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Modern monetary theory or modern money theory (MMT) is a heterodox [1] macroeconomic theory that describes currency as a public monopoly and unemployment as evidence that a currency monopolist is overly restricting the supply of the financial assets needed to pay taxes and satisfy savings desires. [2]
The following other wikis use this file: Usage on en.wikibooks.org Principles of Finance/Section 1/Chapter/Financial Markets and Institutions/Federal Reserve
Part I covers the process of fractional-reserve banking as illustrated in Modern Money Mechanics, by the Federal Reserve Bank of Chicago. The film suggests that society is manipulated into economic slavery through debt-based monetary policies by requiring individuals to submit for employment to pay off their debt.
Monetary economics is the branch of economics that studies the different theories of money: it provides a framework for analyzing money and considers its functions ( as medium of exchange, store of value, and unit of account), and it considers how money can gain acceptance purely because of its convenience as a public good. [1]
The alternative to a commodity money system is fiat money which is defined by a central bank and government law as legal tender even if it has no intrinsic value. Originally fiat money was paper currency or base metal coinage, but in modern economies it mainly exists as data such as bank balances and records of credit or debit card purchases, [3] and the fraction that exists as notes and coins ...
Money creation, or money issuance, is the process by which the money supply of a country, or an economic or monetary region, [note 1] is increased. In most modern economies, money is created by both central banks and commercial banks. Money issued by central banks is a liability, typically called reserve deposits, and is only available for use ...
The central bank under a fixed exchange rate system would have to instantaneously intervene by selling foreign money in exchange for domestic money to maintain the exchange rate. The accommodated monetary outflows exactly offset the intended rise in the domestic money supply, completely offsetting the tendency of the LM curve to shift to the ...
The first formal credit theory of money arose in the 19th century. Anthropologist David Graeber has argued that for most of human history, money has been widely understood to represent debt, though he concedes that even prior to the modern era, there have been several periods where rival theories like metallism have held sway.