Week 8 — Lectures 13 & 14, Reading 7

We're discussing the following for week 8:

Lecture 13: Chartallism, Metallism, and Key Currencies

Lecture Notes
Note: Mehrling uses the term "forward interest parity" in this lecture to describe what he called "covered interest parity" in lecture 8, *and in the notes for this lecture. In lecture 8, forward interest parity was about locking in rates for future borrowing using forward rate agreements (FRAs).*

This lecture examines the base money that sits at the top of a domestic money-credit hierarchy. Chartalism says that the value of base money comes from the state and its laws and institutions. Metallism says that the value of base money comes from the intrinsic value of the underlying metal. Which one is right? Both? Neither?

Lecture 14: Money and the State: International

Lecture Notes
Extending the money view to international monetary systems. This lecture frame this week's Robert Mundell in terms of balance sheets and the money view. How does the gold standard compare to the potential for a global fiat currency?

Reading 7: A Reconsideration of the Twentienth Century by Robert Mundell

Study Questions
Mundell tells a story of the evolution (devolution?) of the international monetary system over the course of the 20th century. He wants to address exchange rate stability through domestic price level stability, ultimately paving the way for a new international currency. To what extent are his story and vision compatible with the money view?

Money and Banking Summer 2021 Reddit Master Thread