Flows of Funds Through the Financial System-40.0-30.0-20.0-10.00.010.020.030.040.050.019301933193619391942194519481951195419571960196319661969197219751977198019831986198919921995199820012004200720102013ReceiptsOutlaysSurplus or Deficit(−) Government Budget Surplus or Deficit as a Percentage of Gross Domestic Product, 1930–2015 (2010 onwards are estimates) U.S. Govt large net borrower of funds…largest since WW2Principal Money Market InstrumentsPrincipal Capital Market InstrumentsPrimary Assets and Liabilities of Financial IntermediariesPrincipal Financial Intermediaries and Value of Their Assets1928 Note: In Gold Coin payable …on demand 1928 “Gold Certificate” 2004 Note: no gold/silver mentionedNote: Electronic includes internet, paypal, debit, pre-pay cards…but not credit cards (this is credit, not a payment defined here…)Trips your check makes…1979 Fiat Spider 84k miles Excellent condition! One owner for last 20 years! What is “moneyness”? Degrees of LiquidityCHAPTER 2 Money and Central Banks The Monetary Aggregates • Saving Deposits include MMDA (6 checks per month) • “Small Time Deposits” include CDs (less than $100k) • Retail MMMF– “retail” (less than $50k); not a bank account…mutual fund that holds short-term T-Bills and CPAnd what is the Fed up to lately?Fed doesn’t control M1 directly, controls monetary base… (monetary base = bank reserves and currency in
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