Únase a getAbstract para acceder al resumen.

A Primer on Money, Banking, and Gold

Únase a getAbstract para acceder al resumen.

A Primer on Money, Banking, and Gold

Wiley,

15 mins. de lectura
10 ideas fundamentales
Audio y Texto

¿De qué se trata?

How money works - or why it no longer matters how much gold your government is holding.

  • 0.5×
  • 0.75×
  • 1×
  • 1.25×
  • 1.5×
  • 1.75×
1×

Editorial Rating

8

Qualities

  • Innovative

Recommendation

Peter L. Bernstein’s classic, originally published in the mid-1960s, provides a learned, generally accessible explanation of the workings of the American monetary system. Of course, some of the information is quite out-of-date, but you’ll understand that as you read. For example, the author speaks extensively about the importance of gold in international finance – yet gold has not really mattered since 1971. Moreover, the book came out before history taught the lessons of the 1970s, 1980s and 1990s, not to mention the financial crisis that began in 2008. Former Fed Chair Paul Volcker’s foreword and Bernstein’s new introduction acknowledge these time lags. The last quarter of the 20th century saw a very extensive reshaping of the financial system, including the creation of new financial entities and even new forms of money, so this primer is less useful and informative than it may have been when new. Nonetheless, getAbstract finds that Bernstein’s explanation of the fundamental workings of the Federal Reserve and of the role of commercial banks in the monetary system remains lucid and well worth reading.

Summary

Why Money Matters

Money means that you do not have to negotiate a barter exchange whenever you want to make a purchase. Money was a fixture of even very rudimentary societies. However, in today’s complex society, money is no longer a matter of feathers, beads or even coins, but of accounting entries by bankers. Money is abstract. Oddly, there is also something abstract or symbolic about gold. Even though gold is physical, hard to find and impressive to look at, it has no intrinsic or inherent value. People decide upon its monetary value, as they decide upon the value of money. In some cases, those people make incorrect value decisions. They may allow money supply reserves and prices to fall so much that producing goods seems pointless. Alternatively, they may let the money supply expand so rapidly that it drives up prices, leaving the financially conservative and the poor in the lurch.

Paying for What We Buy

People work for money to buy things. Take a family that lives on $60,000 a year. If inflation occurs, they may need $66,000 to keep living the same way. The income earner may be able to press for a raise or draw down savings, or may find that he or she ...

About the Author

Peter L. Bernstein is founder and president of Peter L. Bernstein, Inc., established in 1973 as publishers of Economics & Portfolio Strategy and as consultants to institutional investors around the world. He also is the author of 10 books.

Comment on this summary