Intermediate Economics – The “Money Multiplier”

OK class, if you found the 1st Lesson informative and interesting here’s another (though a bit more complicated) discussion for you about why the creation of $7+ Trillion in debt is not a good thing for our Nation or the world at large.

First things first, you need to understand 2 fundamental concepts:

1. The Economic Theory that many/most of our financial systems and models are based on is/was largely derived from the assumption that people will act rationally and that specific industries work within economic vaccumes of sorts.

2. The “Money Multiplier” is a term that represents how a $1,000 deposit in a bank will allow the bank to lend $9,000 from the initial deposit over time and retain only $1,000 in hard cash as a “reserve”.

Alright, now that you have these concepts in mind, let’s jump into the meat of things… “The Roving Cavaliers of Credit” by Steve Keen