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10 – The Origins of Asset Backed Securities (ABS) – Part III

In the Part I and Part II of the origins of ABS, it’s shown: The difference between traditional banks that practiced deposit financing and shadow banks that practice market financing. ABS, MBS, CDS, CDO, ABCP are liabilities issued by shadow banks such as SPVs to raise fund from investors to acquire different types of assets.Continue reading “10 – The Origins of Asset Backed Securities (ABS) – Part III”

9 – The Origins of Asset Backed Securities (ABS) – Part II

In the last article we have seen how the shadow banks finance their acquisition of assets via market financing (or securitization) as compared to deposit financing practiced by commercial banks. Before we start, remember: All financial institutions raise funds to acquire assets by issuing their liabilities. Commercial banks raise fund finance the acquisition of assetsContinue reading “9 – The Origins of Asset Backed Securities (ABS) – Part II”

7 – What financial instrument – Bonds, Stocks, Loans, deposits, currency etc really is?

What are financial instruments such as Bonds, Stocks, Loans, Currency and Bank deposits etc. really is?  In fact, they’re not complicated. All of them are promissory notes. Section I : What is a promissory note? Anyone can make any kind of promise. For example: “I promise to complete the work today”, “I promise to bringContinue reading “7 – What financial instrument – Bonds, Stocks, Loans, deposits, currency etc really is?”

6 – The Origins of Asset Backed Securities (ABS) – Part I

In the movie “The Big Short”, there’re a bunch of financial instruments such as ABS, MBS, CDO, CDS being brought to the screen. What are those financial instruments actually? How are they created? The answer is: ABS, MBS, CDO, CDS – all of them are liabilities issued by “shadow banks” such as investment banks, hedgeContinue reading “6 – The Origins of Asset Backed Securities (ABS) – Part I”

4 – State Theory of Money

Continue from the first article titled “1 – Metallic Theory of Money”, it’s said that people accept the one-dollar gold coin as a payment for the goods and services they offered for other reason, but certainly not because of the intrinsic value of the gold coin (i.e not because the gold used to mint the one-dollar gold coin worth 1Continue reading “4 – State Theory of Money”

2- Money doesn’t MOVE!

When you log in to your online banking account and make a RM100 transfer to your friend, how does the money actually get “transferred” from your bank account to your friend’s bank account? How is money “moved” from your bank account to your friend’s bank account? To explain this, let’s assume Alice wants to transferContinue reading “2- Money doesn’t MOVE!”

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