Monetary Theory: Core Curriculum Outline

Module 1: Foundations of Money

• The Evolution of Money: Barter → Commodity → Fiat → Digital
• Functions of Money: Medium, Unit, Store, Standard
• Characteristics of "Good" Money: Durability, Divisibility, Recognizability, Scarcity

Module 2: Theories of Money Supply and Demand

• Quantity Theory of Money (MV = PY)
• Monetarist Perspective (Milton Friedman)
• Keynesian Liquidity Preference and Money Demand
• Endogenous Money Theory (Post-Keynesian / MMT View)
• Velocity of Money and its Stability

Module 3: Inflation, Deflation, and Price Stability

• Types: Demand-Pull, Cost-Push, Built-In Inflation
• Hyperinflation: Causes, Cases, and Consequences
• Deflation and Liquidity Traps
• Inflation Targeting: Pros and Pitfalls
• Real vs. Nominal Variables

Module 4: Interest Rates and Monetary Transmission

• Time Value of Money & Interest Rate Determination
• Loanable Funds vs. Liquidity Preference Theories
• Yield Curve, Term Structure of Interest Rates
• How Monetary Policy Affects the Real Economy

Module 5: Central Banking and Monetary Policy

• Role and Tools of Central Banks:
• Open Market Operations
• Reserve Requirements
• Discount Window / Interest Rates
• Inflation Targeting vs. Dual Mandate
• Policy Rules: Taylor Rule vs. Discretion
• Independence and Credibility of Central Banks

Module 6: Money Creation and Banking System

• Fractional Reserve Banking
• Commercial Bank Money vs. Central Bank Money
• Credit Creation Multiplier
• Shadow Banking System
• Bank Runs and Deposit Insurance

Module 7: Unconventional and Modern Tools

• Quantitative Easing (QE) and QT (tightening)
• Negative Interest Rates
• Forward Guidance
• Yield Curve Control
• Central Bank Digital Currencies (CBDCs)
• Modern Monetary Theory (MMT): Premises and Criticisms

Module 8: Expectations and Monetary Dynamics

• Rational vs. Adaptive Expectations
• Policy Credibility and Time Inconsistency (Kydland & Prescott)
• Role of Forward Guidance and Transparency
• Inflation Expectations and Anchoring

Module 9: Exchange Rates and Monetary Sovereignty

• Fixed, Floating, and Managed Exchange Rates
• Currency Pegs and Speculative Attacks
• Purchasing Power Parity (PPP)
• Interest Rate Parity & Capital Mobility
• Trilemma of International Finance

Module 10: Money and the Macro Economy

• IS-LM Model and Monetary Equilibrium
• AD-AS Model and Policy Shocks
• Phillips Curve: Short-Run Tradeoffs, Long-Run Breakdown
• Money Neutrality vs. Superneutrality
• Fiscal-Monetary Coordination

Module 11: Digital & Alternative Monetary Systems

• Cryptocurrencies and Decentralized Finance (DeFi)
• Stablecoins and Programmable Money
• Private Scrips and Corporate Monetary Zones (e.g., Malone Corporate Scrip)
• Dual Circulation Systems (e.g., China’s strategy)

Module 12: Political Economy of Monetary Systems

• Central Bank Governance and Democratic Accountability
• Monetary Imperialism and Currency Hegemony (e.g., U.S. Dollar System)
• Sanctions, SWIFT, and Weaponized Finance
• Monetary Systems as Tools of Power, Liberation, or Control