Modern Money Mechanics

Modern Money Mechanics by the Federal Reserve Bank of Chicago

Modern Money Mechanics is a booklet produced and distributed free by the Public Information Center of the Federal Reserve Bank of Chicago. Get the Modern Money Mechanics (PDF, here More formats from the Internet Archive.... http://upload.wikimedia.org/wikipedia/commons/4/4a/Modern_Money_Mechanics.pdf 2.5 MB)

Modern Money Mechanics

A Workbook on Bank Reserves and Deposit Expansion

• Introduction

• What is Money?
• What Makes Money Valuable?
• Who Creates Money?
• What Limits the Amount of Money Banks Can Create?
• What Are Bank Reserves?
• Where Do Bank Reserves Come From?

• Bank Deposits—How They Expand or Contract

• How the Multiple Expansion Process Works
• Deposit Expansion

• How Much Can Deposits Expand in the Banking System?
• Expansion through Bank Investments
• How Open Market Sales Reduce bank Reserves and Deposits
• Contraction Also Is a Cumulative Process

• Deposit Contraction

• Bank Reserves—How They Change

• Independent Factors Versus Policy Action
• Factors Changing Reserve Balances—Independent and Policy Actions
• Changes in the Amount of Currency Held by the Public

• When Currency Returns to Banks, Reserves Rise

• Changes in U.S. Treasury Deposits in Federal Reserve Banks

• Bank Reserves Decline as the Treasury's Deposits at the Reserve Banks Increase
• Bank Reserves Rise as the Treasury's Deposits at the Reserve Banks Decline

• Changes in Federal Reserve Float

• An Increase in Federal Reserve Float Increases Bank Reserves
• A Decline in Federal Reserve Float Reduces Bank Reserves

• Changes in Service-Related Balances and Adjustments

• An Increase in Required Clearing Balances Reduces Reserve Balances

• Changes in Loans to Depository Institutions

This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).