The Three Most Important Things I Leaarned in This Course
1289 Words6 Pages
We learned so much in course that applies to our everyday lives and the condition and operation of the country that I actually wish they had taught it back in high school. There was so much subject matter covered that it is difficult to narrow what I learned down to just three things. The textbook and supporting documentation and discussion pertained to the financial system. The financial system is basically how the money moves through our economy. Funds flow primarily through the financial markets which our book defines as; “Markets in which funds are transferred from people who have excess available funds to people who have shortage”. (Mishkin, 2010) The key is to keep the funds productively working in the economy. I will focus broadly and say that the three most important things I learned in this course were about money & financial system itself, the institutions that fuel the system and the Central Banks.
Let’s start with what money is and what it does. Money is “anything that is generally accepted in payment for goods and services.” (Mishkin, 2010) Money needs to have value to the people within a society in order to fill this role. One of the primary roles of money is to be used as payment for goods or services; it also reflects value or price levels and retains value over time. Currency is the actual form of the “acceptable” money. Money that is made of a valuable commodity, such as silver or gold, is called commodity money. As is typical of economies as they mature, the United States has moved away from commodity money to paper money. The money is backed not by the value of the commodity, but by a promise for payment.
The flow of funds happen in the financial markets as mentioned above. This isn’t a plac...
... middle of paper ...
... shock waves through the world’s financial markets. We more quickly hear and react to financial news, whether good or bad.
As I said in the intro, it’s difficult to limit what we learned to three items. We have found that there are a great many factors that contribute to the functioning of the financial system and they all seem to overlap as well. It is also difficult to prioritize them. I do feel that the role of the Central Banks is important as they seem to provide the foundation on which the rest of it sits. I feel that the information within this course should be something that is taught at the high school level. People need to have a basic understanding of how the financial system works. It impacts them everyday.
Mishkin, Frederic S., (2010) The Economics of Money, Banking & Financial Markets 9th Edition, Boston, Addison-Wesley Publishing