Discussion — Lecture 22: Touching the Elephant: Three Views

This session covers Lecture 22: Touching the Elephant: Three Views

The lecture ties the money view into the "economics view" and "finance view" of money and banking. The economics view explains how the past determines the present. The finance view explains how the future determines the present. The money view explains how the present—by virtue of the pattern of cashflows being locked in—determines the present.

In addition to connecting up to some of the economics and finance models that we're used to, Mehrling describes an intellectual progression building from Fischer Black's view of finance. The key insight is that market liquidity is not free. It comes from the dealer system. And the dealer system depends on funding liquidity, which ultimately comes from the central bank.

Lecture Notes

Lecture 22 Discussion Thread