https://padlet.com/ochuko_angozi/lk8m28ytmr4t Made with magic en-us 2018-12-04 01:28:15 UTC 2024-10-26 10:21:00 UTC hello@padlet.com ochuko_angozi https://padlet.com/ochuko_angozi/lk8m28ytmr4t/wish/310712485 In this website, I will talk about money and the banking system. Majority of us use them everyday but we don't understand the role they play in our day to day life and how we could maximize them to our benefits. This pad-let will give you the basic understanding you need in the world of banking and finance. ]]> 2018-12-04 01:31:04 UTC https://padlet.com/ochuko_angozi/lk8m28ytmr4t/wish/310712485 ochuko_angozi https://padlet.com/ochuko_angozi/lk8m28ytmr4t/wish/311119882 https://www.youtube.com/watch?v=Dugn51K_6WA
The concept of money is very easy to understand. This crash course talks about money and finance in detail. they explaining the use money to buy goods and service. When we work, we get paid money. We know the value of money(relatively). But what is money really? Money can be defined has anything that is accepted has a medium of exchange. The key words there is "medium of exchange". Before money, we used barter trade were we exchanged goods or service for another. A farmer would exchange his crops for fish with a fisherman. while effective, It wasn't the best way to trade. it had to store of value; the farmer can't save the fish for too long or it would go bad. It also had no unit of account. how many cucumbers is equivalent to one fish. so money paying the middle man, solved all this trade issues. the farmer can sell his crops for money and decided what he wants to buy. either fish or meat or both. money makes it possible. ]]> 2018-12-04 20:05:55 UTC https://padlet.com/ochuko_angozi/lk8m28ytmr4t/wish/311119882 ochuko_angozi https://padlet.com/ochuko_angozi/lk8m28ytmr4t/wish/311126511 https://www.youtube.com/watch?v=93_Va7I7Lgg
this video explained Money multiplier as a way banks affect the supply of money through fractional reserve banking.
This is a way banks create money out of thin air. When you deposit cash in the bank, the bank doesn't keep all the cash in a safe. what they do is, they keep a fraction of the money, lets say 10% and loan out 90% to borrowers. so if you deposited $100 to your bank, they only keep $10 then loan $90 out creating $90 in new deposit bring the total deposit to $190. the bank just created $90 in deposit from thin air and this pattern repeats itself over and over again. 
the money multiplier has a formula.
Money    
multiplier   =      1/reserve ratio

So with the example used above, $1 new reserve is = $10 in the money.]]> 2018-12-04 20:19:06 UTC https://padlet.com/ochuko_angozi/lk8m28ytmr4t/wish/311126511 ochuko_angozi https://padlet.com/ochuko_angozi/lk8m28ytmr4t/wish/311134044 https://www.youtube.com/watch?v=fTTGALaRZoc
To understand the roles of banks, we need to introduce two new characters, Lenders and borrowers. Without this two, banks would be useless. Banks take in money from lenders for a small amount in interest then load the money to the borrows at a higher interest rate, Very simple. in retrospect, the lenders are just loaning  money to the borrowers. but with low risk. ]]> 2018-12-04 20:37:03 UTC https://padlet.com/ochuko_angozi/lk8m28ytmr4t/wish/311134044 ochuko_angozi https://padlet.com/ochuko_angozi/lk8m28ytmr4t/wish/311151090 https://www.investopedia.com/university/macroeconomics/macroeconomics4.asp
this  website had a thorough breakdown on the common forms of money
1- commodity money:(Gold) Inherent value serve as the value of the money
2 - fait money(paper money) value is less than the value it represents
3 - bank money(check account) accounting credits drawn on by depositors. 

I learnt about the relationship of money and the economy.

"money also have a huge impact on the economy. the demand of money is determined by the price level and the level of activity within and economy".

If the demand of money drops. the interest rate also drops and vice versa.]]> 2018-12-04 21:29:50 UTC https://padlet.com/ochuko_angozi/lk8m28ytmr4t/wish/311151090 ochuko_angozi https://padlet.com/ochuko_angozi/lk8m28ytmr4t/wish/311153207 https://www.bankofcanada.ca/core-functions/financial-system/
 
This website explained in detailed our the bank of canada promote the economy and maintain a stable financial system. 
The bank of canada is the source of liquid funds. and the bank publish a financial statement twice a year that identify risk and ways of avoid it. 


]]> 2018-12-04 21:36:01 UTC https://padlet.com/ochuko_angozi/lk8m28ytmr4t/wish/311153207 ochuko_angozi https://padlet.com/ochuko_angozi/lk8m28ytmr4t/wish/311171083 https://positivemoney.org/how-money-%20works/how-banks-%20create-money/

This website talked about how banks create money and the methods they use. I learnt that 97% of the money is created by banks while only 3% are from the government. The banks create new money from banks loans. So anytime they loan out money, they create new money. 

The website also talks about the type of money "bank money". The number that appears in your checking account is the money banks created and only the government can create paper money. 

It's hard to believe but the money in our accounts right now is just accounting numbers in the bank's computers. When we shop online or use POS, we literally just transfer numbers from our bank accounts to another account and when we get a loan from the bank, the banks just create new money from thin air. shocking but reality.


]]> 2018-12-04 22:57:14 UTC https://padlet.com/ochuko_angozi/lk8m28ytmr4t/wish/311171083 https://padlet.com/ochuko_angozi/lk8m28ytmr4t/wish/311178170 https://www.cbc.ca/news/business/bank-of-canada-rate-decision-1.4742063

This image shows the relationship between interest rates and the economic. interest rate from banks always drops when the economic is falling and banks usually increase the reserves and create less money.]]> 2018-12-04 23:36:16 UTC https://padlet.com/ochuko_angozi/lk8m28ytmr4t/wish/311178170 ochuko_angozi https://padlet.com/ochuko_angozi/lk8m28ytmr4t/wish/311647235 http://cynic.me/wp-content/uploads/2012/05/Fractional-reserve-banking-infographic-HORIZONTAL.png

This image describes the basis fraction reserve banking in detail. It illustrates how banks take our deposit(cash) and keep only a tiny percentage and loan out the rest but not by cash but by accounting. so they take $1000 from you, keep $200 and loan out $800. making the total deposit $1800. $800 in new money.



]]> 2018-12-06 01:09:41 UTC https://padlet.com/ochuko_angozi/lk8m28ytmr4t/wish/311647235 ochuko_angozi https://padlet.com/ochuko_angozi/lk8m28ytmr4t/wish/311648557 https://www.economicshelp.org/wp-content/uploads/2011/10/function-central-bank.png

This image shows all the functions of the central bank which includes stability of the banking system, issues money, lender of last resort for commercial banks and more.  
The central banks makes sure the commercail banks are in line and regulate them. They print paper money and they also set the interest rates. fun stuff]]> 2018-12-06 01:17:47 UTC https://padlet.com/ochuko_angozi/lk8m28ytmr4t/wish/311648557 ochuko_angozi https://padlet.com/ochuko_angozi/lk8m28ytmr4t/wish/311653459 2018-12-06 01:46:26 UTC https://padlet.com/ochuko_angozi/lk8m28ytmr4t/wish/311653459