Money & Banking

Functions of money

• Medium of exchange- use money in exchange for goods and services

• Unit of accounting- yardstick that allows us to compare values of goods and services

• Store of value-store it for use later

Characteristics of Money

• Durable- withstand wear and tear• Portable- easy to carry• Divisible-easy to divide into parts• Stable in value-value doesn’t change rapidly• Scarce-whatever is used as money must be

scarce• Accepted-everyone will take it

History of American Banking

• 1792- Congress passed the Coinage Act- established the dollar as the basic unit of currency

• 1913- Federal Reserve System created- regulated reserves and money supply and made loans to member banks

• 1970’s- automated teller machine developed

Banking services

• Overdraft checking- write a check for more money than you have in your account- interest rate is high

• Electronic funds transfer (EFT)- transfer funds from one bank to another without money changing hands

• Electronic Funds Transfer Act of 1978- responsible for only $50 if money is stolen from ATM- must report car stolen in 2 days.

Users are also protected against computer mistakes

Currency

• Bureau of Mint- make all U.S. coin• 5% of currency in the U.S. is coins• Bureau of Engraving and Printing prints all bills• Issued in $1, $2, $5, $10, $20, $50, $100• Higher amounts aren’t printed anymore so

criminals can’t hide large amounts of cash

This specific $500 dollar bill was printed in 1928 and features a portrait of the twenty- fifth President William McKinley.

Today, there are very few of these $500 bills left

This specific $1,000 dollar bill was printed in 1928 and has the portrait of the twenty-fourth president Grover Cleveland printed on. The 1,000 dollar bill and all bills over $100 were

printed until 1946 before they were discontinued.

The United States government also printed a $5,000 dollar bill which circulated in the American general public until 1969 when it was recalled. This specific $5,000 dollar bill was printed in 1934 and

contains the portrait of the fourth president of the United States James Madison printed on it. There are only about 500 left.

The $10,000 dollar bill was the largest of all dollar bills that was printed and circulated in the American general public. This

specific dollar bill was printed in 1934 and contains the portrait of U.S. Treasury Secretary Chase printed on it. These bills were

also recalled in 1969 and very few are still around today

$100,000The $100,000 dollar bill is actually not a dollar bill at all, it’s a gold certificate. What’s a gold certificate? Well a gold certificate is money that the government prints that only they can own and use. It is intended for only the use in Fiscal Channels. They were never issued or used for general circulation. This specific gold certificate was printed in 1934 and has the 28th president, Woodrow Wilson’s portrait on it. There were only 42,000 $100,000 dollar certificates printed and the only ones around today are not for sale .for educational purposes only

Methods to make counterfeiting difficult

• Print multicolored bills• Using embedded devices such as strips• Microprinting• Color changing ink

Money SupplyHow much do we have?

• M1- currency(bills and coins), checkable deposits and traveler’s checks

• M2- everything in M1 plus savings deposits, small time deposits, money market deposits, retail money market mutual fund balances

Identify Theft

• Identify thieves can steal funds from bank accounts, obtain credit cards, apply for loans, establish utility accounts rent apartments, obtain jobs using your identity

• Need your address, social security number and name

• In Tennessee you can “freeze” credit reports if you have been a victim of Identify theft

• Class D Felony with 1.8-12 years in prison for identify theft.

Do’s and Don’ts

Do• Shred documents• Sign credit cards• Keep up with accounts• Open bills promptly• Report questionable

charges promptly• Check your credit

report twice a year

Don’t•Lend your credit card to anyone•Open suspicious e-mails•Sign blank receipts•Write account numbers on postcards or outside of envelopes•Provide private info over the internet unless it is a secure site