ECON 219 Lecture Notes - Lecture 21: Monetary Reform, Seigniorage, Fixed Exchange-Rate System
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ECON 219 Full Course Notes
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Document Summary
Talking about central banking, because we are talking about the nuances and complications of the simple microeconomic statements. Microeconomic statement of equilibrium, is that the last dollar spent/invested by an economic player has to yield the same utility regardless of where it is spent. Capital allocation is performed by the financial community the banking system. The bank system has a senior player, the central bank. Operations of typical central banks are criticized by some people. What has happened is that the central banks have moved away from the most simple keynesian story (bank alters quantity of money) to a focus of itself concerning itself with macro credential policy (preventing panics/severe instability) . To be able to do bail outs & rescues, as well as quantitative easing (combination of extremely low interest rates, very large increase in liquidity, and improvement of quality of financial paper)
