The course, produced by the Institute for New Economic Thinking and taught by the Institute’s Perry Mehrling, explores money markets and how they work, both in the U.S. and internationally.
After taking the course, you will be able to understand everyday financial discourse at a high level. The class will give you extensive knowledge of how money markets work and is designed to give you the tools be able to spot the next crisis before it hits. You’ll learn what Professor Mehrling calls “the money view,” which will teach you the key institutions that underlie the financial system and give you ideas for how they could be reformed to prevent another collapse.
Sign up for the class here, and read below for an introduction to the class from Professor Mehrling!
The last three or four decades have seen a remarkable evolution in the institutions that comprise the modern monetary system. The financial crisis of 2007-2009 is a wakeup call that we need a similar evolution in the analytical apparatus and theories that we use to understand that system. Produced by the Institute for New Economic Thinking, this course is an attempt to begin the process of new economic thinking, by reviving and updating some forgotten traditions in monetary thought that have become newly relevant.
Three features of the new system are central.
Most important, the intertwining of previously separate capital markets and money markets has produced a system with new dynamics as well as new vulnerabilities. The financial crisis revealed those vulnerabilities for all to see. The result was two years of desperate innovation by central banking authorities as they tried first this, and then that, in an effort to stem the collapse.
Second, the global character of the crisis has revealed the global character of the system, which is something new in postwar history but not at all new from a longer time perspective. Central bank cooperation was key to stemming the collapse, and the details of that cooperation hint at the outlines of an emerging new international monetary order.
Third, absolutely central to the crisis was the operation of key derivative contracts, most importantly credit default swaps and foreign exchange swaps. Modern money cannot be understood separately from modern finance, nor can modern monetary theory be constructed separately from modern financial theory. That's the reason this course places dealers, in both capital markets and money markets, at the very center of the picture, as profit-seeking suppliers of market liquidity to the new system of market-based credit.
1: The Four Prices of Money
2: The Natural Hierarchy of Money
3: Money and the State: Domestic
4: The Money View, Macro and Micro
Banking as a Clearing System
5: The Central Bank as a Clearinghouse
6: Federal Funds, Final Settlement
7: Repos, Postponing Settlement
8: Eurodollars, Parallel Settlement
Banking as Market Making
9: The World that Bagehot Knew
10: Dealers and Liquid Security Markets
11: Banks and the Market for Liquidity
12: Lender/Dealer of Last Resort
The class will consist of lecture videos, shot live in the classroom but then edited down into digestible segments, with integrated quiz questions and animated slide videos added. There will also be weekly quizzes, and a final exam.
What is the coolest thing I'll learn if I take this class? You will learn to read, understand, and evaluate professional discourse about the current operation of money markets at the level of the Financial Times.