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Explore the fundamental mechanics of modern monetary systems through this comprehensive course filmed live at Barnard College, examining how money actually functions in today's interconnected financial world. Delve into the evolution of monetary institutions over the past three to four decades, analyzing the financial crisis of 2007-2009 as a catalyst for understanding new system dynamics and vulnerabilities. Investigate the intertwining of capital markets and money markets, discovering how this integration has created both new opportunities and systemic risks that central banking authorities had to address through unprecedented innovation during the crisis.
Examine the global character of modern monetary systems, tracing how central bank cooperation became essential during the financial collapse and exploring hints of an emerging international monetary order. Study the critical role of derivative contracts, particularly credit default swaps and foreign exchange swaps, understanding why modern money cannot be separated from modern finance. Learn how dealers in both capital and money markets function as profit-seeking suppliers of market liquidity in the new system of market-based credit.
Master the "money view" approach that places payment systems and money markets at the center of monetary analysis, beginning with foundational concepts like the four prices of money and the natural hierarchy of financial instruments and institutions. Analyze the relationship between money and the state in both domestic and international contexts, examining the Federal Reserve System's evolution from the National Banking System through quantitative easing policies.
Understand central banking operations through detailed examination of clearinghouse functions, federal funds markets, and repo markets, learning how these mechanisms facilitate final settlement and manage liquidity in the banking system. Explore the Eurodollar market as a parallel settlement system and its implications for global finance, while studying the historical context provided by Bagehot's classical banking principles.
Investigate modern dealer operations and liquid security markets, analyzing how banks function as money dealers and examining the Fed's role as both lender and dealer of last resort. Compare chartalist and metallist theories of money while exploring key currency systems and international payment mechanisms. Study foreign exchange markets from a dealer perspective, understanding both private dealing systems and central bank interventions.
Examine the distinction between direct and indirect finance, tracing the evolution from traditional banking to modern shadow banking systems. Learn about derivative instruments including forwards, futures, interest rate swaps, and credit default swaps, understanding their role in modern financial markets and their implications for monetary policy. Conclude by synthesizing economics, finance, and money views to develop a comprehensive understanding of contemporary monetary systems and their regulation.
