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Three Misconceptions On Modern Banking and Money

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UC Berkeley has top-five economics and business schools. Yet, after taking classes in both, I’ve had to unlearn everything I was taught about how the financial machine works. What we read in school is mostly wrong and not reflective of modernity. I want to summarize three critical points in understanding the monetary stack. Thanks for reading Punia Viision! Subscribe for free to receive new posts and support my work. Credit to Luca Prosperi for this illustration. Banks are part of a state apparatus consisting of state treasuries, central banks, and commercial banks. They are not private companies as one typically thinks of them. Let’s focus specifically on the relationship between central banks and commercial banks. Central banks have a mandate dictated by the federal government that controls their operation. In the US, this is the dual mandate of low inflation and full employment. Central banks leverage commercial banks to carry out that mandate. They give commercial banks the exclusi

UC Berkeley has top-five economics and business schools. Yet, after taking classes in both, I’ve had to unlearn everything I was taught about how the financial machine works. What we read in school is mostly wrong and not reflective of modernity. I want to summarize three critical points in understanding the monetary stack. Credit to Luca Prosperi for this illustration. Banks are part of a state apparatus consisting of state treasuries, central banks, and commercial banks. They are not private companies as one typically thinks of them. Let’s focus specifically on the relationship between…

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