Discussion — Lecture 9: The World that Bagehot Knew

This session covers Lecture 9: The World That Bagehot Knew

From the nineteenth-century international gold standard, we can draw insights that apply to the globally financialized world of today. We learn about the origins of monetary policy in the discount mechanism and the manipulation of the discount rate. This lecture connects up with the Walter Bagehot reading from last week, as well as the Allyn Young reading we did at the beginning.

We transition from thinking of banking as a payments system to thinking of banking as market-making. Previously, we focused on the par price of money. Starting now, and for the next several weeks, we will more deeply explore interest rates—especially how dealers determine interest rates.

Lecture Notes

Lecture 9 Discussion Thread