ABSTRACT
Before we can fully understand government policy, we must consider the financial system on which our economy is based. This chapter begins by describing our monetary and credit system as well as the evolution of money from early times to the present. The banking system is extremely important not only to the individual depositors but also to the macroeconomy. Why? Because banks create money. This chapter examines the money creation process, and finally, it discusses the problems caused by money and credit.
