Basic Finance Tutorial - Week 3

 

Modern Money and National Credit

· All money is fiat backed by national credit

· Currency value fluctuates directly with national strength

· Cryptos are decentralized

· As long as nations exist, crypto cannot fully replace central‑bank money

Bank System Adjusts Credit Quantity and Economic Temperature

Reserve Requirement

· Bank cash to meet withdrawals

· Broad money = base money × 1/reserve ratio

· If ratio 10%, $100 base money expands to $1000 M2—the money multiplier

· Banks’ lending willingness & macro conditions...

Benchmark Rate

· Reference for loan & deposit rates

· Rate hike: liquidity shrinks, economy cools

· Rate cut: liquidity expands, economy heats

· Over‑tightening causes early recession; over‑easing causes bubble

Investor Focus Points

· Earning‑supported stocks need not panic—may add positions

· Beware fake statements & high‑debt firms

· Consumer goods like cars less affected

No micro‑finance exists independently; there is always a macro view behind it.