Banking and Money

25 videos
We all use money and most of us use banks. Despite this, the actual working of the banking system is a bit of a mystery to most (especially fractional reserve banking). This older tutorial (bad handwriting and resolution) starts from a basic society looking to do more than barter and incrementally builds to a modern society with fraction reserve banking. Through this process, you will hopefully gain a deep understanding of how money and banking works in our modern world.

Banking 1

VIDEO 11:49 minutes
Introduction to how banks make money and the value they (potentially) add to society.

Banking 2: A bank's income statement

VIDEO 11:59 minutes
Introduction to the income statement of a bank (and to income statements in general).

Banking 3: Fractional reserve banking

VIDEO 11:48 minutes
Fractional reserve banking and the multiplier effect. Introduction to the money supply.

Banking 4: Multiplier effect and the money supply

VIDEO 11:07 minutes
How "money" is created in a fractional reserve banking system. M0 and M1 definitions of the money suppy. The multiplier effect.

Banking 5: Introduction to bank notes

VIDEO 8:49 minutes
Introduction to bank notes (which you are more familiar with than you realize).

Banking 6: Bank notes and checks

VIDEO 11:02 minutes
More on how bank notes and checks can be used.

Banking 7: Giving out loans without giving out gold

VIDEO 8:29 minutes
How banks can give out loans without ever giving out gold.

Banking 8: Reserve ratios

VIDEO 10:49 minutes
How reserve requirements limit how much lending a bank can do.

Banking 9: More on reserve ratios (bad sound)

VIDEO 8:52 minutes
Seeing how reserve ratios limit how much lending I can do.

Banking 10: Introduction to leverage (bad sound)

VIDEO 9:21 minutes
What leverage is. Why it is is good or bad. Leverage and insolvency.

Banking 11: A reserve bank

VIDEO 11:28 minutes
Introduction to the idea of a reserve bank.

Banking 12: Treasuries (government debt)

VIDEO 11:18 minutes
Introduction to government debt and treasuries. What it means when we say that Federal Reserve Notes are issued by the Reserve bank but are an obligation of the Government.

Banking 13: Open market operations

VIDEO 12:28 minutes
Tools of the Central Bank to increase the money supply.

Banking 14: Fed funds rate

VIDEO 11:42 minutes
How open market operations effect the rate at which banks lend to each other overnight.

Banking 15: More on the Fed funds rate

VIDEO 12:16 minutes
More on the mechanics of the Federal Funds rate and how it increases the money supply.

Banking 16: Why target rates vs. money supply

VIDEO 11:40 minutes
The rationale for targeting interest rates instead of directly having a money supply target.

Banking 17: What happened to the gold?

VIDEO 10:12 minutes
Getting off the gold standard. A short discussion of the meaning of wealth.

Banking 18: Big picture discussion

VIDEO 14:08 minutes
Pros and Cons of various banking systems. More on gold.

The discount rate

VIDEO 13:22 minutes
The discount rate and window. Lender of last resort.

Repurchase agreements (repo transactions)

VIDEO 11:24 minutes
Mechanics of repurchase agreements (repo transactions/loans)

Federal Reserve balance sheet

VIDEO 9:57 minutes
Analysis of the federal reserve balance sheet as of Feb 2007.

Fractional Reserve banking commentary 1

VIDEO 19:13 minutes
Understanding the weak points of Fractional Reserve Banking

FRB commentary 2: Deposit insurance

VIDEO 17:19 minutes
More on the weaknesses of fractional reserve banking. The FDIC and deposit insurance and its side effects.

FRB commentary 3: Big picture

VIDEO 21:27 minutes
Summary of thoughts in last two videos. Discussion of why Fractional Reserve Banking is a subsidy to banks and allows them to arbitrage the yield curve.


VIDEO 3:37 minutes
London InterBank Offer Rate