Why can’t governments print an unlimited amount of money? - Jonathan Smith

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  • เผยแพร่เมื่อ 19 มิ.ย. 2024
  • Explore the economic strategy of quantitative easing, where a central bank purchases bonds in order to boost the economy.
    --
    In March 2020, the COVID-19 pandemic rocked economies worldwide. Millions of people lost their jobs, and many businesses struggled to survive or shut down. Governments responded with some of the largest economic relief packages in history- the US alone spent $2.2 trillion on a first round of relief. So where did all this money come from? Jonathan Smith explores the strategy of quantitative easing.
    Lesson by Jonathan Smith, directed by Serin İnan, Kozmonot Animation Studio.
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ความคิดเห็น • 1.6K

  • @Manvendra0077
    @Manvendra0077 2 ปีที่แล้ว +3484

    Zimbabwe be like: JUST PRINT MORE, DUH!

    • @roboticol6280
      @roboticol6280 2 ปีที่แล้ว +99

      you maybe rich in zimbabwe but then you go to usa

    • @CensoredMercy
      @CensoredMercy 2 ปีที่แล้ว +9

      @@roboticol6280 ...

    • @NorwaysGreatestSon
      @NorwaysGreatestSon 2 ปีที่แล้ว +57

      The Weimar Republic's logic is:
      If you can't pay debt just print more money

    • @andyosully
      @andyosully 2 ปีที่แล้ว +39

      America be like: write that down! WRITE THAT DOWN!

    • @andyosully
      @andyosully 2 ปีที่แล้ว +5

      Lenders actually ended up putting all their money in housing.

  • @kellie5476
    @kellie5476 2 ปีที่แล้ว +3093

    I wonder if anyone's ever created money out of *thick* air?

    • @vumanhtung
      @vumanhtung 2 ปีที่แล้ว +149

      EXTRA THICC air.

    • @greipapa
      @greipapa 2 ปีที่แล้ว +105

      Yes,Bitcoin

    • @Snufkin224
      @Snufkin224 2 ปีที่แล้ว +93

      If money is made of paper then the paper comes from trees which mostly is made of carbon from the air.

    • @greenisnotacreativecolour
      @greenisnotacreativecolour 2 ปีที่แล้ว +29

      It's easier to create stuff out of thick air because it's more dense - there are more atoms available.

    • @dad2827
      @dad2827 2 ปีที่แล้ว +13

      Ahhhhh Ted ed has a sense of humor.

  • @Alkalus
    @Alkalus 2 ปีที่แล้ว +2459

    You: *buy a bond*
    Central Bank: We’ll pay you back.
    Central Back: *buys a bond* It’s like printing my own money!

    • @alexwang982
      @alexwang982 2 ปีที่แล้ว +40

      Bonds are weird.

    • @thegermanbasket732
      @thegermanbasket732 2 ปีที่แล้ว +14

      Almost as weird as pi

    • @nikkyboy1067
      @nikkyboy1067 2 ปีที่แล้ว +15

      If they are buying/acquiring debt and happen to be a bank
      that's why they're a bank

    • @gurkha630
      @gurkha630 2 ปีที่แล้ว +1

      Mhm

    • @calholli
      @calholli 2 ปีที่แล้ว +23

      Wrong.. The central bank doesn't pay you back. It's our government that has to pay for the bonds, including the interest that comes with it; and how do they pay for that?--- Through Taxes. Its a complete scam. It's simply a justification for spending whatever they want now, and it is promised to be paid back later by tax payers, with interest. It is the finest fraud ever devised by man.

  • @SyndarNailo
    @SyndarNailo 2 ปีที่แล้ว +524

    It's all a matter of equivalent exchange, you trace the alchemic circle on the floor, place the ingredients, and try to transmute into money.

    • @Jaechhetai
      @Jaechhetai 2 ปีที่แล้ว +15

      Fmab fan?

    • @ken_yap
      @ken_yap 2 ปีที่แล้ว +10

      One is all, all is one. 🙏🏻

    • @Lucky10279
      @Lucky10279 2 ปีที่แล้ว

      😆

    • @bobthegoat7090
      @bobthegoat7090 2 ปีที่แล้ว +37

      It is very dangerous. Money transmutation is a huge taboo and it often fails. You may end up with an abomination in the form of Venezuelan bolívar instead of USD and it might cost you your arm

    • @SyndarNailo
      @SyndarNailo 2 ปีที่แล้ว +4

      @@bobthegoat7090 Ok i won't try

  • @lovesunnyskies
    @lovesunnyskies 2 ปีที่แล้ว +1795

    Every 7-year old: *”Printing, duhh?”* 🙄

    • @timothyhawkins3627
      @timothyhawkins3627 2 ปีที่แล้ว +39

      More like enter digits, hit "enter." duh!

    • @BroAnarchy
      @BroAnarchy 2 ปีที่แล้ว +58

      As a 7 year old, i can confirm.

    • @lumbratile4174
      @lumbratile4174 2 ปีที่แล้ว +28

      @@BroAnarchy why in the world do you comment on TH-cam as a 7 year old??? Why do you even have access to yt lmao

    • @BroAnarchy
      @BroAnarchy 2 ปีที่แล้ว +35

      @@lumbratile4174
      Oops,
      I meant .... *_70_* year old
      My bad 😁😁😁

    • @Alvionalx
      @Alvionalx 2 ปีที่แล้ว +3

      @@lumbratile4174 *e*

  • @mishca
    @mishca 2 ปีที่แล้ว +1190

    This is something I've always wondered about...

    • @jokecenter9138
      @jokecenter9138 2 ปีที่แล้ว +6

      Same lol...

    • @kopkaljdsao
      @kopkaljdsao 2 ปีที่แล้ว +26

      US economic policy would normally lead to hyperinflation but it is backed by a commodity(oil) that curbs the negative effects. Oil dollars + USD being global reserve currency means US can use inflation and currency devaluation to take care of debt with minimal risk for runaway inflation and economic instability. In practical terms US monetary policy actually transfers most of the negative effects indirectly on countries with tight budgets trying to maintain a budget surplus and low debt.

    • @wdfaseer5898
      @wdfaseer5898 2 ปีที่แล้ว +43

      @@kopkaljdsao AKA : Robbing other countries.

    • @calebcarranza8930
      @calebcarranza8930 2 ปีที่แล้ว

      Yeah me too

    • @007SuperSoldier
      @007SuperSoldier 2 ปีที่แล้ว +2

      @@kopkaljdsao No one can maintain a surplus unless someone else maintains a deficit.

  • @hb.raafay
    @hb.raafay 2 ปีที่แล้ว +240

    From Business to History to Economy to Medicine to everything; I love TED-Ed for extreme versatility and exceptional animation over the years.

    • @enjoyplanet9559
      @enjoyplanet9559 2 ปีที่แล้ว +4

      please whats the difference between TED , TEDx and TED-Ed ?

    • @hb.raafay
      @hb.raafay 2 ปีที่แล้ว +6

      @@enjoyplanet9559 I think TED is the organization.
      TEDx are collaborative talks and sessions on topics.
      TED-Ed is TED Education about lessons from various tutors.

    • @AKumar528
      @AKumar528 2 ปีที่แล้ว

      USA prints unlimited money but rest of the world has to bear the brunt.

  • @mikewilliams6025
    @mikewilliams6025 2 ปีที่แล้ว +343

    Since money is such a versatile word the original question is a little misleading. The government can put currency into circulation, but it can never create wealth.

    • @itsDhiran
      @itsDhiran 2 ปีที่แล้ว +6

      Which is essentially the same but not 😗😗😗

    • @muhammadsalman7714
      @muhammadsalman7714 2 ปีที่แล้ว +11

      Agree with you and hence only Islamic Zakat system can fix all issues n stops inflation

    • @Hyyacinth
      @Hyyacinth 2 ปีที่แล้ว +17

      @@muhammadsalman7714 no

    • @jjpower6769
      @jjpower6769 2 ปีที่แล้ว +2

      I'm lost. Why can the government never create wealth?

    • @ivanivanovic5857
      @ivanivanovic5857 2 ปีที่แล้ว +26

      @@jjpower6769
      In simple terms, wealth and money are two different things. Wealth can be considered the total value of the assets owned by an entity. Wealth can be created by a few processes which the government can influence, but if you take all of the dollars that exist, they are worth a certain amount. If you print more dollars, that amount doesn't increase to accommodate for the new dollars, instead the value of all dollars decreases, so all the dollars that exist still fits that certain amount.

  • @SV42165
    @SV42165 2 ปีที่แล้ว +762

    “It’s possible that we are in a completely fradulent system.”
    - The Big Short, Dr. Michael J. Burry

    • @fernandoaispuro159
      @fernandoaispuro159 2 ปีที่แล้ว +29

      When the Brad Pitt Character says " people will lose houses, jobs, retirement accounts, did you know for every 1% unemployment goes up 12,000 people die?".
      This isn't the exact quote but it hit hard when he said that.

    • @somerandomuser5155
      @somerandomuser5155 2 ปีที่แล้ว +2

      @@fernandoaispuro159 what movie?

    • @theshuriken
      @theshuriken 2 ปีที่แล้ว +5

      @@somerandomuser5155 The Big Short

    • @SV42165
      @SV42165 2 ปีที่แล้ว +1

      @@fernandoaispuro159 “Just stop dancing.”

    • @babydoh7742
      @babydoh7742 2 ปีที่แล้ว +1

      Speaking legitimate fax bro, print those dial-up red-pills.

  • @DylanDkoh
    @DylanDkoh 2 ปีที่แล้ว +523

    Old title
    "How do governments create money out of thin air? - Jonathan Smith"

    • @SV42165
      @SV42165 2 ปีที่แล้ว +1

      😂 WHY ?

    • @taiefmiah
      @taiefmiah 2 ปีที่แล้ว +1

      Loans

    • @0Sildar0
      @0Sildar0 2 ปีที่แล้ว +13

      They completely reversed the meaning lol

    • @vincentjosephpanes8678
      @vincentjosephpanes8678 2 ปีที่แล้ว +2

      Oh yeah, I just notice it today

  • @CyanLightning
    @CyanLightning 2 ปีที่แล้ว +1397

    Germans after WW1: We're billionaire but we can't buy a breads

    • @marianchovych
      @marianchovych 2 ปีที่แล้ว +29

      That what I was thinking !
      Good thing I payed attention in history w

    • @Inazarab
      @Inazarab 2 ปีที่แล้ว +26

      The circumstances are vastly different. Weimar Germany in the 1920's is not the USA in 2021. During the 2008 financial crisis it was done with no concernag amount of inflation. Check out the deficit myth and read about MMT. The talk about hyperinflation is pure hyperbole.

    • @kenzahcarstairs5417
      @kenzahcarstairs5417 2 ปีที่แล้ว +7

      we have so much money we're practically drowning in it but we are also so poor at the same time

    • @hfar_in_the_sky
      @hfar_in_the_sky 2 ปีที่แล้ว +17

      @@Inazarab I think the OP was less about comparing economies and more about pointing out how printing money doesn't help if inflation is out of control. Just in a humorous and historically relevant way.

    • @DIGVIJAY.SINGH.
      @DIGVIJAY.SINGH. 2 ปีที่แล้ว +2

      People in Pennsylvania will be like are you talking to me

  • @ANDROLOMA
    @ANDROLOMA 2 ปีที่แล้ว +126

    True story: I remember from junior high in 1971 a social studies teacher predicting to our class that the US national debt would reach one trillion dollars, maybe by the year 2000. Must have been an inevitability.

    • @stachowi
      @stachowi 2 ปีที่แล้ว +7

      They need excuses to make more debt to feed the debt monster

    • @divyaakashdutta4038
      @divyaakashdutta4038 2 ปีที่แล้ว +1

      How old are you sir?

    • @ANDROLOMA
      @ANDROLOMA 2 ปีที่แล้ว

      @@divyaakashdutta4038 50 years ago I was 12.

    • @henrygustav7948
      @henrygustav7948 ปีที่แล้ว

      It is now 31 trillion USD. Is the Federal govt broke? Are we now paying higher taxes? Are your grandchildren now paying for WW2? The stuff they told you is a lie.

    • @ANDROLOMA
      @ANDROLOMA ปีที่แล้ว +1

      @@henrygustav7948 I was bright enough when young to decide against having children and grandchildren. What puzzles me is why the rest of you weren't so wise.

  • @Silverwind87
    @Silverwind87 2 ปีที่แล้ว +205

    Short Answer: Printing more money decreases the value.
    Long Answer: They actually can print more money, but it's complicated.

  • @PresidentGeorgeWBush-vf8yi
    @PresidentGeorgeWBush-vf8yi 2 ปีที่แล้ว +130

    Title: Why can’t governments print an unlimited amount of money?
    My brain: *GERMANY*

    • @westwoods7675
      @westwoods7675 2 ปีที่แล้ว +4

      You do know that Germany did it on purpose just to goad the allies into forgiving their reparations?

    • @Nietabs
      @Nietabs 2 ปีที่แล้ว +4

      Zimbabwe Venezuela

  • @ISuperI
    @ISuperI 2 ปีที่แล้ว +110

    Why government can't print unlimited money?
    Me, a Venezuelan: *hyperinflation flashbacks*

  • @AJAY-xw3oo
    @AJAY-xw3oo 2 ปีที่แล้ว +67

    Inflation: "The more amount of money you require but less amount of goods you get"
    Am I right?..

    • @user-fe3gy1wf2r
      @user-fe3gy1wf2r 2 ปีที่แล้ว +8

      Well kind of. You just need more money to buy the same thing or with the same money you buy less. And it can work both ways (in my country chocolate bars used to be 100g now they're 85g)

    • @santos122122
      @santos122122 2 ปีที่แล้ว +14

      Well it sounds to me like inflation is caused more by lack of goods than it is by excess money.
      For example if the country has enough goods and the central bank overprints money there will be no hyperinflation.
      Because the prices will only increase in proportion to the excess of printed money.
      However if you have lack of goods especially food the prices will continue to skyrocket as less and less goods are available and no amount of money printing will be able to compensate for this.

    • @subbyc3257
      @subbyc3257 2 ปีที่แล้ว +5

      @@santos122122 I agree with you that it can be caused by lack of goods but it can also be caused by overprinting. If there's too much money in circulation in a economy(due to overprinting) then that also means people have more money to spend, so are now willing to pay more for products. You only have to look at Germany's hyperinflation during WW2 to see this is true. They overprinting way too much and faced hyperinflation.
      This is jusy my perspective, I respect your perspective also.

    • @TheThunderBat
      @TheThunderBat 2 ปีที่แล้ว

      @@user-fe3gy1wf2r where i live, the opposite is called deflation

    • @alifaan595
      @alifaan595 2 ปีที่แล้ว

      you have more money, but things are more expensive

  • @solomonmhlongo1308
    @solomonmhlongo1308 2 ปีที่แล้ว +75

    Money heist actors printed money for themselves. 😂😂

  • @jenniferlam7482
    @jenniferlam7482 2 ปีที่แล้ว +14

    2:30 the sass got me. I love the animation, it's really funny.

  • @caiii_i3512
    @caiii_i3512 2 ปีที่แล้ว +26

    simple answer, stuff loses its value when there is too much of it

    • @cloroxbleach-lq7nt
      @cloroxbleach-lq7nt 2 ปีที่แล้ว

      And this is why I hate society

    • @serenitychardonnaybonet296
      @serenitychardonnaybonet296 ปีที่แล้ว +1

      I don’t even care if it loses value as long as everyone at least has money to be able to have food and etc

  • @captainsponge7825
    @captainsponge7825 2 ปีที่แล้ว +21

    surprisingly, this is very simple and yet very educative. would love to see more of these on TH-cam.

    • @xcutepikax
      @xcutepikax ปีที่แล้ว +1

      Simple? I'm still confused ;(

  • @frankmedrisch7451
    @frankmedrisch7451 2 ปีที่แล้ว +35

    “Potential consequences are still unfolding” Upbeat jazz music playing in background…

    • @stachowi
      @stachowi 2 ปีที่แล้ว

      It’s not going to end well... that’s clear

  • @katelynwang4141
    @katelynwang4141 2 ปีที่แล้ว +96

    wow, if only schools taught me this in this fun way! lol

    • @tomasgomes8793
      @tomasgomes8793 2 ปีที่แล้ว +8

      They can't cause these 5 minute videos are pretty expensive to make, let alone a full subject!

    • @vc400
      @vc400 2 ปีที่แล้ว +4

      @@tomasgomes8793 hahaha! Educational system is rigged. They dont want to teach you any money subject.

    • @tomasgomes8793
      @tomasgomes8793 2 ปีที่แล้ว

      @@vc400 I don't know about you, but in my country we can study economy 🤷🏻‍♂️

  • @dylan8443
    @dylan8443 2 ปีที่แล้ว +20

    I remember as a kid when we had the trillion dollar bill.

    • @kirtil5177
      @kirtil5177 2 ปีที่แล้ว +1

      @Replied by 𝗧𝗘𝗗-𝗘𝗗 ✪︎︎ bot alert

    • @dylan8443
      @dylan8443 2 ปีที่แล้ว

      @@kirtil5177 huh?

    • @kirtil5177
      @kirtil5177 2 ปีที่แล้ว +3

      @@dylan8443 the bot's comment was deleted. See the suspicious name i replied to?

  • @sayanchakraborty3720
    @sayanchakraborty3720 2 ปีที่แล้ว +145

    Answer: By taking loans from Central Banks through bonds and never paying them back.

    • @plastovyplast7965
      @plastovyplast7965 2 ปีที่แล้ว +11

      *paying them back with new bonds from government. The money is just another bond.

    • @rahult5998
      @rahult5998 2 ปีที่แล้ว +1

      Yeah we r witnessing it since ...

  • @youfoundme7404
    @youfoundme7404 2 ปีที่แล้ว +5

    Is it just me that whenever I open a Ted-Ed vid, I always imagine this man's voice to narrate them?

  • @thomasmascari2453
    @thomasmascari2453 2 ปีที่แล้ว +12

    The Federal Reserve has two types of accounts: Reserves (similar to checkings) and securities (similar to savings and CDs). Reserve accounts contain non-interest bearing dollars, while the security accounts contain interest bearing dollars ("bonds"). When the feds decide to do quantitative easing they ask bond holders if they want their dollars transferred from their security account to their reserve account. No money is created in the process, just a change of location and interest bearing status. Money is only created per the request of Congress by the federal reserve, of which they just credit reserve accounts from their computers.

  • @tawabshaikh7712
    @tawabshaikh7712 2 ปีที่แล้ว +14

    I was about to think about this Question.
    And they upload at the correct time.:)

    • @eduardkoch5213
      @eduardkoch5213 2 ปีที่แล้ว

      drive.google.com/folderview?id=1YP_-yqhS3_exi6Kfo8Gq82qIyMlJy6_V
      :)

    • @yogi30303
      @yogi30303 2 ปีที่แล้ว

      Everyone thinks about this

  • @lu881
    @lu881 2 ปีที่แล้ว +127

    So people buy bonds with money, so that the Federal Reserve can make money, the money in turn goes out into the economy so that people can make money, people use their earned money to buy bonds so that the Fed can make money.
    This is the Infinite Monetisation Loop that Graham Stephan can only dream of!

    • @taiefmiah
      @taiefmiah 2 ปีที่แล้ว +6

      Keep in mind, most "new cash" is credit in loans

    • @PaleGhost69
      @PaleGhost69 2 ปีที่แล้ว +3

      @@taiefmiah don't forget that half of our measured economy is debt that doesn't exist in the real world

    • @Skaborough
      @Skaborough 2 ปีที่แล้ว +1

      But it doesn't take into account that people are buy and selling the dollar itself as a commodity. Plus the bonds are traded, as a thing separate from the thing. We can't keep looking at econ models that are insular and just blow-off externalities. At some point foreign currency in massive amounts were also exchanged for both. It is far more complicated than this simplistic video about 1 single theory of the economy.

  • @wiscopolo44
    @wiscopolo44 2 ปีที่แล้ว +117

    No one:
    Federal Reserve:
    I’m gonna pretend I didn’t see that.

  • @solidsnake9898
    @solidsnake9898 2 ปีที่แล้ว +3

    Economics be like:
    Am I a joke to you?

  • @clashoftalents8439
    @clashoftalents8439 2 ปีที่แล้ว +2

    This is something I always wondered about!

  • @N0RMALPERSON
    @N0RMALPERSON 2 ปีที่แล้ว +2

    I love your content because it often help me out when something or someone is in trouble
    and i often learn new things because of you

  • @Ziindeed
    @Ziindeed 2 ปีที่แล้ว +50

    Thanks, this video will be a huge help to the counterfeit money community

    • @rkeogh3467
      @rkeogh3467 2 ปีที่แล้ว +3

      Nah man we already know this

    • @Inazarab
      @Inazarab 2 ปีที่แล้ว +9

      Everyone already knows this, this isn't some secret information. Regardless, I also don't see how any of the info in this video would help counterfeiters.

  • @StoneWitch147
    @StoneWitch147 2 ปีที่แล้ว +2

    This is honestly my question since I was a child and I can't believe you made a video of it. Thank you 😢💞

  • @songdeep1
    @songdeep1 2 ปีที่แล้ว +1

    For 2 years I am searching this qn ans finally got it!

  • @ChanwooPark-me1wc
    @ChanwooPark-me1wc 2 ปีที่แล้ว +21

    지금처럼 어려운 시대에 왜 정부가 돈을 더 찍어낼 수 없는지 항상 궁금했는데, 이 영상을 보고 알게 되었습니다. 돈이 무엇인지도 조금 이해가 간 것 같습니다. 좋은 영상 감사합니다.

  • @lovell8983
    @lovell8983 2 ปีที่แล้ว +25

    0:37 FED: I see no god up here, other than me

  • @bushramahmoud6803
    @bushramahmoud6803 2 ปีที่แล้ว +45

    In a nutshell at 1:31 :
    Money to buy cheese was less, but now you need more to buy the same amount of cheese

    • @takeasip1578
      @takeasip1578 2 ปีที่แล้ว +5

      That's a nutshell of inflation not the whole video.

    • @bushramahmoud6803
      @bushramahmoud6803 2 ปีที่แล้ว +2

      @@takeasip1578 i meant that time stamp in a nutshell-

    • @bushramahmoud6803
      @bushramahmoud6803 2 ปีที่แล้ว +1

      @@takeasip1578 not the whole vid

    • @takeasip1578
      @takeasip1578 2 ปีที่แล้ว

      @@bushramahmoud6803 Okay friend, I thought you mean the whole video.

  • @mohammadtabishirfan8638
    @mohammadtabishirfan8638 2 ปีที่แล้ว +1

    one of the thoughts that always strikes me.. thnku TED-Ed for telling why
    and btw this moving anime was quite good !!!

  • @samarakrieger
    @samarakrieger 2 ปีที่แล้ว

    I will never get bored of Ted-Ed's animation.

  • @scirium7199
    @scirium7199 2 ปีที่แล้ว +46

    "Why can't governments print an unlimited amount of money?"
    Venezuela: *hello*

    • @fr_elmahir9016
      @fr_elmahir9016 2 ปีที่แล้ว +1

      400000% inflation : hello

    • @MrTestolin
      @MrTestolin 2 ปีที่แล้ว

      Argentina has entered the chat

  • @cibble3899
    @cibble3899 2 ปีที่แล้ว +39

    When I was younger, I used to think the government could do anything they wanted. Now that I'm older, I know they can, but will ignore the needs of the people as long as it meant keeping the rich in charge. Anyone want to go start a new country? We need to vote on a name.

    • @chugger2836
      @chugger2836 2 ปีที่แล้ว +17

      Literally just explained why they can't do anything they want bro.

    • @cibble3899
      @cibble3899 2 ปีที่แล้ว +1

      @@chugger2836 you see, there is such a thing, as sarcasm :|

    • @thenarcompany
      @thenarcompany 2 ปีที่แล้ว +6

      @@cibble3899 but no one laughed :/

    • @boplax123
      @boplax123 2 ปีที่แล้ว +2

      @@thenarcompany sarcasm doesn't mean it's a joke or meant to be funny :/

    • @rifwann
      @rifwann 2 ปีที่แล้ว +1

      @@thenarcompany sarcasm is to mock.. you should not laugh at people in disaster you know..

  • @rewalos5077
    @rewalos5077 2 ปีที่แล้ว

    Thank you so much for teaching me this.

  • @choonguanquek4180
    @choonguanquek4180 2 ปีที่แล้ว +2

    Increase in money supply is necessary during periods of high unemployment according to the Quantity theory of money the fisher equation MV=PT. It will only drive up prices according to the equation when the V(velocity of money) and T(the transaction volume) remains constant.

  • @user-ed2pw1ne7ve
    @user-ed2pw1ne7ve 2 ปีที่แล้ว +17

    Can the government make money out of thin air?
    There are no savings on the Fed's account, so it basically creates money out of thin air by issuing a payment to a bank. These treasury bonds are used to finance government activity. The government creates money to ensure price stability (control inflation) and to facilitate maximum employment in the economy.

    • @mendozadaniel338
      @mendozadaniel338 2 ปีที่แล้ว +1

      Exactly this is no different than "printing money". There is typically no runaway inflation because it is only utilized during recessions when growth and GDP are far below normal levels.

  • @jennyrazon9582
    @jennyrazon9582 2 ปีที่แล้ว +7

    children: you just need a super-computer, and a barrel of green ink

    • @user-jg7cn5zo7d
      @user-jg7cn5zo7d 2 ปีที่แล้ว

      Thanks for watching, for more tips on how to grow your portfolio message me..
      w.h.a.t.s.a.p.p.
      +.1.2.6.7.8.4.5.3.3.4.4..📨

  • @dynamosaurusimperious2718
    @dynamosaurusimperious2718 2 ปีที่แล้ว

    Another great Ted-Ed also hope y'all have great day

  • @PipMane
    @PipMane 2 ปีที่แล้ว

    I've been waiting for this! Thank you🙏🏻

  • @steampunkastronaut7081
    @steampunkastronaut7081 2 ปีที่แล้ว +6

    My dad once told me creditors (those who loan money or purchase bonds) usually prefer for debtors to keep owing them money rather than paying back the full amount, so they can keep charging interest on them indefinetly.

    • @nunyabiznes33
      @nunyabiznes33 2 ปีที่แล้ว

      Of course, it's better to get more money over time. Also I don't understand why people don't pay their monthly credit card debts in full. Like, you already bought the stuff on a 6-12 month plan instead of shelling out cash in one go, how come you still can't afford to pay it?

    • @seanm3226
      @seanm3226 ปีที่แล้ว

      That’s why many loans have pre-payment penalties.

  • @MattMorency
    @MattMorency 2 ปีที่แล้ว +14

    The companies aren't just refusing to make more stuff. It's not like their expenses haven't risen just like ours.
    Buying the promise of money as said money loses its value is a bad purchase.

    • @thecobaltemperor
      @thecobaltemperor 2 ปีที่แล้ว

      Simple solution is the government doesn’t print money

    • @chronyx685
      @chronyx685 2 ปีที่แล้ว +3

      @@bl1tz533
      the gold standard is overly restrictive on a nation's money supply, it would make economic growth difficult as there is essentially a cap on the total volume of transactions taking place due to there typically being a fixed amount of gold and hence currency (the medium of exchange);
      This means that even if the quantity or quality of goods and services grow, whether through technological advancements or improvements in education leading to workers up skilling and hence improved goods, the demand for said goods and services cannot increase easily as there physically isn't enough money to go around.
      This is one of the reasons low inflation is actually desirable to an extent, as it slowly expands the money supply of a nation and could be a sign that a country is slowly growing its economy, which ideally means that people are getting access to more goods and services which thus signifies an improvement in the country's material standards of living.

    • @bl1tz533
      @bl1tz533 2 ปีที่แล้ว

      @@chronyx685 wouldnt prices just then adjust? Prices can go up and down; but its a pain in the horse wang to try to deflate a currency.

    • @chronyx685
      @chronyx685 2 ปีที่แล้ว +2

      @@bl1tz533 yes and that would cause a recession. Think about it like this, if you knew that prices across the board were slowly going down for everything, you would keep more money in hand for tomorrow rather than spend it today. This is because the same 10 dollar note yesterday that could buy you a product, is now able to buy you two of that product today for example. Thus the rational thing most people will end up doing is holding on to their money without spending it.
      This would cause demand for goods and services in the country to fall, which would cause revenues and hence profits for companies to fall as well. In order to maintain profit margins and stay in business, companies will start lay offs and retrench workers in orded to reduce costs.
      Workers who are now unemployed face a loss in income, and are now unable to afford purchasing goods and services, pushing down the overall demand for goods and services in the country, further worsening unemployment. This is why a recession would take place.

    • @bl1tz533
      @bl1tz533 2 ปีที่แล้ว

      @@chronyx685 idk man

  • @randombeta
    @randombeta 2 ปีที่แล้ว

    Perfect timing, I was just thinking about that

  • @zzz9x
    @zzz9x 2 ปีที่แล้ว

    Just chat Thanks Ted.
    So these guys behind the scenes know they are creating useful and information videos

  • @ashrofclop
    @ashrofclop 2 ปีที่แล้ว +9

    The title : why can't government can't print out an unlimited amount of money?
    Me : Cough! Cough! US did...

  • @maruf047
    @maruf047 2 ปีที่แล้ว +4

    I was literally discussing this topic about an hour ago. And TedEd responded immediately!

    • @eduardkoch5213
      @eduardkoch5213 2 ปีที่แล้ว

      drive.google.com/folderview?id=1YP_-yqhS3_exi6Kfo8Gq82qIyMlJy6_V

  • @ravindranathhospital1362
    @ravindranathhospital1362 2 ปีที่แล้ว

    Awesome video. I always wondered why people just do not print more money.

  • @Cionaoith
    @Cionaoith 2 ปีที่แล้ว +18

    In short: the money being printed doesn't have actual value.
    In slightly more detail: This is why so many people are investing in precious metals, which have actual intrinsic value. The trouble with investing in anything based on earning interest is that there is no guarantee the interest rate will equal or exceed the inflation rate (simplified example: you invest in a 1-year bond at 3% APR, and inflation during that span hits 5%). Things that have intrinsic value will at least gain value equal to the inflation rate. Investing in precious metals is discouraged, however, because money's value depends in part on your belief that it still has value.

    • @williamholder-soto8350
      @williamholder-soto8350 2 ปีที่แล้ว +2

      Even physical resources are valued more than they are sometimes. Diamonds are generally more common than gold yet the companies keep them behind closed doors.

    • @BenTheMagnifice
      @BenTheMagnifice 2 ปีที่แล้ว +1

      Ahh yes, please tell us more about how "precious" metals have intrinsic value. The only intrinsic value that gold and silver have is that they're pretty. Besides that, all they have is scarcity and a socially constructed belief that they are valuable, just like any fiat currency.
      And don't say that gold is a good conductor of electricity or don't tarnish, while those properties give it some small value, it's nowhere near equivalent to the value that gold has for the former reasons.

    • @Cionaoith
      @Cionaoith 2 ปีที่แล้ว +2

      @@BenTheMagnifice since you feel gold has no intrinsic value, you may discard any that you have into my mailbox. I don't see any reason to argue with you in that case.

    • @guywithdacap4713
      @guywithdacap4713 2 ปีที่แล้ว +2

      What intrinsic value does gold have? Or diamands? You can´t eat it, the things you can produce with it are exremely limited and mostely non essential. History shows that in times of existential crisis the first things loosing value are luxury goods of gold and diamands BECAUSE they have no intrinsic value. Food has intrinsic value because it nourishes you. Wood has intrinsic value because it is a formidable building material and heat source. The intrinsic value of gold is just a myth.

    • @BenTheMagnifice
      @BenTheMagnifice 2 ปีที่แล้ว

      @@Cionaoith absolutely, and you'll do the same for me but with your cash?
      No?
      Thanks for making the point: gold and cash are equivalent.
      I never said gold has no value, it clearly does, but it has roughly the same intrinsic value as paper money, which is to say, very little.

  • @its_NobelS
    @its_NobelS 2 ปีที่แล้ว +37

    Finally i found out the answer i have been wanting to know since child

    • @bushramahmoud6803
      @bushramahmoud6803 2 ปีที่แล้ว

      Lol

    • @zyansheep
      @zyansheep 2 ปีที่แล้ว

      Yay

    • @marcogarrido3781
      @marcogarrido3781 2 ปีที่แล้ว +3

      Well yes, but actually no. The economic theory behind the video is the mainstream economic view... but it is flawed.
      The explanation of the video comes from what is known as the Quantity Theory of Money of economist Irving Fisher, but as Keynes proved later this explanation doesn't holds up, because for it to work, it has to presuppose that the economy always works at full employment... which is never the case (amongst other reasons).

  • @zankcrave
    @zankcrave 2 ปีที่แล้ว +5

    Finally my childhood question answered

  • @kingkongo83
    @kingkongo83 2 ปีที่แล้ว +2

    In theory, the lower interest rate is suppose to incentivize lenders to lend to smaller businesses for better returns, but the reality seems to be that lenders continue to purchase safer assets and even when they do lend to the private sector it tends to be large corporates (larger corporates have better access to capital markets) , the distribution of cheaper capital hence is not even, causing even inflated bubbles in certain areas. Looking into Japan where QE has been going on for sometime, large corporates no longer pursue innovation or value in their business, as there is no real incentive to make higher returns, where money is easy to come buy, it makes more sense for large corporates to buy market share (arbeit at the expense of businesses that cannot afford to buy market share.)

  • @Asmaa_311
    @Asmaa_311 2 ปีที่แล้ว

    Now I’m relieved…

  • @yashdevnani3257
    @yashdevnani3257 2 ปีที่แล้ว +6

    Government : *has green eyes*
    *The government has left the chat*

  • @janetay8798
    @janetay8798 2 ปีที่แล้ว +4

    Gosh the supply-demand diagram follows me everywhere

  • @katakana1
    @katakana1 2 ปีที่แล้ว

    2:40 I like how the 2020 newspaper is labeled as from 2018 April 27..

  • @renzo7793
    @renzo7793 2 ปีที่แล้ว

    Thank you so much! I've been wondering this for a long time.

  • @healermusic4734
    @healermusic4734 2 ปีที่แล้ว +20

    I was just thinking about this. Does TH-cam algorithm also do mind reading?

    • @TheKamron
      @TheKamron 2 ปีที่แล้ว +1

      Yes

    • @bassgx1459
      @bassgx1459 2 ปีที่แล้ว +4

      dude, there was this one time where I picked up a bag of chips in a convenient store but didn't buy it.
      Later I got on youtube and it showed the ad for that exact brand of chip even though I never saw that ad before.

    • @segmentsAndCurves
      @segmentsAndCurves 2 ปีที่แล้ว +1

      @@bassgx1459 Third-party cookie, duh. Turn it off.

    • @arvinahaobam7707
      @arvinahaobam7707 2 ปีที่แล้ว

      Yeahh i am asking the same. Although this is not the question i was asking.

    • @filip9564
      @filip9564 2 ปีที่แล้ว +1

      Well kinda. They track everything you do and uses machibe learning to try to gigure out what you are thinking off.

  • @Joshualacruz
    @Joshualacruz 2 ปีที่แล้ว +6

    Very nice animation/drawing style! 😊
    But I still don't get why printing more money and limiting inflation is not the answer.

    • @aira1615
      @aira1615 2 ปีที่แล้ว +4

      This is a complicated topic of economy that requires many other prior knowledge on the economy, you may need to understand other topics on economy only you can understand this

  • @StaySpicy
    @StaySpicy 2 ปีที่แล้ว +1

    Thank you, NPR Planet Money podcast. I feel so smart that I already knew this. 😁

  • @medelicityliu7934
    @medelicityliu7934 2 ปีที่แล้ว

    Fascinating as always!

  • @alangallegomacias7259
    @alangallegomacias7259 ปีที่แล้ว +3

    2% inflation is considered heathy according to who?

  • @jaykotadia4940
    @jaykotadia4940 2 ปีที่แล้ว +4

    Weimar Republic entered the chat

  • @iampuff7
    @iampuff7 2 ปีที่แล้ว

    I would love a TED-ED video on MMT

  • @chickeneaterofficial2889
    @chickeneaterofficial2889 2 ปีที่แล้ว

    i cant believe we actually need a video on this

  • @adam-hs2kf
    @adam-hs2kf 2 ปีที่แล้ว +7

    sad that USA already printed unlimited amounts of money and is still doing it XD
    bitcoin and gold is probably the way to go right now

  • @bangscutter
    @bangscutter 2 ปีที่แล้ว +22

    Governments: "Printing money is a bad idea."
    Cryptocurrency: "Creates money out of thin air."

    • @mike.1
      @mike.1 2 ปีที่แล้ว +1

      @Lucas Zhu Sometimes it's a fixed value. But even so, it isn't immutable. It can be changed by consensus.

    • @SoulMasterX
      @SoulMasterX 2 ปีที่แล้ว +4

      Number of different cryptocurrency is unlimited. There are unlimited number of shitcoin in market. All of these coins create faith money from non-sense white paper.

  • @blackrock1404
    @blackrock1404 2 ปีที่แล้ว

    Thank you❤

  • @briggdiggs536
    @briggdiggs536 2 ปีที่แล้ว

    Thanks! Ill teach this to my family.

  • @yuutrax4440
    @yuutrax4440 2 ปีที่แล้ว +8

    And then they say bitcoin is illegal

  • @cageybee7221
    @cageybee7221 2 ปีที่แล้ว +5

    TL;DR Quantitative easing is money printing with extra steps.

    • @eduardkoch5213
      @eduardkoch5213 2 ปีที่แล้ว

      drive.google.com/folderview?id=1YP_-yqhS3_exi6Kfo8Gq82qIyMlJy6_V

    • @currently7886
      @currently7886 2 ปีที่แล้ว

      Preach

  • @fatimahasan7710
    @fatimahasan7710 2 ปีที่แล้ว

    A question that stuck with me since childhood

  • @Iblueprofen
    @Iblueprofen 2 ปีที่แล้ว

    I find this video totally absorbing and curiosity-provoking.

  • @jadtiya
    @jadtiya ปีที่แล้ว +3

    If first person buys $1 biilion dollars with interest of 1%, so the total amount after one year to be paid will be $1.01 billion dollars, But the economy has only $1 Billion in running, so from where will he bring extra $10 Million dollars, for that again someone will buy bonds to repay that, and thats how this debt will get on increasing with inflation getting high. And yaa the first person to get that loan will always be richer than the second, second will be richer than third and so on, until it will reach the person where the currency amount has no value. That is why in this world the person who works more is paid less and who sits on desk paid more (person who resides rules, white collar jobs). That is why there is unequality. That is why world will be upside down in a Capitalist society. It is not about how much you are worth, It is about power. Now you know why finances are not taught in school.

  • @FinancialShinanigan
    @FinancialShinanigan 2 ปีที่แล้ว +9

    TikTok finfluencers taught me the money printer goes brrrrrrrrrrrrrrrr

  • @popindosin228
    @popindosin228 2 ปีที่แล้ว

    I love this animation style

  • @BuffEZ
    @BuffEZ ปีที่แล้ว +1

    Me: I'm going to sleep early tonight
    Also me watching this at 3am

  • @kimmycassie
    @kimmycassie 2 ปีที่แล้ว +3

    Sometimes I wonder if society could have much better systems in place than what we have now

    • @michaelstephenvargas8821
      @michaelstephenvargas8821 ปีที่แล้ว

      Of course there will be better. No matter how good a system is there will be better. The question is should we switch? The problem is that we can't just experiment destroying societies in the process which could make everything worse.

  • @christinetelienpa5611
    @christinetelienpa5611 2 ปีที่แล้ว +3

    Clouds of political uncertainty, which had overshadowed British shares for several years, have begun to clear and the sun is shining on the London Stock Exchange again. Both the UK All Companies and UK Smaller Companies investment company sectors delivered sparkling total returns of more than 40 % over the last year.

    • @danielfred9267
      @danielfred9267 2 ปีที่แล้ว +1

      ᴍᴇᴀɴᴡʜɪʟᴇ, ᴡʜɪʟᴇ ᴛʜᴇ ᴇᴄᴏɴᴏᴍɪᴄ ᴇғғᴇᴄᴛs ᴏғ ʙʀᴇxɪᴛ ʀᴇᴍᴀɪɴ ᴛᴏ ʙᴇ sᴇᴇɴ, sᴛᴏᴄᴋ ᴍᴀʀᴋᴇᴛs ᴀʀᴇ ɪɴ ʙᴜsɪɴᴇss ᴛᴏ ᴀɴᴛɪᴄɪᴘᴀᴛᴇ ᴛʜᴇ ғᴜᴛᴜʀᴇ ᴀɴᴅ ᴛʜᴇʀᴇ ɪs ᴀʟʀᴇᴀᴅʏ ᴇᴠɪᴅᴇɴᴄᴇ ᴏғ ʀᴇɴᴇᴡᴇᴅ ᴄᴏɴғɪᴅᴇɴᴄᴇ ɪɴ ᴜᴋ ᴄᴏʀᴘᴏʀᴀᴛᴇ ᴠᴀʟᴜᴀᴛɪᴏɴs. ғᴏʀ ᴇxᴀᴍᴘʟᴇ, ᴀᴄᴄᴏʀᴅɪɴɢ ᴛᴏ ɪɴᴅᴇᴘᴇɴᴅᴇɴᴛ sᴛᴀᴛɪsᴛɪᴄɪᴀɴs ᴀᴛ ᴍᴏʀɴɪɴɢsᴛᴀʀ ᴠɪᴀ ᴛʜᴇ ᴀɪᴄ, ᴛʜᴇ ᴀᴠᴇʀᴀɢᴇ ᴜᴋ ᴀʟʟ ᴄᴏᴍᴘᴀɴɪᴇs’ ɪɴᴠᴇsᴛᴍᴇɴᴛ ᴄᴏᴍᴘᴀɴʏ’s ᴛᴏᴛᴀʟ ʀᴇᴛᴜʀɴ ᴏᴠᴇʀ ᴛʜᴇ ʟᴀsᴛ 12 ᴍᴏɴᴛʜs ᴛᴏ ᴊᴀɴᴜᴀʀʏ 2, 2020, ᴡᴀs 41%. ᴛʜᴇ ᴀᴠᴇʀᴀɢᴇ ᴜᴋ sᴍᴀʟʟᴇʀ ᴄᴏᴍᴘᴀɴɪᴇs ɪɴᴠᴇsᴛᴍᴇɴᴛ ᴄᴏᴍᴘᴀɴʏ ᴅɪᴅ ᴇᴠᴇɴ ʙᴇᴛᴛᴇʀ, ʀɪsɪɴɢ ʙʏ 42%.ᴛʜᴇ ᴇᴄᴏɴᴏᴍɪᴄ ᴇғғᴇᴄᴛs ᴏғ ʙʀᴇxɪᴛ ʀᴇᴍᴀɪɴ ᴛᴏ ʙᴇ sᴇᴇɴ, sᴛᴏᴄᴋ ᴍᴀʀᴋᴇᴛs ᴀʀᴇ ɪɴ ʙᴜsɪɴᴇss ᴛᴏ ᴀɴᴛɪᴄɪᴘᴀᴛᴇ ᴛʜᴇ ғᴜᴛᴜʀᴇ ᴀɴᴅ ᴛʜᴇʀᴇ ɪs ᴀʟʀᴇᴀᴅʏ ᴇᴠɪᴅᴇɴᴄᴇ ᴏғ ʀᴇɴᴇᴡᴇᴅ ᴄᴏɴғɪᴅᴇɴᴄᴇ ɪɴ ᴜᴋ ᴄᴏʀᴘᴏʀᴀᴛᴇ ᴠᴀʟᴜᴀᴛɪᴏɴs. ғᴏʀ ᴇxᴀᴍᴘʟᴇ, ᴀᴄᴄᴏʀᴅɪɴɢ ᴛᴏ ɪɴᴅᴇᴘᴇɴᴅᴇɴᴛ sᴛᴀᴛɪsᴛɪᴄɪᴀɴs ᴀᴛ ᴍᴏʀɴɪɴɢsᴛᴀʀ ᴠɪᴀ ᴛʜᴇ ᴀɪᴄ, ᴛʜᴇ ᴀᴠᴇʀᴀɢᴇ ᴜᴋ ᴀʟʟ ᴄᴏᴍᴘᴀɴɪᴇs’ ɪɴᴠᴇsᴛᴍᴇɴᴛ ᴄᴏᴍᴘᴀɴʏ’s ᴛᴏᴛᴀʟ ʀᴇᴛᴜʀɴ ᴏᴠᴇʀ ᴛʜᴇ ʟᴀsᴛ 12 ᴍᴏɴᴛʜs ᴛᴏ ᴊᴀɴᴜᴀʀʏ 2, 2020

    • @danielfred9267
      @danielfred9267 2 ปีที่แล้ว +1

      ᴛʜᴇ ᴀᴠᴇʀᴀɢᴇ ᴜᴋ sᴍᴀʟʟᴇʀ ᴄᴏᴍᴘᴀɴɪᴇs ɪɴᴠᴇsᴛᴍᴇɴᴛ ᴄᴏᴍᴘᴀɴʏ ᴅɪᴅ ᴇᴠᴇɴ ʙᴇᴛᴛᴇʀ, ʀɪsɪɴɢ ʙʏ 42 %.✔̸️̸✔̸️̸

    • @fredaldridge9001
      @fredaldridge9001 2 ปีที่แล้ว

      @@danielfred9267 are you a bot?

  • @NateCrownwell
    @NateCrownwell 2 ปีที่แล้ว

    That was awesome, thank you :)

  • @officiallyallensanity
    @officiallyallensanity 2 ปีที่แล้ว +1

    i was dancing and snapping my fingers to the music while learning something new.

  • @MartinLichtblau
    @MartinLichtblau 2 ปีที่แล้ว +4

    Problem isn't money, or the lack of it, but how equal/fair it is distributed.
    E.g. inflation only hurts if your capital/income didn't increase in equal amounts.

  • @lutti2587
    @lutti2587 2 ปีที่แล้ว +157

    Just use bitcoin

    • @starlove9762
      @starlove9762 2 ปีที่แล้ว +1

      His services are awesome.

    • @nawadoljantra5989
      @nawadoljantra5989 2 ปีที่แล้ว +2

      The first time I told my wife that i was investing in forex trade, she was angry and told me that I will lose all the money I invested in it

    • @nawadoljantra5989
      @nawadoljantra5989 2 ปีที่แล้ว +2

      Now she is happy with what I'm earning from binary options

    • @agnesyakubu2334
      @agnesyakubu2334 2 ปีที่แล้ว

      @@nawadoljantra5989 Lol she has to be happy most women are scared to take risk..

    • @agnesyakubu2334
      @agnesyakubu2334 2 ปีที่แล้ว +1

      Forex trading is only risky when you choose to trade on your own without the guidance of a professional

  • @sunnytiwari7792
    @sunnytiwari7792 2 ปีที่แล้ว

    Another season fo History on Trail Please.

  • @premharshan7883
    @premharshan7883 2 ปีที่แล้ว +1

    I never heard these kind of explanation ever how much government can print today cause of your team I knew this thank a lot for making these kind of videos

  • @Lucky10279
    @Lucky10279 2 ปีที่แล้ว +12

    Ted-ed: Why can't governments create unlimited money?
    Me: Have you never heard of hyperinflation?!

    • @sorestedhebytheTumtumtree
      @sorestedhebytheTumtumtree 2 ปีที่แล้ว

      Unfortunately, no. First time I've heard of the word.

    • @akshatgupta3280
      @akshatgupta3280 2 ปีที่แล้ว

      @@sorestedhebytheTumtumtree me too😂

    • @Lucky10279
      @Lucky10279 2 ปีที่แล้ว

      @@sorestedhebytheTumtumtree It's went inflation gets so out of control that money becomes worthless.

    • @vc400
      @vc400 2 ปีที่แล้ว

      Lol! How about deflation? Dont forget that too.

  • @yelloe_birb
    @yelloe_birb 2 ปีที่แล้ว +4

    its funny how whenever i thought 'if banks make money, why cant we have infinite money" when I was younger i never thought how prices could just be raised. seems like such a simple response now

  • @MrProudindian001
    @MrProudindian001 ปีที่แล้ว

    printing can be done full-on, but there could be limitations on securing these stations and providing resources to these stations. As these stations produce things that govern large segments of society, their social fabric, and thus power.

  • @jiayundong6174
    @jiayundong6174 2 ปีที่แล้ว

    needed this for my econs exam

  • @TheMcKenzieHaus
    @TheMcKenzieHaus 2 ปีที่แล้ว +21

    At the end of the day, it’s doing things that’s doesn’t ruin the perception of the dollars value. It’s valued for the sake of value lol 😂

  • @jjs3287
    @jjs3287 2 ปีที่แล้ว +4

    Depends what the economy is doing at the time and how much its being fed in. If its just furlough payments to keep a roof over peoples head or keep the economy on life support then it wont cause an issue. If you start throwing furlough payments at working people and they start spending it on life style upgrades then yes of course it will cause inflation. Its just a game and for it to work at all everyone just has to stick to the rules.

  • @careless-truth5860
    @careless-truth5860 2 ปีที่แล้ว

    I have been asking this question YEARS ago

  • @rommelgolpeo2096
    @rommelgolpeo2096 2 ปีที่แล้ว

    New uploaded videos can't wait to watch it all😍