# Understanding Money Mechanics - Notebook Summary::Note that needs comment. Todoist::Review comments in docx and make notes # Synopsis >[!alert] These are notes about Robert Murphie's book *Understanding Money Mechanics* that I have downloaded from Kindle. ## Links [[Understanding Money Mechanics]] ![[Understanding Money Mechanics - Notebook.docx]] ![[Notes and highlights for.docx]] # Notes Murphy, Robert. Understanding Money Mechanics. Ludwig von Mises Institute. Kindle Edition. ## **Note - Chapter 1: The Theory and Brief History of Money and Banking > Page 24 · Location 242** “[B]anks can build up deposits by increasing loans and investments so long as they keep enough currency on hand to redeem whatever amounts the holders of deposits want to convert into currency. This unique attribute of the banking business was discovered many centuries ago.” This paragraph needs significant clarification. ## **Note - Chapter 4: Standard Open Market Operations: How the Fed and Commercial Banks "Create Money" > Page 60 · Location 907** “Up until the change in regulations made in 2020, commercial banks in the US were required to keep some money “in reserve” in order to satisfy the demands of their customers who might show up to pull some cash out of their checking accounts.” Banks don’t keep “money” in reserve. They keep R$ in their reserve accounts, which cannot be used as money. ## **Note - Chapter 6: Central Banking Since the 2008 Financial Crisis > Page 82 · Location 1283** "Prior to the financial crisis most people probably never thought about— and the Fed itself certainly didn’t emphasize—the fact that **when the Fed cut or raised interest rates** it didn’t simply turn a dial but instead had to buy or sell assets, and thereby create or destroy dollar reserves in the financial system." AGAIN, The Fed cannot raise or lower rates. ## **Note - Chapter 12: Do the Textbooks Get Money and Banking Backward? > Page 140 · Location 2225** In this case, Acme’s vault cash—which, remember, started out at $2 million—has dropped to $1,990,000. That means that Acme’s **total reserves have dropped by the $10,000 that its client withdrew from the bank after being granted a new loan.** This is an even more direct way in which a commercial bank can “lend out its reserves.” They don’t lend reserves. They stop being reserves when handed to the customer.