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FOR WHOM?: One of three basic questions of allocation (What? and How? are the other two). Answering the "For Whom?" question of allocation determines who receives the goods that society produces with limited resources. Answering the "For Whom" question involves related questions such as, should goods be distributed to people according to incomes and ability to buy (contributive standard), wants and needs (needs standard), political affiliation, or some other criterion (perhaps equality standard)?

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Lesson 19: Money Creation | Unit 1: A Little Magic Page: 3 of 23

Topic: Money Creation <=PAGE BACK | PAGE NEXT=>

The magic is that banks create something of value: they create money.

Note that:

  • To create other valuable items we need valuable resources.
  • Banks create money by adding to a checking account.
Precedents:
  • Governments have done this for centuries: When they print paper currency, they transform items with little or no value into money with more value, value that is created from nothing.
The reality of money creation:
  • Banks do part of the money 'printing' or creation function historically performed by governments.
  • This is the reason why banks are heavily regulated.

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LAW

A generally accepted, verified, proven, fundamental scientific relation. A law is a scientifically certified, thoroughly verified, cause-and-effect relation about the workings of the world. It has been tested and retested through the scientific method. The law of demand, law of increasing opportunity cost, and law of diminishing marginal utility are three fundamental (and extremely important) economic laws of nature.

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APLS

WHITE GULLIBON
[What's This?]

Today, you are likely to spend a great deal of time strolling around a discount warehouse buying club trying to buy either pink cotton balls or a genuine down-filled comforter. Be on the lookout for small children selling products door-to-door.
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This isn't me! What am I?

John Maynard Keynes was born the same year Karl Marx died.
"The more you praise and celebrate your life, the more there is in life to celebrate."

-- Oprah Winfrey

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New Zealand Futures and Options Exchange
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