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If, as part quantitative easing, a central bank buys government bonds, it might affect prices of other assets positively via arbitrage and the so-called portfolio rebalancing effect. There are obviously several factors at play, but I focus on that one. If there is more demand for government bonds via QE, bond prices increase, and their yields fall. Assume ...


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Does Adam Smith ... support a Central Bank/Federal Reserve? Adam Smith was firmly in favor of central banking (although not necessarily in the same way as understood today). In the Wealth of Nations chapter 3 part I Adam Smith writes “In order to remedy the inconvenience to which this disadvantageous exchange must have subjected their merchants, such small ...


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If you consider bank balances to be "money", then the fractional reserve theory makes sense. If you consider bank balances to be "not money", then the financial intermediation theory makes sense. They are two equivalent ways of looking at the same system from different perspectives. If bank deposits are "money", then of course, ...


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