BADM 1004 Lecture Notes - Lecture 5: Cash Register, Moral Hazard, Deposit Insurance
3 Apr 2017
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What is money: economies don"t need money. Double coincidence of wants : economic organization of a p. o. w. Camp all the allied prisoners got the same rations. Sikh prisoners didn"t want beef, french prisoners were desperate for coffee. Soon cigarettes emerged as currency: uses of money. Standard object exchange goods and services. I hand over five dollars, the bartender hands me a beer. I look at the menu: a bud light costs five dollars but a nice porter costs me seven. The cash register at the bar holds 500 dollars: money reduces transaction costs when it is: divisible uniform storable compact, paper money. 11th century in china bank notes carried a guarantee that it could be traded at any time for coinage paper money could be public or private. Governments can"t stop bank runs: alleviation. Central banks can print money and lend it to banks. This stops banks from failing: prevention.
