San José State University
Department of Economics
Econ 135—Money and Banking
Course No. 27299, Spring 2016
Instructor:
Jeffrey Rogers Hummel
Office Location:
DMH 144
Telephone:
Campus office, (408) 924-5418; Home office, (925) 926-0807
Email:
Jeffrey.Hummel@sjsu.edu
Office Hours:
Tuesday, 1:00-2:30 P.M.; Thursday, 12:00-1:30 P.M.; and by
appointment
Class Days/Time:
Thursday, 6:30-9:15 P.M.
Classroom:
DMH 166
Prerequisites:
Econ 1A
Course Description
Monetary institutions and theory, central banking, Federal Reserve System, interest rates,
foreign exchange, price level theory, flow of funds, policy relative to private, government
and international finance.
Announcement
This is now a four-unit course. You are expected to complete an average of 12 hours of
work per week inclusive of lectures, assignments, and activities. This syllabus contains
learning objectives, class meeting times, and assignments commensurate with the
expectation of 12 hours of work per week across 15 weeks in a semester. For reference,
under a traditional three-unit course, you were expected to complete 9 hours of work per
week inclusive.
Description of changes
The new, 4-unit Econ 135 has been modified to include more material. This extra
material is incorporated into an expanded Econ 135 Course Reader (described and listed
below under “Required Texts/Readings”), with a writing assignment for each reading
assignment. The reading and writing will require an estimated 40 hours of additional
outside activity over the entire semester. This expected time is based on average reading
and writing skills. This requirement means that the new 4-unit Econ 135 course now
supports achievement of the Department’s Program Learning Objective number 5:
Communication.
Econ 135, Spring 2016
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Course Learning Outcomes and Program Learning Objectives
This is course about money, banking, and the financial system. It applies the insights of
both economic theory and history to modern financial institutions. By the end of the
course, the student should demonstrate critical and independent thinking about such
controversial issues as inflation, the causes of the Great Depression, monetary policy,
banking deregulation, the S & L crisis, international exchange rates, and the recent
financial crisis. Although this course touches on the full range of Economics PLOs, it
emphasizes PLO2 and PLO4.
PLO2: Macroeconomics.
PLO4: Specialist Areas: Finance.
PLO 5: Communication: Demonstrate efficient communication skills.
Upon successful completion of this course, students should be able to demonstrate the
follow:
CLO 1.Explain money's vital function and how it interacts with banking and the financial
system.
CLO 2. Explain how the interaction of the demand and stock of money determine the
price level.
CLO 3. Explain seigniorage and the role it has played in the history and evolution of
government involvement in the monetary and financial system.
CLO 4. Explain the complicated relationships between money, interest rates, and fiscal
policy.
CLO 5. Discuss the various factors that play a role in financial crises.
Required Texts/Readings
Textbooks
1. R. Glenn Hubbard and Anthony Patrick O’Brien, Money, Banking, and the Financial
System, 1st edn. (Boston: Prentice Hall, 2012): ISBN-13: 978-0132553452).
2. Murray N. Rothbard, What Has Government Done to Our Money? rev. edn. (Auburn,
AL: Ludwig von Mises Institute, 1990); ISBN-13: 978-1933550343 (available online at
http://mises.org/library/what-has-government-done-our-money).
Other Readings
Econ 135 Course Reader, available at Maple Press, 330 South 10th Street.
Dropping and Adding
Students are responsible for understanding the policies and procedures about add/drop,
grade forgiveness, etc. Refer to the current semester’s Catalog Policies section at
http://info.sjsu.edu/static/catalog/policies.html. Add/drop deadlines can be found on the
current academic year calendars document on the Academic Calendars webpage at
http://www.sjsu.edu/provost/services/academic_calendars/. The Late Drop Policy is
available at http://www.sjsu.edu/aars/policies/latedrops/policy/. Students should be aware
of the current deadlines and penalties for dropping classes. Information about the latest
changes and news is available at the Advising Hub at http://www.sjsu.edu/advising/.
Econ 135, Spring 2016
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Assignments and Grading Policy
The final examination, which will be comprehensive, is worth 40 points out of the total of
100 for the course. Each of two other examinations is worth 20 points toward the total. In
addition, there will be twelve short, objective quizzes based exclusively on assigned
weekly readings worth another 20 points. Each quiz individually is worth 2.5 points,
allowing students to drop or miss four out of the twelve quizzes. There will be no makeups for any quizzes. Although I shouldn’t have to mention this, cheating on any quiz or
exam will result in an automatic F for the entire course.
In order to qualify for taking any quiz, students must write a brief summary of the
readings assigned for that quiz. These written summaries must be a hard copy, at least
400 words long, neatly typed, and written in standard English. They also must be turned
in at the beginning of the class for which the readings are assigned. Failure to turn in the
writing assignment automatically disqualifies a student from taking that quiz, earning
zero points on it. Hand-written, unintelligible, or late summaries are not acceptable.
The written summaries will not be scored but will be checked for acceptability. Written
summaries are unacceptable if (a) if they do not apply to the readings assigned: (b) if they
do not cover all the readings assigned for that day; (c) if they are less than 400 words; or
(d) if they are plagiarized from any source, whether from the readings themselves, from
some other written source, or from another student. An unacceptable written summary
will disqualify a student’s grade for that particular quiz, earning the student zero points,
irrespective of how many questions he or she may have answered correctly. If two or
more students turn in identical written summaries for the same assigned readings, the
quizzes of each of them will be disqualified. There will be absolutely no exceptions.
In addition, the written summaries should include an accurate and typed word count. If
they fail to do so, one-half point will be deducted from grade for the associated quiz.
Converting Number Grades to Letter Grades
97-100
93-96
90-92
87-89
A+
A
AB+
83-86
80-82
77-79
73-76
below 60
B
BC+
C
F
70-72
67-69
63-66
60-62
CD+
D
D-
(continued)
Econ 135, Spring 2016
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Converting Number Grades to Letter Grades (continued)
Also affecting final grades are the total number of quizzes students take. Although
allowed to drop four out of the twelve quizzes without penalty, students who do not turn
in written summaries and get a positive score (of at least one-half point) on a minimum of
four quizzes automatically fail the course, no matter how well they have done on their
exams. Below is listed the highest final grade that students can achieve depending on
how many written summaries with positive quiz scores they have completed.
only 3 written summaries and quizzes
only 4 written summaries and quizzes
only 5 written summaries and quizzes
only 6 written summaries and quizzes
7 or more written summaries and quizzes
highest possible grade: F
highest possible grade: D+
highest possible grade: C+
highest possible grade: B+
highest possible grade: A+
Classroom Protocol
This is a traditional, lecture-based course. I therefore encourage students to record the
lectures if they believe doing so will help their studying. But any use of laptops, tablets,
or other electronic device for typing notes is prohibited in class. Studies have proven that
students who take notes on these devices significantly impair their comprehension of the
material. So students need to come prepared to take hand-written notes. Those who
violate this prohibition will have a half point deducted from their final grade for the
course (out of 100 points) for each and every infraction.
Because class participation helps enliven the course, it is greatly appreciated and can earn
students up to one extra point toward their final grade. Class attendance is not mandatory
and will not directly affect a student’s grade. My experience, however, is that students
who miss several classes, in addition to dropping quizzes, consign themselves to doing
extremely poorly on their exams (unless they are truly exceptional). I therefore strongly
encourage students to attend fully every class.
Finally, if you experience any difficulty in this course, please do not hesitate to come to
me for help. I am available not only during office hours but also by phone, and I am
always happy to clarify hard concepts, resolve any lingering confusion, or otherwise
assist you in making this course enjoyable and rewarding.
Econ 135, Spring 2016
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University Policies
Academic integrity
Your commitment as a student to learning is evidenced by your enrollment at San Jose
State University. The University’s Academic Integrity policy, located at
http://www.sjsu.edu/senate/S07-2.htm, requires you to be honest in all your academic
course work. Faculty members are required to report all infractions to the office of
Student Conduct and Ethical Development. The Student Conduct and Ethical
Development website is available at http://www.sa.sjsu.edu/judicial_affairs/index.html.
Instances of academic dishonesty will not be tolerated. Cheating on exams or plagiarism
(presenting the work of another as your own, or the use of another person’s ideas without
giving proper credit) will result in a failing grade and sanctions by the University. For
this class, all assignments are to be completed by the individual student unless otherwise
specified. If you would like to include your assignment or any material you have
submitted, or plan to submit for another class, please note that SJSU’s Academic Policy
S07-2 requires approval of instructors.
Campus Policy in Compliance with the American Disabilities Act
If you need course adaptations or accommodations because of a disability, or if you need
to make special arrangements in case the building must be evacuated, please make an
appointment with me as soon as possible, or see me during office hours. Presidential
Directive 97-03 at http://www.sjsu.edu/president/docs/directives/PD_1997-03.pdf
requires that students with disabilities requesting accommodations must register with the
Accessible Education Center (AEC) at http://www.sjsu.edu/aec to establish a record of
their disability.
In 2013, the Disability Resource Center changed its name to be known as the Accessible
Education Center, to incorporate a philosophy of accessible education for students with
disabilities. The new name change reflects the broad scope of attention and support to
SJSU students with disabilities and the University's continued advocacy and commitment
to increasing accessibility and inclusivity on campus.
Workload Expectations
Academic Policy S12-3 at http://www.sjsu.edu/senate/S12-3.htm has defined expected
student workload as follows: “Success in this course is based on the expectation that
students will spend, for each unit of credit, a minimum of forty-five hours over the length
of the course (normally 3 hours per unit per week with 1 of the hours used for lecture) for
instruction or preparation/ studying or course related activities including but not limited
to internships, labs, clinical practica. Other course structures will have equivalent
workload expectations as described in the syllabus.”
Econ 135, Spring 2016
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Econ 135—Money and Banking
Spring 2015: Course Schedule
Week
Date
Topics, Readings, Assignments, Deadlines
1
Jan
28
2
Feb
4
Rothbard, chs. I, II.
3
Feb
11
Hubbard & O’Brien, ch. 2; Rothbard, ch. III.
4
Feb
18
Hubbard & O’Brien. chs. 1, 4.
5
Feb
25
Hubbard & O’Brien, chs. 3, 7.
6
Mar
3
Hubbard & O’Brien, chs. 5, 6.
7
Mar
10
first examination.
8
Mar
17
Hubbard & O’Brien, chs. 9, 10.
9
Mar
24
Hubbard & O’Brien, ch. 11.
Mar
31
Spring break.
10
Apr
7
Hubbard & O’Brien, ch. 12.
11
Apr
14
Hubbard & O’Brien ch. 14.
12
Apr
21
second examination.
13
Apr
28
Hubbard & O’Brien, chs. 13, 15.
14
May
5
Rothbard, ch. IV; Selection in the Course Reader from Mishkin, 2nd
edn., ch. 19.
15
May
12
Hubbard & O’Brien, chs. 8, 16.
Final
Exam
May
19
DMH 166: 6:30 to 8:45 P.M.
NOTE: In addition to the above, the Course Reader contains copies of or links to
supplementary readings assigned for various weeks.
Econ 135, Spring 2016
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Course Units:
I.
The Nature and Origin of Money.
II.
The Nature and Origin of Credit.
III.
An Overview of Today’s Financial System.
IV.
Commercial Banking: History and Practice.
V.
VI.
VII.
Nonbank Intermediaries, Deregulation, and Financial Crisis.
Modern Central Banking.
Money and the World Economy.
For each unit, I will hand out an outline of my lecture and a list of important terms.
Optional Recommended Readings:
Introductory
Todd G. Buchholz, New Ideas from Dead Economists: An Introduction to Modern
Economic Thought, rev. edn. (New York: Plume, 2007).
David Friedman, Hidden Order: The Economics of Everyday Life (New York:
HarperBusiness, 1996).
Milton and Rose Friedman, Free to Choose: A Personal Statement (New York:
Harcourt Brace Jovanovich, 1980).
Henry Hazlitt, Economics in One Lesson: Fiftieth Anniversary Edition (San Francisco:
Laissez Faire, 1996).
David Henderson, ed., The Fortune Encyclopedia of Economics (New York: Warner
Books, 1993).
Paul Heyne, Peter J. Boettke, and David L. Prychitko, The Economic Way of Thinking,
10th edn. (Upper Saddle River, NJ: Prentice Hall, 2003). [Note: If you can find it, the 5th
edn. written exclusively by Heyne was the best, although more recent editions are still
useful.]
Israel M. Kirzner, Competition and Entrepreneurship (Chicago: University of
Chicago Press, 1973).
Steven E. Landsburg, The Armchair Economist: Economics and Everyday Life (New
York: Free Press, 1995).
Money and Banking Texts
George G. Kaufman, The U.S. Financial System: Money, Markets and Institutions,
6th edn. (Englewood Cliffs, NJ: Prentice Hall, 1995).
Roger LeRoy Miller and David D. VanHoose, Money, Banking, and Financial
Markets, 3rd edn. (New York: McGraw-Hill, 1993).
Peter S. Rose and Milton H. Marquis, Money and Capital Markets: Financial
Institutions and Instruments in a Global Market Place, 10th edn. (Boston: McGraw-Hill
Irwin, 2008).
Lawrence H. White, The Theory of Monetary Institutions (Oxford: Blackwell, 1999).
(continued)
Econ 135, Spring 2016
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Optional Recommended Readings (continued):
Monetary Theory
H. Geoffrey Brennan and James M. Buchanan, Monopoly in Money and Inflation:
The Case for a Constitution to Discipline Government (London: Institute of Economic
Affairs, 1981).
Friedrich A. von Hayek, The Denationalization of Money--The Argument Refined:
An Analysis of the Theory and Practice of Concurrent Currencies, 2nd edn. (London :
Institute of Economic Affairs, 1978).
J. Huston McCulloch, Money and Inflation: A Monetarist Approach, 2nd edn. (New
York: Academic Press, 1982).
Ludwig von Mises, The Theory of Money and Credit, rev. edn. (London: Jonathan
Cape, 1934).
Murray N. Rothbard, The Mystery of Banking (New York: Richardson & Snyder,
1983).
George A. Selgin, A Theory of Free Banking: Money Supply Under Competitive Note
Issue (Totowa, NJ: Rowman & Littlefield, 1988).
Monetary History
Kevin Dowd, ed., The Experience of Free Banking (London: Routledge, 1992).
Milton Friedman, Money Mischief: Episodes in Monetary History (New York:
Harcourt Brace Jovanovich, 1992).
Milton Friedman and Anna Jacobson Schwartz, A Monetary History of the United
States, 1867-1960 (Princeton, NJ: Princeton University Press, 1965).
Charles A. E. Goodhart, The Evolution of Central Banks (Cambridge, MA: MIT Press,
1988).
Alan Greenspan, The Age of Turbulence: Adventures in a New World (New York:
Penguin Press, 2007).
Edward J. Kane, The S & L Insurance Mess: How Did It Happen? (Washington:
Urban Institute Press, 1989).
Angela Redish, Bimetallism: An Economic and Historical Analysis (Cambridge:
Cambridge University Press, 2000)
Murray Rothbard, America's Great Depression (Princeton, NJ: Van Nostrand, 1963).
Richard H. Timberlake, Jr., Monetary Policy in the United States: An Intellectual and
Institutional History (Chicago: University of Chicago Press, 1978).
Andrew Dickson White, Fiat Money Inflation in France: How It Came, What It
Brought, and How It Ended (New York: D. Appleton-Century, 1933).
Lawrence H. White, Free Banking in Britain: Theory, Experience, and Debate,
1800-45 (Cambridge: Cambridge University Press, 1984).
Monetary and Financial Reform
Tyler Cowen and Randall Kroszner, Explorations in the New Monetary Economics
(Oxford: Blackwell, 1994).
Milton Friedman, A Program for Monetary Stability (New York: Fordham University,
1960).
David Glasner, Free Banking and Monetary Reform (Cambridge: Cambridge
University Press, 1989).
Martin Wolf, Fixing Global Finance (Baltimore: Johns Hopkins University Press,
2008).
Econ 135, Spring 2016
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