It's an, it's an encyclopedia entry, so there's no math. I hope you found it easy, easy enough reading. How many of you have had a look at this yet? Okay, good, good. This lecture is really inspired by the reading for this week, this reading by Allen Young. That's the reason this course places dealers, in both capital markets and money markets, at the very center of the picture, as profit-seeking suppliers of market liquidity to the new system of market-based credit. Modern money cannot be understood separately from modern finance, nor can modern monetary theory be constructed separately from modern financial theory. Third, absolutely central to the crisis was the operation of key derivative contracts, most importantly credit default swaps and foreign exchange swaps. Central bank cooperation was key to stemming the collapse, and the details of that cooperation hint at the outlines of an emerging new international monetary order. Second, the global character of the crisis has revealed the global character of the system, which is something new in postwar history but not at all new from a longer time perspective. The result was two years of desperate innovation by central banking authorities as they tried first this, and then that, in an effort to stem the collapse. The financial crisis revealed those vulnerabilities for all to see. Most important, the intertwining of previously separate capital markets and money markets has produced a system with new dynamics as well as new vulnerabilities. Three features of the new system are central. Produced and sponsored by the Institute for New Economic Thinking, this course is an attempt to begin the process of new economic thinking by reviving and updating some forgotten traditions in monetary thought that have become newly relevant. The financial crisis of 2007-2009 is a wakeup call that we need a similar evolution in the analytical apparatus and theories that we use to understand that system. The last three or four decades have seen a remarkable evolution in the institutions that comprise the modern monetary system.
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