Week 3 — Lectures 4 & 5, Reading 2

We're discussing the following for week 3:

Lecture 4: The Money View, Micro and Macro

Lecture Notes
Sources and Uses. Flow of funds. Every use of funds has a corresponding source on its own balance sheet (micro) and on someone else's (macro). Assets and liabilities represent commitments of future cashflows.

Lecture 5: The Central Bank as a Clearinghouse :

Lecture Notes
The central bank knits the payment system together by making it behave as if it were one big bank.

Reading 2: The Vision of Hyman P. Minsky by Perry Mehrling

Study Questions
Minsky put the problem of liquidity front and center. This reading is very much tied to the content of Lecture 4, which talks about the survival constraint—An any given point in time, every economic agent must maintain a balance between its cash commitments and its cash inflows. If you can't meet your cash commitments, then you're done. "Liquidity kills you quick."

Money and Banking Summer 2021 Reddit Master Thread