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
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.
@@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.
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.
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.
@@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.
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.
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.
@@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.
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.
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.
@@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.
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)
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.
@@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.
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!
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.
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.
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.
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.
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.
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.
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.
@@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 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.
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.
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?
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.
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.
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.
@@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.
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.
@@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.
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.
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).
To the people saying "Why can't they just force companies to not raise their prices" ..... Your reasoning is the sort of vague non-answer to the problem that has kept the can of illusionary growth going in the first place. Apart from the obvious fact that businesses would go bankrupt, because you are asking them to lose money, it isn't addressing the underlying inflation, just expecting businesses to cop it. There are two ways to the current inflation crisis. You can raise central bank rates to limit consumer demand and you can have the central bank sell back it's goodies into the market. This is what the central banks are saying they will do, but they are in trouble, because they essentially empied their entire bag of tricks during Covid, overshot, and now have no interest rate floor to drop back to if they rise it and trouble starts. Governments are incentivised now to spend more to "Give people" to help inflation, which just worsens inflation, and will likely resort to raising taxes with the increased spending, which is obviously also a drain on spending. As you can see, there are no easy answers, especially when you've kicked the can down the road for so long with easy answers, suddenly you have no tricks left in the bag. It's like giving a meth addict meth every time they start to come down. Sooner or later, they need a detox (recession), and that's not popular to an economically literate society, so they keep kicking. So.... "why don't they just force businesses to keep their prices stable" is both insanely unfair, and also kicking the can, as is "just spend more", or "just lower the rates".....There are only hard. VERY HARD answers from here, and I for one am glad, having been blocked from asset prices spiralling beyond the saving ability of young, middle / working class workers for the sake of an invested few who were capital heavy pre 2010. They found a way to buy a decade of extreme wealth and make it look good to the poor - like heaven with all the spending. But the can hits the wall eventually. Unfortunately, well it explodes, I foresee the situation where the rich will prey on the illiteracy of the many to concoct another brilliant "solution" which will look amazing once more to the poor and debt burdened, but actually favour the rich....And it's not "saving the banks". It will be debt cancellations (massively helping asset rich and debt heavy wealthy folks), a globalized currency and digitized currency, and the complete control of money in a centralized system. It's a lot easier than solving this current mess!
What is your opinion on a maximum wage. Like for example if your initial invest exceed 1,000 times over then all additional profit goes back into social and infrastructure programs
@@romanski5811 Sure, this doesn't really deal with inflation directly, but it's a fairly standard fiscal policy tool that governments can use. I assure you though, that since those deciding on such policies are directly affected, such policies are constructed in complex ways to disguise the truth. I.e. Excessive loopholes in capital gains from assets, and tax loopholes to deduct from your income. One has to remember that expecting the rich and wealthy to help the poor will never happen, even if they "Get the vote". Their job is to present a policy that "sounds good for the poor" to actually help the rich. Politicians are paid on the higher end of middle class wages, yet many have like ten properties negatively geared. This wealth is accumulated due to liasing with private companies and wealthy donors. So you really think they'd actually develop a policy that forces the rich to pay? No, but they'll certainly say it will. Just like climate spending. The young and naive believe climate spending is a priority, and you know who else does? Politicians and the wealthy, because it's another excuse to "look good for the masses", when in reality, it simply means tax the working class and pass on the money to giant corporations who will apparently "health the climate". So anytime you think "Is this a good policy?", you should reframe it as "How does this policy actually help the rich?" The more governments spend, the greater the gap forms between the rich and poor. It is so brilliant, it has fooled people since FDR in World War 2. For every hundred dollars the government gives to the poor, there's a million handed to a company. And if you think a policy looks genuinly good for the poor and working class, look again.
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.
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.
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.
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.
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.)
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
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.
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
One rare diamond ring can cost £10,000 but if you could get them anywhere you'd pick them up really cheap. Printing money's the same. It devalues everything.
It's simple. Phil has recruited me and another guy. Now, the two of us are going to recruit three people each. Each of THEM is going to get three people. The more people that get involved, the more people that invest, the more money we all make....
Reminder that other countries currency experience inflation (thus causing problem un their own country) because usa force saudi to sell oil in dollar by threatening them. I'm saying every country should arm better to kick usa out of middle east. Last oil country leader who sold in other currency is Gaddafi
the worst thing the governemt is doing right now is paying people to stay home. unemployment benefits like this should be limited to 3 months, and legitimate job inquiries should be required to prolong it. I mean ike setting up a meeting with a social worker to help find jobs is required. There are tons of jobs right now and people are not taking them. even with the promos of. college class being paid for, even with sign on bonuses.
At 3:39, the guy with the mortorbike travelling across the roof, on the wall and onto the wall is like, "For heavens sake, this is a Ted-Ed animation, screw physics." 😂😂
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.
Simple answer: All the money has to equal all the goods you can buy. If you add more money but the goods stay the same, the worth of the money decreases as the money:goods ratio inbalances
I'm a Venezuelan expat, and I ought to be the bearer of bad news on this. That approach was already made by the Venezuelan Central Bank back in the early 2010s, by constantly getting debt bonds from PDVSA which they used as a means to justify printing more money (at least until the literal money printer in Maracay broke). That is one of the defining factors that played into creating the hyperinflation crisis over there.
1:23 This illustration doesn't match the demonstration of the situation. If suppliers increases the price their product, why it'll shift the demand curve up? Rather it should shift the supply curve upward, and remaining the demand curve same. That'll reposition the equilibrium point to a higher price point but a lower quantity point. I think, that'll match the graph illustration with the situation explained.
Imagine if money, taxes and economies weren’t a thing… people wouldn’t measure everything in terms of economic profit and loss and could focus on domains like the environment, which as long as money is a concern, is not a priority 🤔
![[UNCUT] เก็บ "สจ.โต้ง" เอี่ยวมาเฟีย รู้ตัวคนบงการ ก่อนสั่งลั่นไก I คนดังนั่งเคลียร์ I 13 ธ.ค.67](http://i.ytimg.com/vi/o-J_p62D40w/mqdefault.jpg)
Zimbabwe be like: JUST PRINT MORE, DUH!
you maybe rich in zimbabwe but then you go to usa
@@roboticol6280 ...
The Weimar Republic's logic is:
If you can't pay debt just print more money
America be like: write that down! WRITE THAT DOWN!
Lenders actually ended up putting all their money in housing.
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.
Fmab fan?
One is all, all is one. 🙏🏻
😆
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
@@bobthegoat7090 Ok i won't try
I wonder if anyone's ever created money out of *thick* air?
EXTRA THICC air.
Yes,Bitcoin
If money is made of paper then the paper comes from trees which mostly is made of carbon from the air.
It's easier to create stuff out of thick air because it's more dense - there are more atoms available.
Ahhhhh Ted ed has a sense of humor.
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.
Which is essentially the same but not 😗😗😗
Agree with you and hence only Islamic Zakat system can fix all issues n stops inflation
@@muhammadsalman7714 no
I'm lost. Why can the government never create wealth?
@@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.
Every 7-year old: *”Printing, duhh?”* 🙄
More like enter digits, hit "enter." duh!
As a 7 year old, i can confirm.
@@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
@@lumbratile4174
Oops,
I meant .... *_70_* year old
My bad 😁😁😁
@@lumbratile4174 *e*
“It’s possible that we are in a completely fradulent system.”
- The Big Short, Dr. Michael J. Burry
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.
@@fernandoaispuro159 what movie?
@@somerandomuser5155 The Big Short
@@fernandoaispuro159 “Just stop dancing.”
Speaking legitimate fax bro, print those dial-up red-pills.
You: *buy a bond*
Central Bank: We’ll pay you back.
Central Back: *buys a bond* It’s like printing my own money!
Bonds are weird.
Almost as weird as pi
If they are buying/acquiring debt and happen to be a bank
that's why they're a bank
Mhm
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.
Old title
"How do governments create money out of thin air? - Jonathan Smith"
😂 WHY ?
Loans
They completely reversed the meaning lol
Oh yeah, I just notice it today
From Business to History to Economy to Medicine to everything; I love TED-Ed for extreme versatility and exceptional animation over the years.
please whats the difference between TED , TEDx and TED-Ed ?
@@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.
USA prints unlimited money but rest of the world has to bear the brunt.
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.
They need excuses to make more debt to feed the debt monster
How old are you sir?
@@divyaakashdutta4038 50 years ago I was 12.
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.
@@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.
This is something I've always wondered about...
Same lol...
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.
@@kopkaljdsao AKA : Robbing other countries.
Yeah me too
@@kopkaljdsao No one can maintain a surplus unless someone else maintains a deficit.
Title: Why can’t governments print an unlimited amount of money?
My brain: *GERMANY*
You do know that Germany did it on purpose just to goad the allies into forgiving their reparations?
Zimbabwe Venezuela
Germans after WW1: We're billionaire but we can't buy a breads
That what I was thinking !
Good thing I payed attention in history w
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.
we have so much money we're practically drowning in it but we are also so poor at the same time
@@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.
People in Pennsylvania will be like are you talking to me
Short Answer: Printing more money decreases the value.
Long Answer: They actually can print more money, but it's complicated.
Yes, please explain the long answer
Please explain
Explain
Expl
Exp
Why government can't print unlimited money?
Me, a Venezuelan: *hyperinflation flashbacks*
Lebanon
2:30 the sass got me. I love the animation, it's really funny.
Inflation: "The more amount of money you require but less amount of goods you get"
Am I right?..
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)
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.
@@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.
@@евграфломов where i live, the opposite is called deflation
you have more money, but things are more expensive
Money heist actors printed money for themselves. 😂😂
Answer: By taking loans from Central Banks through bonds and never paying them back.
*paying them back with new bonds from government. The money is just another bond.
Yeah we r witnessing it since ...
simple answer, stuff loses its value when there is too much of it
And this is why I hate society
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
surprisingly, this is very simple and yet very educative. would love to see more of these on TH-cam.
Simple? I'm still confused ;(
Is it just me that whenever I open a Ted-Ed vid, I always imagine this man's voice to narrate them?
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!
Keep in mind, most "new cash" is credit in loans
@@taiefmiah don't forget that half of our measured economy is debt that doesn't exist in the real world
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.
No one:
Federal Reserve:
I’m gonna pretend I didn’t see that.
wow, if only schools taught me this in this fun way! lol
They can't cause these 5 minute videos are pretty expensive to make, let alone a full subject!
@@tomasgomes8793 hahaha! Educational system is rigged. They dont want to teach you any money subject.
@@vc400 I don't know about you, but in my country we can study economy 🤷🏻♂️
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.
In a nutshell at 1:31 :
Money to buy cheese was less, but now you need more to buy the same amount of cheese
That's a nutshell of inflation not the whole video.
@@takeasip1578 i meant that time stamp in a nutshell-
@@takeasip1578 not the whole vid
@@bushramahmoud6803 Okay friend, I thought you mean the whole video.
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.
Literally just explained why they can't do anything they want bro.
@@chugger2836 you see, there is such a thing, as sarcasm :|
@@cibble3899 but no one laughed :/
@@thenarcompany sarcasm doesn't mean it's a joke or meant to be funny :/
@@thenarcompany sarcasm is to mock.. you should not laugh at people in disaster you know..
2% inflation is considered heathy according to who?
Thanks, this video will be a huge help to the counterfeit money community
Nah man we already know this
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.
BECUASE WE DONT HAVE UNLIMITED RESOUCRES!!!!!
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.
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.
“Potential consequences are still unfolding” Upbeat jazz music playing in background…
It’s not going to end well... that’s clear
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.
Simple solution is the government doesn’t print money
@@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.
@@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.
@@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.
@@chronyx685 idk man
"Why can't governments print an unlimited amount of money?"
Venezuela: *hello*
400000% inflation : hello
Argentina has entered the chat
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.
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?
That’s why many loans have pre-payment penalties.
I was about to think about this Question.
And they upload at the correct time.:)
drive.google.com/folderview?id=1YP_-yqhS3_exi6Kfo8Gq82qIyMlJy6_V
:)
Everyone thinks about this
0:37 FED: I see no god up here, other than me
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.
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.
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.
@@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.
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.
@@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.
children: you just need a super-computer, and a barrel of green ink
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..📨
i was dancing and snapping my fingers to the music while learning something new.
Life's good 👍
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.
UR SPITTIN
Pass a law to keep prices the same for 5 years then give everyone £10000 in cash that money will be spent and build up the economy
The title : why can't government can't print out an unlimited amount of money?
Me : Cough! Cough! US did...
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.
Economics be like:
Am I a joke to you?
I will never get bored of Ted-Ed's animation.
Finally my childhood question answered
there was no reason to print new money for the stimulus checks... the govt was already sitting on stockpiles of cash - our taxes
Finally i found out the answer i have been wanting to know since child
Lol
Yay
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).
To the people saying "Why can't they just force companies to not raise their prices" ..... Your reasoning is the sort of vague non-answer to the problem that has kept the can of illusionary growth going in the first place. Apart from the obvious fact that businesses would go bankrupt, because you are asking them to lose money, it isn't addressing the underlying inflation, just expecting businesses to cop it. There are two ways to the current inflation crisis. You can raise central bank rates to limit consumer demand and you can have the central bank sell back it's goodies into the market. This is what the central banks are saying they will do, but they are in trouble, because they essentially empied their entire bag of tricks during Covid, overshot, and now have no interest rate floor to drop back to if they rise it and trouble starts. Governments are incentivised now to spend more to "Give people" to help inflation, which just worsens inflation, and will likely resort to raising taxes with the increased spending, which is obviously also a drain on spending. As you can see, there are no easy answers, especially when you've kicked the can down the road for so long with easy answers, suddenly you have no tricks left in the bag. It's like giving a meth addict meth every time they start to come down. Sooner or later, they need a detox (recession), and that's not popular to an economically literate society, so they keep kicking. So.... "why don't they just force businesses to keep their prices stable" is both insanely unfair, and also kicking the can, as is "just spend more", or "just lower the rates".....There are only hard. VERY HARD answers from here, and I for one am glad, having been blocked from asset prices spiralling beyond the saving ability of young, middle / working class workers for the sake of an invested few who were capital heavy pre 2010. They found a way to buy a decade of extreme wealth and make it look good to the poor - like heaven with all the spending. But the can hits the wall eventually. Unfortunately, well it explodes, I foresee the situation where the rich will prey on the illiteracy of the many to concoct another brilliant "solution" which will look amazing once more to the poor and debt burdened, but actually favour the rich....And it's not "saving the banks". It will be debt cancellations (massively helping asset rich and debt heavy wealthy folks), a globalized currency and digitized currency, and the complete control of money in a centralized system. It's a lot easier than solving this current mess!
What is your opinion on a maximum wage. Like for example if your initial invest exceed 1,000 times over then all additional profit goes back into social and infrastructure programs
@@romanski5811 Sure, this doesn't really deal with inflation directly, but it's a fairly standard fiscal policy tool that governments can use. I assure you though, that since those deciding on such policies are directly affected, such policies are constructed in complex ways to disguise the truth. I.e. Excessive loopholes in capital gains from assets, and tax loopholes to deduct from your income. One has to remember that expecting the rich and wealthy to help the poor will never happen, even if they "Get the vote". Their job is to present a policy that "sounds good for the poor" to actually help the rich. Politicians are paid on the higher end of middle class wages, yet many have like ten properties negatively geared. This wealth is accumulated due to liasing with private companies and wealthy donors. So you really think they'd actually develop a policy that forces the rich to pay? No, but they'll certainly say it will. Just like climate spending. The young and naive believe climate spending is a priority, and you know who else does? Politicians and the wealthy, because it's another excuse to "look good for the masses", when in reality, it simply means tax the working class and pass on the money to giant corporations who will apparently "health the climate". So anytime you think "Is this a good policy?", you should reframe it as "How does this policy actually help the rich?"
The more governments spend, the greater the gap forms between the rich and poor. It is so brilliant, it has fooled people since FDR in World War 2. For every hundred dollars the government gives to the poor, there's a million handed to a company. And if you think a policy looks genuinly good for the poor and working class, look again.
And then they say bitcoin is illegal
For 2 years I am searching this qn ans finally got it!
Government : *has green eyes*
*The government has left the chat*
It’s cool how some of the characters have cartoon bodies with real life heads, and others have real bodies with cartoon heads.
Why dont we print more money ???
Germany : We tried it, dosent work. trust me
Governments: "Printing money is a bad idea."
Cryptocurrency: "Creates money out of thin air."
@Lucas Zhu Sometimes it's a fixed value. But even so, it isn't immutable. It can be changed by consensus.
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.
This video taught me more than my university degree in economics.
Get a refund
This is honestly my question since I was a child and I can't believe you made a video of it. Thank you 😢💞
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.
TikTok finfluencers taught me the money printer goes brrrrrrrrrrrrrrrr
1:20 - they are both raising prices and producing more goods according to the graph
I was just thinking about this. Does TH-cam algorithm also do mind reading?
Yes
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.
@@bassgx1459 Third-party cookie, duh. Turn it off.
Yeahh i am asking the same. Although this is not the question i was asking.
Well kinda. They track everything you do and uses machibe learning to try to gigure out what you are thinking off.
Me: I'm going to sleep early tonight
Also me watching this at 3am
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
Am I the only one who just appreciated the Trabant at 3:38?
We see you! You are not alone. ;)
Sometimes I wonder if society could have much better systems in place than what we have now
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.
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.)
Gosh the supply-demand diagram follows me everywhere
ted-ed can even make inflation sound interesting
Very nice animation/drawing style! 😊
But I still don't get why printing more money and limiting inflation is not the answer.
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
2:40 I like how the 2020 newspaper is labeled as from 2018 April 27..
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.
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
ᴛʜᴇ ᴀᴠᴇʀᴀɢᴇ ᴜᴋ sᴍᴀʟʟᴇʀ ᴄᴏᴍᴘᴀɴɪᴇs ɪɴᴠᴇsᴛᴍᴇɴᴛ ᴄᴏᴍᴘᴀɴʏ ᴅɪᴅ ᴇᴠᴇɴ ʙᴇᴛᴛᴇʀ, ʀɪsɪɴɢ ʙʏ 42 %.✔̸️̸✔̸️̸
@@danielfred9267 are you a bot?
Plebs don't you dare consider stopping our racket. Bankers approve of this clip.
TL;DR Quantitative easing is money printing with extra steps.
drive.google.com/folderview?id=1YP_-yqhS3_exi6Kfo8Gq82qIyMlJy6_V
Preach
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
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
Just chat Thanks Ted.
So these guys behind the scenes know they are creating useful and information videos
Ted-ed: Why can't governments create unlimited money?
Me: Have you never heard of hyperinflation?!
Unfortunately, no. First time I've heard of the word.
@@sorestedhebytheTumtumtree me too😂
@@sorestedhebytheTumtumtree It's went inflation gets so out of control that money becomes worthless.
Lol! How about deflation? Dont forget that too.
One rare diamond ring can cost £10,000 but if you could get them anywhere you'd pick them up really cheap. Printing money's the same. It devalues everything.
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 😂
People: What are you?
Treasury bonds: Bond, Treasury Bond
Weimar Republic entered the chat
It's simple. Phil has recruited me and another guy. Now, the two of us are going to recruit three people each. Each of THEM is going to get three people. The more people that get involved, the more people that invest, the more money we all make....
Reminder that other countries currency experience inflation (thus causing problem un their own country) because usa force saudi to sell oil in dollar by threatening them.
I'm saying every country should arm better to kick usa out of middle east. Last oil country leader who sold in other currency is Gaddafi
Just use bitcoin
His services are awesome.
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
Now she is happy with what I'm earning from binary options
@@nawadoljantra5989 Lol she has to be happy most women are scared to take risk..
Forex trading is only risky when you choose to trade on your own without the guidance of a professional
Is there a name for such animation/ graphics?
The fact that this needed to be explained is proof that the US dollar will eventually fail unless we move off of fiat.
Lemme guess, crypto
the worst thing the governemt is doing right now is paying people to stay home. unemployment benefits like this should be limited to 3 months, and legitimate job inquiries should be required to prolong it. I mean ike setting up a meeting with a social worker to help find jobs is required.
There are tons of jobs right now and people are not taking them. even with the promos of. college class being paid for, even with sign on bonuses.
One is stuck playing the impassioned protagonist in one’s Subjective Narrative of Self 🎈
I too like words
How to pretentiously say nothing
At 3:39, the guy with the mortorbike travelling across the roof, on the wall and onto the wall is like, "For heavens sake, this is a Ted-Ed animation, screw physics." 😂😂
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.
Simple answer: All the money has to equal all the goods you can buy. If you add more money but the goods stay the same, the worth of the money decreases as the money:goods ratio inbalances
I'm a Venezuelan expat, and I ought to be the bearer of bad news on this. That approach was already made by the Venezuelan Central Bank back in the early 2010s, by constantly getting debt bonds from PDVSA which they used as a means to justify printing more money (at least until the literal money printer in Maracay broke). That is one of the defining factors that played into creating the hyperinflation crisis over there.
I liked the illustration more than what Central Banks do 😀
Anyone talks about printing money
Weimar republic: let us introduce ourselves
1:23 This illustration doesn't match the demonstration of the situation. If suppliers increases the price their product, why it'll shift the demand curve up? Rather it should shift the supply curve upward, and remaining the demand curve same. That'll reposition the equilibrium point to a higher price point but a lower quantity point. I think, that'll match the graph illustration with the situation explained.
Imagine if money, taxes and economies weren’t a thing… people wouldn’t measure everything in terms of economic profit and loss and could focus on domains like the environment, which as long as money is a concern, is not a priority 🤔
@R S but what I’m saying is that people could actually cooperate and stop being so competitive..
Quantitative easing. Such a fancy word for a simple idea of just printing money
Congratulations. I learned nothing
3:55 " ...and eyebrows " 👍😂👌