Syllabus

This course offers an introduction to a money view of economic activity for modern times, building on the intellectual traditions of British central banking and American institutionalism. Part One explores the economics of payment systems and money markets. Part Two explores connections with foreign exchange and capital markets. The present session is Part One; Part Two will start one week after Part One finishes. My recent book The New Lombard Street: How the Fed became the Dealer of Last Resortcan be read as an example of how the money view helps understand the evolution of the role of central banking from the origin of the Fed to the most recent crisis. (The link takes you to a Princeton Press page where you can view pdf of the book for free, and order a discount price copy.) The course is six weeks long, with a final exam in the seventh week. Each week there are two lectures, one reading with associated guide questions, and one quiz that assesses your understanding of the material for that week (except that the first week has no quiz). Readings and lecture notes for the entire course are visible throughout the course, but the video lectures are released one week at a time in order to encourage you to proceed at the same pace as the rest of the class. The idea is to facilitate discussion. In my experience, learning about money is much like learning a language. There is a special vocabulary and a special grammar that practitioners use to talk among themselves, and if you want to join the conversation or even just lurk in the background and listen, then you have to learn the language. Like learning any language, immersion is really the best way. You need to surround yourself with expert speakers and try to figure out what they are saying. For this purpose, I have recruited a team of Community TAs--graduate students, practitioners, even some postdocs--to monitor the discussion forums, and talk with you. Typically the TAs are not yet expert speakers themselves yet, so I am talking with them at the same time. I will also be producing a weekly video analyzing some article in the Financial Times, which is where you can find abundant examples of the native speech. And of course I encourage you to talk with each other, trying out this new language for yourselves. Week 1. Introduction (Sept 1-7) Lec 1: The Four Prices of Money Lec 2: The Natural Hierarchy of Money Reading: Allyn Young No Homework Week 2. Introduction, continued (Sept 8-14) Lec 3: Money and the State: Domestic Lec 4: The Money View, Macro and Micro

Reading: Hyman Minsky Homework, due Sept 15: Quiz 1 Week 3. Banking as a Clearing System (Sept 15-21) Lec 5: The Central Bank as a Clearinghouse Lec 6: Federal Funds, Final Settlement Reading: Charles Dunbar Homework, due Sept 22: Quiz 2 Week 4. Banking as a Clearing System, continued (Sept 22-28) Lec 7: Repos, Postponing Settlement Lec 8: Eurodollars, Parallel Settlement Reading: Walter Bagehot Homework, due Sept 29: Quiz 3 Week 5. Banking as Market Making (Sept 29-Oct 5) Lec 9: The World that Bagehot Knew Lec 10: Dealers and Liquid Security Markets Reading: John Hicks Homework, due Oct 6: Quiz 4 Week 6. Banking as Market Making, continued (Oct 6-12) Lec 11: Banks and the Market for Liquidity Lec 12: Lender/Dealer of Last Resort Reading: Jack Treynor Homework, due Oct 13: Quiz 5 Week 7. Review and Exam (Oct 13-19) Lec Review Final Exam, due Oct 20.