FIN 350 Lecture Notes - Lecture 3: Royal British Society Of Sculptors, Early American Currency, Money Supply

• School: Quinnipiac University
• Department: Finance
• Course: FIN 350
• Professor: Porter

Document Summary

Federal reserve and its powers: trying to provide an overall stable environment in order to avoid what happened in 2007-2008. Banker of american revolution rodent morris came up with continental currency. 1907 bank panic: made congress realize that they needed to create a central bank, jp morgan, created the federal reserve system. Going to serve as a lender of last resort. Where bank could go to if they had good assets but a liquidity problem. Relatively good banks could use the federal reserve for a discount rate. 1913- agreed to and created the central bank. How the fed and banks can create money. The fed is just making an accounting entry basically creating money out of thin air: uses this money to buy securities. How check processing works: goes through the federal reserves, takes money out of specific bank that it originated from and then gives the money to the bank of the person receiving the check.