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Modern Money Mechanics

Modern Money Mechanics

This is a free, online book, the purpose of which "is to describe the basic process of money creation in a "fractional reserve" banking system. The approach taken illustrates the changes in bank balance sheets that occur when deposits in banks change as a result of monetary action by the Federal Reserve System - the central bank of the United States. The relationships shown are based on simplifying assumptions. For the sake of simplicity, the relationships are shown as if they were mechanical, but they are not, as is described later in the booklet. Thus, they should not be terpreted to imply a close and predictable relationship between a specific central bank transaction and the quantity of money. The introductory pages contain a brief general description of the characteristics of money and... Show More
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