Initial Activity What aspect of bartering is this cartoon poking fun at?
Initial Activity Assessment 1. Two units of the same type of money must be the same in terms of what they will buy, that is, they must be (a) divisible. (b) portable. (c) acceptable. (d) uniform. 2. What is the source of fiat money’s value? (a) it represents the value of another item (b) government decree (c) presidential pardon (d) it is equal to the value of the stock market
Initial Activity There are three types of money: Commodity, Representative and Fiat. Classify the following items into the money category. Silver A dime Gold bonds Shells Cattle Silk Tobacco
History of American Banking Throughout American history, people have used commodity money, European coins, privately printed banknotes, and many other forms of notes. To control the amount of money in circulation, Congress established the Federal Reserve System in 1913. It serves as the nation’s central bank. In 1914 the system began issuing paper money called Federal Reserve notes, which soon became the major form of currency
History of American Banking The Constitution of the United States gave Congress the power to mint coins. It was not until the Civil War that the government set up a safe, uniform currency. In 1934 the nation switched from a gold standard to a fiat money standard. Electronic funds transfer has revolutionized the banking industry, with customers using automated teller machines and even the Internet to do their banking.
Mini Lesson History of American Banking England forbade Colonial America from using printed money or minted coins. Bartering of various goods was used in place of money. When the war came, the Continental congress issued bills of credit (Continentals)to pay war debts. Too many continentals were issued and they became worthless. After the war, the United States began to mint its own coins backed by gold and silver
Banking Services Checking accounts Storage of valuables Automatic deposit and payment Money transfers Overdraft checking, which allows a customer to write a check for money that is in the account and the bank will loan the money to be paid back at a high interest rate.
Mini Lesson DISADVANTAGES OF ELECTRONIC BANKING Lack of privacy and possibility of tampering are risks of electronic bank transfers. Customer has little “float” time between writing the check and its being cashed by the bank. Electronic Funds Transfer Act (EFTA) helped calm some of these concerns. Ex. A person is only responsible for $50 in losses if someone steals or they lose their bank/credit cards and they report it within two days. If they wait longer they could be responsible for up to $500