The basics of Adam Smith and the roles of banks as engines of economic growth.

1. Introduction to Capitalism
Mr. Geib and Mr. Fitz-Patrick
12th Grade Economics

2. History of Wealth
• “Mercantilism”
– Government directed
economic activity
• “Command Economy”
• Top down…
• Adam Smith
• “The invisible hand of
self-interest”
– Get the government out of
the way, and let many many
individuals make their own
financial decisions
• “Market economy”
• Bottom up…
Adam Smith and “The Wealth of
Nations”

3. “THE INVISIBLE HAND”
Banks, business people, products, and the “markets”
where they meet and increase the “wealth of the nation.”

4. “CAPITALISM”
• The accretion of wealth
through capital
– Banks take “capital,” and
they make that money
available to others
– Investment and interest
rates
– Growth over time through
building a business
• Banks as engines of
economic growth
– Incredible global economic
growth over past century!
Wall Street financial markets in
New York City.

5. BANKS AS ENGINES OF
ECONOMIC GROWTH