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change AP macroeconomics

I've really enjoyed reading pragcap and related articles to better understand how our economy works and what impact policy decisions might have.

In terms of better educating the masses, I'm wondering if one point to start would be a campaign to try to get AP macroeconomics to not associate the federal reserve bank with their fractional reserve system lectures, or better yet remove the fractional reserve / money multiplier course entirely.  Does anyone have any experience with this?

Here is their curriculum module:

"An injection of new deposits into the banking system will have a “multiplier” effect on bank deposits. When a bank receives a new deposit, it must keep a certain percentage of the new deposit either as vault cash or on deposit with the Fed (these are the required reserves dictated by the Fed). The remainder of the deposit becomes excess reserves and may be loaned out by the bank. Because banks are profit-maximizing firms that earn profits from making loans, they will generally loan out as much of their excess reserves as possible. Thus, the excess reserves from the new deposit become loans.

... The payment also will not multiply if the bank into which the proceeds of a bond purchase are deposited holds the payment as excess reserves (rather than loaning it out). This may be the case if banks cannot locate “creditworthy” borrowers."

https://apcentral.collegeboard.org/pdf/cm-macro-monetary-policy.pdf?course=ap-macroeconomics

 

So my question is which would be most effective (if any):

- write to multiple prominent economists with a microphone (Krugman?) to sign a letter that this module is plain wrong

- write the College Board (or whoever runs AP macroeconomics) directly citing the Fed paper stating "Changes in reserves are unrelated to changes in lending, and open market operations do not have a direct impact on lending. We conclude that the textbook treatment of money in the transmission mechanism can be rejected.": https://www.federalreserve.gov/pubs/feds/2010/201041/201041pap.pdf

- ???

Kevin

 

Hi Kevin.

I've actually debated Krugman about this topic over the years and talked to him personally about it. Mainstream economists have kind of shifted the sands of the debate from a strict relationship between reserves and lending to now meaning a loose relationship.

I still think their narratives are wrong, but it's virtually impossible to convince them of that. They simply don't want to admit they are wrong or can't understand how this actually works. And it is pretty much impossible to prove them wrong definitely.

It all kind of sucks if you ask me. Some people just refuse to try to see the world for what it is when that reality contradicts a lot of their life's work.

"Pragmatic Capitalism is the best website on the Internet. Just trust me. Please?" - Cullen Roche