Introduction: Money and banking for everyone - learn how to understand Finance


My goal is to explain the most important concepts about Money and Banking in the most simple way possible.


Why should I care about a system I am not able to understand and about people that are way better in handling this chaotic system than I could possibly do?



Finance is one of the most important parts of today's society

What has the after-work beer I bought in my local pub to do with the financial system? I will explain the financial mechanism that affects your and my daily life in detail. I will underline my explanations with hands-on quotes from the financial times.

I promise that I will speak your language and together we will translate all the weird and scary terms from the Financial Times into real English. I am also not going to use mathematics. The financial system might not be as shady, unpredictable and awful as you think if you are motivated to learn more about the system as a whole.


I will post a new piece of the financial puzzle every week. It will not take you more than 10 Minutes a day to read through it and understand another aspect of this world. If you have any questions or want a German translation, just write a comment below the text. (If you are not sure what a word or description means, look at my financial dictionary, where I will explain the most important phrases and words again. )


I promise you, you will understand that picture, which is a balance sheet of the Fed…

…and you can read a financial times article by the end of my series, as well as understand what “Brexit” really means.


Just as a motivation, this will be a piece of cake for you in just a few days of time:

“Bond yields were also pushed higher after European Central Bank president Mario Draghi said on Thursday that officials had not even discussed extending the central bank’s own quantitative easing program, which is in danger of running out of bonds to buy.”

My Motivation:

I am a nerd and completely fascinated by the money and banking system and want to share my passion. I want to help you to understand the system, so you can make your own judgments and be able to question opinions and articles. When I read my first FT article this summer, I literally didn’t understand a word, but with the basic concepts from my blog entries, you will be able to understand a financial article.


I have gained most of my knowledge about these concepts at the Columbia University in my class Money and Banking by Perry Mehrling. He has been such an inspiration and I am very thankful that he taught me so much, he is definitely one of the best professors. If you want to learn more about that topic and get many more background information, you can watch his course online. I would highly recommend participating in his course online via: I promise you, it is definitely worth to pay for that course to get all of the materials or at least watch/listen to it. Before you start spending money go through my series and find out for yourself if you enjoy reading about the financial system. Once you gained interest and want to learn more, you can sign up for Professor Mehrling's course.


Let's start this series

I hope you enjoy this series, so you are able to build your own opinion about finance, because money is dominating our world if we like it or not, even though it can’t buy you happiness.

I will always give you a quote from the Financial times in the beginning and at the end of the article. I will “translate” it and you will see, that you will understand more and more each time and don’t be disappointed if you do not get everything in the beginning. It is a big puzzle that needs some dedication to solving it, but everything becomes more clear in the end and afterwards people can not tell you financial lies anymore.



The first article: The hierarchy of money

The second article: Why do we need banks?

The third article: Why we need a central bank?

The fourth article: How can banks create money out of thin air?

Written by: Philine Paschen

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