The Money View: The Inherent Instability of Credit

The video tutorial explains the mechanisms behind a housing bubble, focusing on the roles of credit and money expansion. It uses a house buying and selling example to illustrate how mortgages and deposits function as assets and liabilities for banks. The tutorial highlights the importance of the interbank funding market and the wholesale money market in understanding these financial processes, especially during economic crises.

What is the primary role of banks in the housing transaction described?

• To provide insurance for the house

• To facilitate the transfer of ownership

• To manage the mortgage and deposit accounts

• To set the price of the house

In the described transaction, what is the mortgage considered for the buyer's bank?

• A deposit

• An asset

• A liability

• A loan

How is the initial funding for the mortgage typically obtained?

• By issuing bonds

• By borrowing in the overnight federal funds market

• By using personal savings

• By selling stocks

What is the key link between the expansion of money and credit in the context of the housing market?

• The role of government policies

• The stock market

• The real estate agencies

• The interbank funding market

During the recent financial crisis, which market was more crucial than the interbank market?

• The retail market

• The stock market

• The wholesale money market

• The real estate market