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Thanks for this feedback. I have now updated the article substantially. The new version covers the possibility of banks lending money to each other as opposed t

Thanks for this feedback. I have now updated the article substantially. The new version covers the possibility of banks lending money to each other as opposed to settling a transaction with cash/reserve deposits. Diffs: https://github.com/baobabKoodaa/blog/commit/c2f7fef53d621accee110f3b40510c15e9cdc061 https://github.com/baobabKoodaa/blog/commit/c2f7fef53d621acc...

H8crilA 6y ago
Sure! The various types of money usually have interest rates associated with them, and those rates tell you about the relationships between the types of money. For example there is an interest rate differential between the central bank money and the US treasuries (which are equivalent to USD money for most people most of the time), captured by the repo rate minus IOER. This differential blew up quite recently (in 2019), showing a temporary divergence between tbills and "real money". In the past, before central banks, each region of the US had their own money, and merchants had conversion tables. They would literally tell you that, for example, Boston money is worth for me only 80 cents on the dollar. Much like today we quote prices on bonds. Robert Shiller has some really good finance lectures on YouTube. The one about central banking: https://m.youtube.com/watch?v=_SpIaGTq0u8 https://m.youtube.com/watch?v=_SpIaGTq0u8