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Because the monetary system is so pervasive, it touches everyone.  But depending on where we are in the system, it touches each of us in a different way.  There are many faces of money, and for each face there is a characteristic language that people who encounter that face use to talk about their experience. 

In order to understand the system as a whole, we need to be able to engage with the variety of discourse about the system, because we need to integrate information about all the different faces of money.  (If we rely solely on the intuition we have gained from our lives as retail consumers, we will never understand the system as a whole.)  The reading assignments have been chosen with the objective of introducing you to the wide range of monetary discourse.  They are quite different from one another, and that is the point.  

As you read each one, you should try to use the text as a way to enter the mind of someone who is viewing the monetary system from a particular place, and try to see it through their eyes.  To do this, close reading is necessary, because you are reading not just for facts but also for the point of view behind the selection and organization of these particular facts.  That is why there are guide questions, to help you to enter the mind behind the text.  And that is why, compared to some other courses you may have taken, there are very few readings.  

If you want suggestions for further reading, I am happy to provide, but only after you do close readings of these few selections.  Advanced students, who will be aware of the range of readings that I am not assigning, should NOT assume that I am ignorant or dismissive of these other readings, but rather appreciate the opportunity to read some things that probably they have not encountered before.  Probably I have not assigned your favorite author, but don't take that as any indication of disrespect or even disagreement necessarily.      

The overall pedagogical goal is to assemble, over the weeks of the course, a range of entry points for understanding monetary phenomena.  After the course, when you read about something happening in the world of money, you should be able to point out what dimensions of this event Minsky would have drawn attention to, or Bagehot, or Hicks, or whoever.  By putting yourself imaginatively in the mind of these authors, you will learn to see what they see, and so to see more than you do now.   Reading books like these is how I learned to think about money, and they also inspire my writings, as for example my recent book The New Lombard Street:  How the Fed became the Dealer of Last Resort which serves therefore as a kind of overall text for the course.  You might want to read it quickly before the course starts, and then go back and read it again when you are done.

Week 1

Allyn Young   Study questions  There are four chapters in this selection, and that's a lot of reading I know.  If you are pressed for time--and who isn't?--focus on the first "The Mystery of Money" and the third "Mobilizing Bank Credits".   Come back later to read the other chapters.  The second "Monetary System of the US" is interesting for Young's quite negative views on "fiat" currency, and the fourth "Dear and Cheap Money" for his views on international money which anticipate themes we will be addressing in Part Two of the course.

Week 2

Hyman Minsky  Study questions There are five sections in this selection and it is pretty dense reading, because I was trying to fit an entire intellectual biography into the length of a journal article!  For the purposes of the course, the most important section is the third "Vision" since we are trying to build some intuition about the monetary system.  Second in importance is the fourth section "Minsky and the World" which shows how Minsky used his vision to engage with the concrete problems of his own time, an account that is of interest mainly as a challenge for present day students of the money view to engage the concrete problems of the present time.

Optional Problem Set 1

Week 3

Charles Dunbar  Study questions  This passage is from Dunbar's textbook, which was a staple of education at Harvard for a generation before the establishment of the Fed, which is to say when the United States was a kind of "emerging market" economy, not the superpower that it would later become.  Allyn Young would have studied this book, and you can see traces of that study in the reading for Week 1.  Read Dunbar to develop intuition about the economics of the payment system, and how the lending function of banking connects up with the payments function.  

Week 4

Walter Bagehot  Study questions This is the chapter that contains the famous "Bagehot Rule" for central bank intervention during a crisis, so watch for it, and try to understand the logic that led Bagehot to the formulation.  If you want more Bagehot--and who doesn't?--the whole book is available for free here.  It is one of the classics of Victorian literature, according to me, quite apart from its foundational importance for monetary economics and the theory of central banking.

Optional Problem Set 2

Week 5

Sir John Hicks  Study questions This is the last book Hicks wrote in his very long career, and it represents a change of views about the appropriate direction for monetary theory.  In his earlier work he had advocated thinking about money as a special kind of commodity, and so using the analytical apparatus of supply and demand as a way to do monetary theory.  Here at the end of his career, he proposes instead that we think of banks as a special kind of dealer.  In a sense, this entire course represents my attempt to pick up and develop the suggestion of Hicks.

Week 6

Jack Treynor  Study questions If you want to think about banks as a special kind of dealer, one place to start is with Treynor's model of the economics of the dealer function.  Treynor is concerned with security dealers, not banks, but the essential ideas that we need are all there.  Dealers make money by supplying market liquidity, which they do by offering trading options.  The Treynor diagram that I use in lecture comes from this article.

Optional Problem Set 3

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