Understanding the Basics of Banking

I haven't been available to update this blog recently, and I won't be available for several more months, so I thought I should at least leave it with the top page serving as a kind of index for ...

http://brown-blog-5.blogspot.com/2013/12/index-of-examples-partial.html

UPDATE 1 2013.08.26: Changed the role of variable "G": it no longer contributes to public's money stock. UPDATE 2 2013.08.26: Changed the role of variable "Mg": it no longer contributes to the ...

http://brown-blog-5.blogspot.com/2013/08/banking-example-112-macro-balance.html

This post is just a more detailed version of Example #11 . Please refer to that prior post for explanations of the assumptions made and the independent variables I adopt here from that example. ...

http://brown-blog-5.blogspot.com/2013/08/banking-example-111-macro-balance.html

In this post I am trying to capture a large set of possible balance sheets here in a simplified world consisting of just four basic entities. I'm making many simplifications (of course), but I d...

http://brown-blog-5.blogspot.com/2013/08/banking-example-11-all-possible-balance.html

In recent discussions with David Beckworth about a recent post of his, I've become confused as to what the Market Monetarist (MMist) position really is on some key issues. Commentator "Jared" b...

http://brown-blog-5.blogspot.com/2013/08/market-monetarists-please-explain.html

This example is meant to illustrate inside money creation, destruction, and the relationship between that and the creation and destruction of debt. It demonstrates these ideas through loan/depos...

http://brown-blog-5.blogspot.com/2013/08/banking-example-10-principal-interest.html

This reader inspired example simply shows what happens when an individual pays taxes to the Federal government. Setup: the Treasury Dept. (Tsy), the central bank (CB), a commercial bank (A) ...

http://brown-blog-5.blogspot.com/2013/08/banking-example-9-paying-taxes.html

This post is a variation on Example #4 . I've eliminated some parts and added others in an attempt to simplify, clarify and explain the two kinds of quantitative easing (QE) and the difference b...

http://brown-blog-5.blogspot.com/2013/08/banking-example-41-quantitative-easing.html

This post attempts to depict the various labels used to describe US money in a Venn diagram and an accompanying table. I've simplified the world into just four entities: The Treasury (Tsy), the ...

http://brown-blog-5.blogspot.com/2013/06/money-labels.html

 This post examines the process of inflation targeting by the Fed as a classic feedback control system. I think looking at it this way illuminates the differences between the neo-classical scho...

http://brown-blog-5.blogspot.com/2013/06/inflation-targeting-as-feedback-control.html

This example illustrates what happens when the Treasury department deficit spends (this includes auctioning bonds and then spending the proceeds). The core of this process is illustrated on bala...

http://brown-blog-5.blogspot.com/2013/05/banking-example-8-treasury-deficit.html

This post is very similar to my previous list of ways in which reserves can leave the banking system , but here I'm not worrying about what's inside or outside the banking system, which greatly ...

http://brown-blog-5.blogspot.com/2013/04/the-three-places-reserves-can-go.html

If you're like me, concepts stay fuzzy until you make a concrete example out of of them. There are still a couple of important MR concepts that I'm having a hard time understanding fully. One ha...

http://brown-blog-5.blogspot.com/2013/04/help-requested.html

The purpose of this example is to demonstrate how to calculate bank capital in various ways vs equity. This post was inspired by a comment thread with Joe in Accounting at pragcap . My basic con...

http://brown-blog-5.blogspot.com/2013/03/banking-example-7-calculating-capital.html

Example of a loan and deposit transfer. Coloring of cells inspired by commenter Geoff at pragcap.com (an attempt to make it more clear, by matching assets with their related liabilities across ...

http://brown-blog-5.blogspot.com/2013/03/banking-example-12-loand-deposit.html

See this post for a simplified list of where reserves can go (ignoring the distinction between inside and outside the banking system). First of all, we need to define what is meant by reserve...

http://brown-blog-5.blogspot.com/2013/03/list-of-ways-reserves-leave-banking.html

Example loan and deposit transfer with both reserve and capital regulatory requirements. Required capital is partly raised by a stock issuance and partly by retained earnings (from a loan origin...

http://brown-blog-5.blogspot.com/2013/03/example-32-capital-requirements-stock.html

Example loan and deposit transfer with both reserve and capital regulatory requirements. Required capital is partly raised by a stock issuance and partly by retained earnings (from a loan origin...

http://brown-blog-5.blogspot.com/2013/03/banking-example-31-capital-requirements.html

This example looks at what happens when the central bank (CB) purchases Treasury bonds from the public and holds them to maturity. For just the purchase see Example 4 . Setup: one central bank...

http://brown-blog-5.blogspot.com/2013/03/banking-example-6-cb-holds-gov-debt-to.html

Examples of a bank spending money; in one case by crediting a deposit and in another by transferring reserves. Setup: Two commercial banks, A and B, and two people, x and y. Reserve requireme...

http://brown-blog-5.blogspot.com/2013/03/banking-example-5-bank-spends-excess.html

See Example #4.1 for a simplified comparison of the two kinds of QE. The example below focuses on the second kind, which is more prevalent. Setup: one central bank (CB), one commercial bank (...

http://brown-blog-5.blogspot.com/2013/03/banking-example-4-quantitative-easing.html

Example loan and deposit transfer with both reserve and capital regulatory requirements. Setup: one central bank (CB), two commercial banks A and B, and one person x. Reserve requirements are...

http://brown-blog-5.blogspot.com/2013/03/banking-example-3-capital-requirements.html

Example of a bank customer using a loan to make a purchase. See Example 1 for an example of a loan and deposit transfer. Setup: one central bank (CB), two commercial banks A and B, and two p...

http://brown-blog-5.blogspot.com/2013/03/banking-example-11.html

Here we add reserve requirements to Example 1 . To see the effects of capital requirements also, see Example 3 . Reserve requirements are regulatory requirements which stipulate that if a bank h...

http://brown-blog-5.blogspot.com/2013/02/banking-example-2.html

Example of a loan and deposit transfer. For a more colorful version see Example #1.2 . Setup: one central bank (CB), two commercial banks A and B, and one person x. No reserve requirements or c...

http://brown-blog-5.blogspot.com/2013/02/banking-example-1.html