Overview: The Market of Concurrent Trading (MCT) framework offers a conceptual model that illustrates how financial innovations, such as bank money, economize the use of base money in the economy. This perspective contrasts with the traditional view of a “money-multiplying effect,” instead highlighting an “economizing effect” where substitutes for money facilitate trade without increasing the …
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An Interactive Working Paper on Base Money vs. Bank MoneyBy John McCallie In the wee hours of the morning, Prof. Smith decided to give it one last roll at Caezar’s House. After all, he was playing with “House money” after a nice run at the tables earlier. He “deposited” a small pad of “Benjamins” on …
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Welcome to McCallie on Money, a resource for understanding how money works beneath the surface. Here, we explore the ideas outlined in Professor John McCallie’s paper, “The Derivatives of Money: The ‘House Money’ of Banks,” which provides a fresh, market-oriented framework to understand the difference between actual money (“base money”) and its many substitutes—such as …
Continue reading “What Is Money? A Theory of Concurrent Trading and Market Coordination”
