How modern monetary systems work

Follow money through bank accounts, payment systems, government finance, and prices. Separate accounting from causal claims.

Prerequisite: Arithmetic and percentages. No prior economics or accounting required. Build from claims and balance sheets to bank lending, settlement, monetary policy, government finance, inflation, and currency regimes. Sixteen lessons include worked accounts, bounded interactive models, and 32 illustrated exercises. Read in order, then audit the final case.

Lessons

1. 1

   Money, claims, and purchasing power

   Identify what you hold, who owes you, and what a money total includes.

2. 2

   Read a balance sheet before telling a story

   Separate assets, liabilities, equity, stocks, and flows.

3. 3

   How a bank loan creates a deposit

   Follow origination without confusing money creation with free resources.

4. 4

   How payments cross bank boundaries

   Track customer deposits and central-bank reserves separately.

5. 5

   Repayment, interest, and loan losses

   Distinguish deposit destruction from a bank absorbing a loss.

6. 6

   Why banks cannot lend without limit

   Separate profitability, capital, liquidity, and confidence.

7. 7

   How a central bank steers short-term rates

   Understand reserve supply, administered rates, and operating frameworks.

8. 8

   Interest rates, bond prices, and time

   Derive present value instead of memorizing that bond prices fall when yields rise.

9. 9

   How policy reaches spending and prices

   Trace channels and lags without treating an interest-rate change as a forecast.

10. 10

    Quantitative easing as an asset swap

    Trace the seller, its bank, and the central bank before discussing economic effects.

11. 11

    Government payments, taxes, and bonds

    Keep treasury operations distinct from private lending and central-bank purchases.

12. 12

    Sector balances and the limits of identities

    Reconcile private saving, public deficits, and external balances.

13. 13

    Debt sustainability is a conditional calculation

    Separate interest costs, primary balances, growth, and refinancing risk.

14. 14

    Measure inflation, then explain it

    Separate a price level, its growth rate, and a causal account of persistent inflation.

15. 15

    Exchange rates and monetary constraints

    Follow cross-border payments and compare floating currencies, pegs, and currency unions.

16. 16

    Read a monetary argument from the ledgers outward

    Combine accounting, institutional rules, behavior, and evidence in one case.