MONEY What It Is How It Works
MONEY What It Is How It Works
Perfect Bound Softcover
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For several thousand years, money has been viewed as tokens with intrinsic value, like gold or silver coins.  Paper currencies were often used as substitutes, but they were only accepted on the promise they could be converted into “hard money” on demand. 


The era of hard money is now history.  Today every major industrial nation creates its own monetary base of intrinsically worthless and inconvertible tokens known as fiat money.  Most other forms of money are viable only to the extent they are convertible on demand into the government’s fiat money.


Many books deal with money in relation to financial institutions and markets, but say little or nothing about the imperatives in a fiat money system.  This book should help fill the void.  It consists of a collection of fifty-one short essays selected from those I wrote over a period of several years for my website at  Thanks to Google and other search engines, the website has been discovered by many thousands around the world and is now visited by several hundred a day.

The essays in this book can be read in any order.  However the first section, Understanding Money, introduces some concepts that may seem strange at first because they differ from conventional wisdom.  It is recommended that the reader spend a little extra time there.  Hopefully it will become evident as these concepts are developed in later essays that conventional wisdom is not a reliable basis for understanding modern money. 


Most students of economics are taught that the Federal Reserve targets and controls the amount of bank reserves; that private bank lending then expands the money supply by a multiple of those reserves, depending on the required reserve ratio; that “the interest rate” normally increases when the government borrows to cover its deficit spending.  All of these are incorrect, yet they are implicit in many economic analyses, with results that may go far astray from reality.


As might be expected with such a complex and multi-faceted subject, there is no unique framework on which a modern money system can be understood.  The test is whether it is able to provide valid answers to questions as they arise.  One should not expect to achieve a satisfactory understanding overnight.  It takes time and effort before the pieces begin to fall into place.  The challenge to the reader is in getting to the “aha!” point.  The challenge to the author is in providing a coherent story in terms that enable the reader to get there.

My formal education was in science and engineering.  I graduated from UC Berkeley with a bachelor’s degree in physics and earned a masters degree in electrical engineering from USC.  My entire professional career was in the field of guided missiles and spacecraft engineering.  I retired in 1990 as Chief Scientist of the Control System Laboratory at the Space and Communications Division of Hughes Aircraft Co.  During my forty years there, I was responsible for the design of flight control systems of several guided missiles, communication satellites, and science mission spacecraft, including the Surveyor which in 1966 was the first ever to soft land on the moon.


My interest in monetary systems and macroeconomics developed about ten years ago through internet discussion groups and e-mail exchanges with a number of economists.  Since then, much of my time has been spent in researching and analyzing the social institution we call money – primarily in its modern form.



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