Money is created in two basic ways today. The first is cash (fiat / fiat currency) in paper and metal form issued by Central Banks, and the other is loans (debt) created by commercial banks depending on the partial reserve system. Here, we’ll talk about partial reserve banking. It would be descriptive and useful to talk about full reserve banking…
The Federal Reserve, the Fed, started overnight reverse repo transactions in 2013. The aim of reverse repo transactions is to control the short-term interest rates. Reverse repo (RRP), reverse repurchase agreements, is a transaction that central banks implement when they want to reduce excess cash in the market. In this way, it is aimed to suppress the downward interest rate.…
Money can essentially be studied in two forms, these are the limited (solid) form and the unlimited form. Limited money is the metals with intrinsic value such as gold, silver, platinum, which cannot be produced in the desired amount by the states, whose amount is limited in the world. Recently, digital currencies have been tried to be added to these.…
GREAT TRANSFORMATION FROM MONETARY ECONOMY TO INFORMATION ECONOMY The economic system we have been in for nearly 300 years since the Industrial Revolution is a monetary system. Firstly, European countries, USA; The money economy, which developed with the industrial revolution in developed countries such as Japan, turned towards digitalization with the production of microchips in the 1950s. Today, the common…
The ratio of the total household debt to production, which includes the debt of the private sector and households on a country basis as well as the debt of the states in the world, is another important indicator that can give an idea about the magnitude of the destruction to be experienced in the crisis.
In the monetary system of the world, the ballooning created by the unlimitedly printed money in the markets is the most important factor triggering the systemic crisis. Here, the question arises of how countries will be affected by the impending global financial disaster.
Another important indicator of the global crisis is the ballooning in the real estate market as a result of excessive pricing. It is necessary to briefly summarize the situations in which there is a problem in the real estate market and many of them will show the risk of collapse in the market if they happen. We can summarize these…
In Figure 1, we can see the 10-year bond interest rates and real GDP growth rates of the USA. If we look at the crisis years mentioned earlier, we see that the Real GDP growth rate was lower than the 10-year bond rate, especially in the 2001 crisis.