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Pages:
2 pages/β‰ˆ550 words
Sources:
3 Sources
Style:
MLA
Subject:
Mathematics & Economics
Type:
Essay
Language:
English (U.S.)
Document:
MS Word
Date:
Total cost:
$ 8.64
Topic:

Relationship between the Amount of Money in Circulation, Interest Rates, and Inflation

Essay Instructions:

Read p. 21-71
On page 52-53, Graeber accounts for the populist reading of the “Wizard of Oz”, where “the Wicked Witches of the East and West represent the East and West Coast bankers (promoters of and benefactors from the tight money supply), the Scarecrow represented the farmers (who didn't have the brains to avoid the debt trap)”.
In your short answer, address these questions:
The statement implies some conventional understanding of the relationship between the amount of money in circulation, interest rates, and inflation. What is the intuition behind why lenders would want "tight money supply", and conversely, borrowers don't? Try to think about this in the most basic terms possible.
What is meant by a ‘debt trap’? Is all debt a trap, or are there certain types of debt or circumstances that result in a type of trap? I'm not sure there is a right answer to this, just do some looking/thinking and make a case for it.
Take the sources from the pdf I uploaded

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Written Answers
The statement implies some conventional understanding of the relationship between the amount of money in circulation, interest rates, and inflation. What is the intuition behind why lenders would want "tight money supply", and conversely, borrowers don't? Try to think about this in the most basic terms possible.
In Graeber's account, it is implied that there is a direct relationship that relates the characters of the story of the Wizard of Oz and their roles to financial constructs that people commonly encounter. It is a generally accepted fact that money is what makes the world go round, and when there is a lack of supply for money for an individual or multiple entities, the necessity for money is still very much present, thus making the act of provision a very important matter. When money is tight, some turn to lenders who take advantage of the situation to make profits by lending people money to pay for their bills and other expenses. This phenomenon and process explain why lenders want “tight money supply” while the borrowers don’t. The business of lending is based on the act of lending people or entities money for a certain amount of time to be repaid with a fixed, agreed-upon interest or interest rate. A tight money supply will create a demand for money that is beneficial for the lenders because they will get profits when the contract period or loan duration is up. This will provide them with a stream of income that lets them lend to other borrowers and gain more profits from interests. Conversely, borrowers do not want a “tight money supply" because it will drive them to the necessities of borrowing from such lenders. They...
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