Banking 6: Bank Notes and Checks

[ChecksSuperstore]

The history of checks and banking can be very interesting. I am just glad that checks are still around nowadays.

[derokojohn]

I have one question! since in this concept with gold backed currency, you have monetary base expanding through two processes. One is bank note, and other is checking account. My question is, is it not then truth to say that in non gold backed currency you would have less money expanding cause there wouldn't be this additional bank note creation from gold deposit, since there is no gold. You would have only checking account and bank notes?

[LyfeIzLike]

Awesome lecture Professor Saul!

[ionuorah]

Can someone please tell me how to download specific videos from Khan Academy

[altaltalt123]

"I don't know what he does with the one dollar bills"

...hehehehe. :)

[bruincafe00]

By virtue of saying "I don't want just ANYONE to print out these notes to come and get my gold pieces," you're adding value to gold. In your previous videos you've mentioned that gold is inherently worthless. So where do we draw the line here?

Paper money? Digital money? Any kind of placeholder? What's the deal?

[rhoadess]

Why not create a system where everyone's value is stored on a secure networked computer system, no more need for cash or gold. If someone wants to exchange money, they can of course write a check but for the most part, all transactions can be made simply by the use of a fingerprint scanner. This would make a person's money very difficult to steal and it would be easily tracked and it might be useful in dealing with crime, such as the sell of illegal drugs, tax evasion, and the like.

[ginmillsinger]

I'll share your channel with friend's. I seldom leave the music community, but saw this on CNN.  This is for EVERYONE! You are doing a GREAT service!

Thanks!

Bill

[Luigi84289]

In an ideal world this is how banks would function. The problem is greed. Bankers always give in eventually and print excess notes thus inflating the total number of bank notes in circulation. The best method on a gold standard is the checking method because of the obvious personal nature of the medium. Only the account holder of each checking account can write a check. If the gold doesn't exist you can't right a check for it.

[james02Perry]

Too good - all videos. Examples are hypothetical but so very easy to understand.

Thanks and God bless.

[whentheskyfalls]

person B uses the one dollar bills to go to the strip club XD

[zignationer]

great video man

[illmatic33]

If someone write you a check and you already cashed it, how long does the person have before he/she can no longer stop payment?

ps. amount of $500 (if that matters)

[notme222]

@illmatic33, Depends which bank it was written on and which bank you cashed it in. Same bank, zero minutes. A foreign bank, could be several days. There's a scam involving Nigerian banks where you deposit a check, send them money, and then it turns out to be fake but took so long to find out that you thought it was cleared.

[69Bluntsmoka420]

Pretty much the only time I use a check is when I owe a friend or family member money and I don't have any cash on me.

[snopro54]

I wonder what he does with all those ones.

[BigPurple121]

Knowledge is power

[nalcow]

@BigPurple121 indeed :)

[jackuy12345]

good work keep them up~~~~~

[footlestool]

When and where did bank notes and checks first emerge as a form of currency?

[ThatIsNotDeadWhich]

Italy, but precisely when I don't know. Probably during the early Renneisance.

The word "bank" is actually derived from the Italian word for "bench" because the moneychangers would sit on benches and trade money. And "bankrupt" is from the Italian phrase for "broken bench" because a moneychanger who went under water would get his bench broken so he couldn't do business from it anymore.

At least that's the story I heard.

[luke2468013579]

Actually bank notes first emerged in china and the earliest forms of cheque were i believe used in rome.

[Kin94285]

the first form of bank notes... probably not the first... its not unlikely that some earlier civilization came up with something similar.

[vornavalley]

It was not planned and happened by accident. See Paul Grignon's video "Money as Debt" - Part 1. Basically what happened was that people took their gold to a vault owner for safekeeping and were walking around with receipts for the gold. When they wanted to buy something some people just started handing over the receipts instead of withdrawing their gold and paying with it. The "banknote" was born. Sounds plausible.

[arseneremy]

@footlestool Rome

[jdrizd2]

I see where this is heading...