Investing Forum - Warren Buffett and Value Investing
Any good books on how money is created in an economy?
edited July 30
I am looking for a good book explaining how money is created in US economy. I am looking for a book on how money is generated by the Fed not on how one can increase wealth. Any suggestions?
Hi there vassy,
As Value Investors we tend to be frugal and always look for the cheap option. Instead of spending money buying a book I recommend you read the white paper entitled 'Money creation in the modern economy' by the Bank of England. It can be viewed as a PDF for free here;
Please don't hesitate to ask if you have any further questions.
Thanks a lot for the reply! One question, regarding the paper you mentioned. Fig 1 in the paper shows assets and liabilities of central bank and commercial banks. I am not able to understand the difference between 'reserves' and 'currency'. The paper mentions that --> 'bank deposits' — which are essentially IOUs from commercial banks to households and companies and 'currency' — mostly IOUs from the central bank. If currency is IOUs from central bank how come the diagram in Fig 1 (a) has currency and reserves for central bank. Central bank will have currency only in the liabilities side, right? What does reserves of central bank mean? What is exactly the difference between reserves and currency?