Class Notes 11-1 - November 1 2011 Global Challenges Money...

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November 1, 2011 Global Challenges: Money I Research paper template Today: The Rise of “Casino Capitalism” Thursday: The Globalization of Microfinance What is Money? Money plays a critical role in the global economy. It is a store of value. It provides a means of exchange between the goods Money Commodity Sales (Money 1 ) Everyday about 2 or so trillion dollars ricochet around the planet. But where does this money come from and how does it manage move around the world so fast these days? The Giant Pool of Money Governments put money into circulation. It can mint coins and print notes and put them into circulation through Reserve Banks or by buying up government bonds. Banks also create “fictitious capital”. As well as accepting deposits they extend credit - money that is based All of this money wants to go somewhere – into shares, bonds, property, gold, foreign exchange market etc. – people want a return on their money Managing Capital Flows: National Regulations After the Wall Street Crash of 1929, legislation introduced to regulate banking and finance in US and most other parts of the world In US, Glass Steagall Act of 1933, among other things, created a firewall between commercial banking, investment banking and insurance industry
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