I'm reading Randy Wray's book on money, and took a detour through Heilbroner and Galbraith's *The Economic Problem*. On p. 335, they introduce the notion of a "T account" and say, regarding assets and liabilities: "it is obvious that the two sides of the balance sheet must always come to the same total. *The total of assets and the total of liabilities are an identity*." (emphasis in original)
I'm trying to work through some examples based on some of Wray's writings and I'm having trouble understanding how T accounts work when, to me, it appears you can have assets with no corresponding liability, and the identity mentioned above falls apart. For example, let's say I purchase some land, and a bank building, and have $1 million in cash with which to open a bank. I put the cash in the vault and open my doors for business, ready to prey upon ... uh serve the public. At this point, before any other accounts have been opened, what does the T account for the bank look like? The assets would be the $1 million, but what are the liabilities? Would it be my ownership stake, i.e., shares of the company that I own? Bill _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
