6. HOW LONG DOES PAPER MONEY LAST? * * LG2 What is the Money Supply? Source: Federal Reserve, www.federalreserve.gov . 20- Bill How Long it Lasts $1 21 Months $5 16 Months $10 18 Months $20 24 Months $50 55 Months $100 89 Months
7. MONEY MILESTONES * * LG2 What is the Money Supply? Source: Conde Nast Portfolio 20- Year Milestone 1956 Congress set the minimum wage at $1 an hour 1960 $10 million presidential campaign by candidate Richard Nixon 1985 $100,000 bottle of wine sold at auction at Christie’s 1995 $1 million cost for a 30-second commercial during Super Bowl XXIX 2001 $10 movie ticket in New York 2004 $100 million Picasso painting sold at Sotheby’s 2007 $1 billion stadium built in London (Wembly)
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11. The 12 FEDERAL RESERVE DISTRICT BANKS * * Basics About the Federal Reserve LG2 20-
16. LARGEST BANK FAILURES * * LG3 The History of Banking and the Need for the Fed 20- Bank Year Assets Washington Mutual Bank 2008 $307 Billion Continental Illinois NB&T 1984 $67 Billion First Republic Bank Corp 1986 $49 Billion American Savings & Loan Assn 1988 $45 Billion IndyMac Bank 2008 $32 Billion
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Notes de l'éditeur
See Learning Goal 1: Explain what money is and what makes money useful.
See Learning Goal 1: Explain what money is and what makes money useful. Money should be portable. For a money system to be effective, money should be easy to handle and carry. Money should be divisible. A good system makes exchange simple and easy in terms of daily transactions. (For example, prior to the introduction of the Euro, the French money supply system was difficult, because they had two kinds of money: money of account which is theoretical money with no coinage and money of exchange which has coins. The French system was not easily divisible and not easy to understand.) Money should be durable. U.S. currency does wear out, but only after considerable usage and transfers. There has been continued discussion and several attempts towards making the dollar bill into a coin. Cost savings is the motivation behind this movement, since bills stay in circulation less than two years, and coins can last upwards of 20 years. Money should be difficult to counterfeit. This is very important because easily duplicated currency could lead to a significant eroding of the value of a country’s currency
See Learning Goal 2: Describe how the Federal Reserve controls the money supply.
See Learning Goal 2: Describe how the Federal Reserve controls the money supply. How Long Does Paper Money Last? This slide gives the students an idea of the life span of paper money in circulation. The largest denomination ever printed was a $100,000 gold certificate. Share with students some interesting facts regarding U.S. currency: - Originally, U.S. currency included denominations of $500, $1,000, $5,000, and $10,000. No currency printed today is greater than $100 dollars. - The percent of U.S. counterfeit currency in circulation is estimated to be .02%. - U.S. Currency bills are 2.61 inches wide, 6.14 inches long, thickness of .0043 inches and weighs 1 gram. - It costs 4.2 cents to produce a U.S. bill. - The Bureau of Engraving prints about 16,650,000 one dollar bills per day. (Source: enchantedlearning.com)
See Learning Goal 2: Describe how the Federal Reserve controls the money supply. Money Milestones This slide illustrates some interesting dates regarding U.S. money Have students look through the dates. Which do they find most interesting or surprising and why? Ask students: How do some of the amounts listed compare to today? If time allows have students check out The U.S. Treasury’s Bureau of Engraving and Printing’s website http://www.moneyfactory.gov/ for more interesting information.
See Learning Goal 2: Describe how the Federal Reserve controls the money supply. Since the United States abandoned the gold standard the U.S. dollar has depreciated by approximately 90 percent.
See Learning Goal 2: Describe how the Federal Reserve controls the money supply. The Impact of a Falling Dollar This slide highlights some of the issues related to a falling dollar. While these points are positive, the long term implications of a falling dollar are more serious. A declining dollar will eventually result in the following: Higher interest rates on government and consumer debt. Higher inflation due to a rise in the price of imports, and commodity prices increase since most are priced in terms of U.S. dollars.
See Learning Goal 2: Describe how the Federal Reserve controls the money supply. The Federal Reserve is a quasi-governmental agency not under the direct control of the U.S. government.
See Learning Goal 2: Describe how the Federal Reserve controls the money supply.
See Learning Goal 2: Describe how the Federal Reserve controls the money supply.
What’s money? Money can be anything that people accept as payment for goods and services . What are the five characteristics of useful money? Portability, divisibility, stability, durability, and uniqueness. What’s the money supply, and why is it important? The money supply is the amount of money available for people to buy goods and services. It is important to manage the money supply, since too much money could cause inflation and too little money may cause deflation. How does the Federal Reserve control the money supply? To control the money supply the Federal Reserve can increase or decrease the reserve requirement, buy or sell government securities, or change the discount rate. What are the major functions of the Federal Reserve? What other functions does it perform? The Federal Reserve is responsible for creating an environment that fosters stable prices and full employment. It attempts to manage these two goals with monetary policy. As if that was not enough, the Federal Reserve is also responsible for the clearing of checks.
See Learning Goal 2: Describe how the Federal Reserve controls the money supply. See Figure 20.3 in text for further information.
See Learning Goal 3: Trace the history of banking and the Federal Reserve System. State banks were also permitted to join.
See Learning Goal 3: Trace the history of banking and the Federal Reserve System. Largest Bank Failures This slide highlights the largest bank failures in U.S. banking history. Two of these failures are a direct result of the financial crisis that occurred in 2008. Ask students: Why didn’t the Washington Mutual and IndyMac Bank failures create a total loss of confidence in the United States banking system like we saw during the Great Depression? ( Students should be able to recognize the stepped up role of the US government including the creation of the FDIC insurance program and the temporary increase in FDIC coverage from $100,000 to $250,000 until December 2009.)
See Learning Goal 4: Classify the various institutions in the U.S. banking system.
See Learning Goal 4: Classify the various institutions in the U.S. banking system.
See Learning Goal 4: Classify the various institutions in the U.S. banking system. Commercial banks also offer credit cards, financial counseling, automatic payment of bills, brokerage services, safe-deposit boxes, travelers checks, and individual retirement accounts (IRAs).
See Learning Goal 4: Classify the various institutions in the U.S. banking system.
See Learning Goal 4: Classify the various institutions in the U.S. banking system.
See Learning Goal 4: Classify the various institutions in the U.S. banking system. Due to their exemption from federal income taxes, the fees are typically less and the interest rates paid on deposits are higher at credit unions.
See Learning Goal 4: Classify the various institutions in the U.S. banking system.
See Learning Goal 4: Classify the various institutions in the U.S. banking system. What Attracts Customers to Online Banking This slide illustrates what attracts customers to online banking. Households have increased their use of online banking from approximately 8 million households to an estimated 51 million households in 2009. Leading the growth of online banking are California, Florida and Texas. Combined, these states made up more than 40 percent of the growth in online banking. Others in the top 10 for growth were Washington, Georgia, Arizona, North Carolina, Missouri, and Maryland. More than 71 percent of online banking customers report they are highly satisfied with their online banking experience. According to ComScore the adoption of online banking is rising at a rate of 13 percent each year. And by 2011, 76 million households will bank online compared with an estimated 51 million in 2009.
Why did the U.S. need a Federal Reserve Bank? The Federal Reserve emerged after the banking crisis of 1907 and was organized originally to be a lender of last resort. What’s the difference between a bank, a savings and loan association, and a credit union? After bank deregulation the services offered by banks and S&Ls are now similar. They both offer many of the same services. Credit Unions are tax-exempt member-owned cooperatives that operate like banks. What’s a consumer finance company ? Consumer finance companies offer short-term loans to those who cannot meet the credit requirements of regular banks.
See Learning Goal 5: Briefly trace the causes of the banking crisis of 2008-2009 and explain how the government protects your funds during such crises.
See Learning Goal 5: Briefly trace the causes of the banking crisis of 2008-2009 and explain how the government protects your funds during such crises. The amount of depositors’ insurance was temporarily increased to $250,000 to create confidence in the banking system.
See Learning Goal 5: Briefly trace the causes of the banking crisis of 2008-2009 and explain how the government protects your funds during such crises.
See Learning Goal 6: Describe how technology helps make banking more efficient.
See Learning Goal 6: Describe how technology helps make banking more efficient.
See Learning Goal 7: Evaluate the role and importance of international banking, the World Bank, and the International Monetary Fund.
See Learning Goal 7: Evaluate the role and importance of international banking, the World Bank, and the International Monetary Fund. Both the World Bank the IMF were created to rebuild the world economy after World War II.
What are some of the causes for the banking crisis of 2008-2009? After the internet bubble of the late 1990s, the Federal Reserve lowered interest rates creating a situation in which mortgage rates were low thus fueling a housing boom. Banks relaxed their underwriting standards and created mortgage-backed securities and sold them to organizations throughout the world. The government did not regulate these transactions well and banks collapsed as housing values fell and individuals defaulted on their loans. What’s the role of the FDIC? The role of the FDIC is to insure bank deposits if a bank were to fail. Bank deposits are currently insured up to $250,000 (until December 2013). How does a debit card differ from a credit card? Unlike a credit card a debit card functions as a check, withdrawing funds directly from a checking account. The debit card only allows you to spend money that is in your account; once the balance is zero the card cannot be used. If the card is used with a zero balance, it will result in overdrafts. What’s the World Bank and what does it do? The World Bank also called the International Bank for Reconstruction and Development is responsible for financing economic development. What’s the IMF and what does it do? The IMF was established to assist the smooth flow of money among nations. Nations must join the IMF and allow for flexible exchange rates, inform the IMF of changes in a countries monetary policy, and to modify policies on the advice of the IMF.
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