Mohammad Ashraf - Understandings and Misunderstandings

This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG

The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

I wrote this book to clarify the concept of money and how money facilitates a smooth functioning of the economy. Depending upon ones lack of understanding, often the conduct of monetary policychanges in money supply by the Federal Reserve System (the Fed), central bank of the United Statesis considered shady if not outright illegal. In the aftermath of the 20072009 financial crisis and the Great Recession that followed, the Fed significantly increased money supply. The terms quantitative easing became ubiquitous in the media and everyday discourse. Critiques of the Feds actions followed.

Movements that call for the Fed to close its door resurfaced. Ron Paul, former Congressman from Texas, wrote a book in 2009 titled End the Fed. Mr. Paul dedicated his book to the young people who are at the heart of the anti-Fed movement.

The concept of money remains elusive to many. Worse still, misinformation abounds. From financial TV pundits, to self-help gurus, to hucksters of the Prosperity Gospel, and everyone in between, stand ready to impart words of wisdom. Lack of expertise in economic matters is not an impediment. All telling those seeking advice that they can get wealthy without having to work. Or some version of it.

Jim Cramers CNBC Website states that, Mad Money with Jim Cramer takes viewers inside the mind of one of Wall Streets most respected and successful money managers. Cramer is your personal guide through the confusing jungle of Wall Street investing, navigating through opportunities and pitfalls with one goal in mindto help you make money.

Tony Robbins is a self-help guru who purports to teach you how to be happy and realize your full potential. In his sold-out seminars, among other acts, he teaches the attendees how to walk on fire. He also sells physical training videos and supplements on his Website. The magazine, Money, had a cover story on Tony Robbins in its May 2017 issue. John Jack Bogle, the founder of Vanguard Fund interviewed Mr. Robbins. TONY ROBBINS WANTS TO MAKE YOU RICH, was imprinted in bold letters on the cover with Robbinss picture showing him with a huge smile, his teeth on full display.

Perhaps the lack of knowledge about money and monetary policy is not exactly the fault of public either. Keeping the actions of central banks secret was considered a valued tool in the conduct of monetary policy, and mumbling with great incoherence was a skill much valued in a central banker. Nowadays transparency is considered imperative for the conduct of monetary policy and the smooth functioning of the economy.

A lot changed over the course of writing this book. The Fed increased and decreased money supply, and then increased it again. When the manuscript was in its final stages, the Coronavirus (COVID-19) engulfed the globe. Due to the COVID-19 the world economy practically shut down. To provide support to the US economy the Fed had to increase money supply. This world event renewed publics interest in the Feds and other central banks actions, making the topic of this book ever more relevant.

In this book I use the terms pecunia and its plural pecunae to represent money. This is as opposed to using dollar, pound, the euro, or any other name for currency. The purpose behind coining these terms was to start the reader afresh and baggage-free. During the spring semester of 2020 one of the classes I taught was International Trade. I used the Krugman, Obstfeld, and Melitz textbook for this course. I was reviewing this textbook during the fall semester of 2019 and over the Holidays before the spring 2020 semester. To my surprise Krugman et al. had already used pecunia, as in the Bank of Pecunia in Chapter 18. And I thought I was an original in coining these terms.

Finally, to all my friends and colleagues, please know that I remain ever grateful for your help and encouragement throughout the process of writing this book. Usually authors provide a list of names of individuals who have been helpful during the writing of a manuscript. I will avoid providing such a list for fear of leaving someone out.

Sincerely,

Mohammad Ashraf

May 2020