Make Money from Money

Citizenship: Consumer Economics

About the Unit

• In the Consumer Economics Unit we will be exploring the following questions:

• How do banks and other financial institutions make money?

• What is a public company?

• What are public services?

• What is the purpose of education?

• Why is employment important?

• What effect does income inequality have?

Financial Services

Video

•https://www.youtube.com/watch?v=CqD3hnjZBTM

Historical Examples

• 13th Century (1200’s) - Scholars condemn usury, which is the practicing of making unfair loans to someone.

• 1397 - Medici Family (Italy) founds a bank that operates on the basic principles that modern banks operate under.

• 1873 - British Journalist Walter Bagehot urges the bank of England to act as a “safety net” lender to British Banks.

• 1930 - The Bank of International Settlements is founded in Switzerland and creates international banking rules and regulations.

• 1992 - US Economist Hyman Minsky publishes “The Financial Instability Hypothesis,” which has helped explain the 2007-08 financial crisis caused by bank failures.

Summary

•Banks and other financial institutions fund their operations by paying people interest to borrow their money and make a profit by collecting fees and interest to lend people money.