclusively limited to metals like silver and gold, which had intrinsic value. ----Modern Money Paper money or paper currency Money is wanted not for its own sake but for the things it will buy. We do not consume money directly; rather, we use it by getting rid of it. Most money today is bank money----deposits in a bank or other financial institution. Components of the Money Supply Monetary Aggregates: M1 and M2 ----Transactions Money M1 consists of items that are actually used for transactions, includes: Coins. M1 includes coins not held by banks. Paper currency. Many years ago, paper money was backed by gold or silver. But today’s paper currency and coins are fiat money(法定货币). The sum of coins and paper currency is known as currency. Checking accounts, which are technically known as “demand deposits and other checkable deposits”. ----Broad Money (M2) Sometimes called asset money or near-money, it includes M1 as well as savings accounts in banks and similar assets that are very close substitutes for transactions money. Why are these not transactions money? Because they cannot be used as means of exchange for all purchases; they are forms of near-money , however, because you can convert them into cash very quickly with no loss of value. Interest Rates: The Price of Money Interest is the payment made for the use of money. It is the price paid to borrow money, which a