Basic understanding of how money works pdf

Have you been wondering why there is so much debt in the world? And who will repay this debt, when and how? Do you regularly ask yourself how our monetary system works, how bubbles arise in financial markets and whether this system is fundamentally flawed? In short: Do you want to understand how a money economy is structured? Then you are right here! is a project of Hamburg Open Online University (HOOU) in co-operation with Dr. Michael Paetz (Lecturer at the Department of Economics at the University of Hamburg). We have set ourselves the goal of conveying the fundamental and indisputable connections of a money economy to a broad public. Because only when one has understood the concept of “money” can one understand and assess the problems as well as the possibilities that this system brings with it.

For the time being, we will limit ourselves to the fundamental relationships, but in the following sections we will also go into the most important monetary policy measures of a central bank. Above all, it is about a basic understanding of receivables and liabilities or assets and debts. Because every debt must inevitably be matched by a fortune. We want to explain why this is the case and how such debtor-creditor relationships arise.

I would like to thank the HOOU and the student assistants, Hendrik Hinnrichs, Diego Diez, Christian Gerl and Johannes Heinen, who supported me in the implementation of this project. I would also like to thank my good friend Johannes Semm for his charming voice in the trailer video above. As usual, all errors that have not been corrected even after repeated cross-reading are entirely my fault.

Dr. Michael Paetz, December 2018.

  • Provide a basic understanding of how a money economy works.
  • Teach the basics of accounting thinking in order to better understand monetary phenomena.
  • Communicate thinking in monetary “cycles”.
  • Raising awareness of the difficulties in interpreting terms such as “saving” and “consumption”.
  • Teach the basics of macroeconomic accounting
  • Teach the basics of modern monetary policy.

The content in this learning offer is published under the following license:
Creative Commons - Attribution - Noncommercial 4.0 License

Dr. Michael Paetz

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