Assignment

Are banks special?

Most US banks are privately owned, profit making organizations. Although they provide a

service just as many other businesses, banks differ because of their importance in the macro

economy. Policymakers have debated whether banks should be permitted to only do “banking

business”, or whether banks should be permitted to engage in other lines of business such as

selling insurance or buying and selling stocks and bonds. In this week’s assignment you will

address that premise through the following questions;

Provide a brief (one paragraph) overview of this week’s material.

2.What are the risks for the macro economy if a bank fails, that do not exist for other

businesses?

3.If banks could participate in other lines of business, what benefits would there be for

consumers?

3.Overall, discuss whether or not banks should be allowed to enter other lines of business.

Provide support for position from course and/or outside materials.

• Krugman, P. (2009, September 2). How did economists get it so wrong? The New York Times Magazine [online].

Numerous articles on Keynesian Economics.

• Hardaway, R. (2015, July 28). Keynesian economics. The Huffington Post [online].

This video provides a historical account of the evolution of money and how banks came to have the power to create money.

• The Brookings Institution
• The Economist- Economics
• Forbes- Economics & Finance
• Investopedia
• Bloomberg View- Economics
• The White House Administration, Council of Economic Advisors
• World Economic Forum
• The Heritage Foundation