video explains the market for foreign exchange and how a change in money stock will
affect the exchange rate. If you think about it, you should be able to see that if a country wants to fix its exchange rate, it may be forced to alter
its money stock to achieve that goal. Hence, a fixed exchange rate limits the use of monetary policy for other objectives.
Milton Friedman and Anna Schwartz changed the way economists viewed the Great Depression with their A Monetary History of the United States, 1867-1960. Can you summarize Friedman's position after viewing this clip?
scene from the movie, It's A Wonderful Life, we see a bank run and George, the hero, explain why the money is not in the vault. Where is the money? Why cannot the bank pay all its depositors at once? How does George get out of the situtation?
These links were checked on April 30, 2010.
Copyright Robert Schenk