To throw a bit more confusion into the mix, inflation is actually an increase in the money supply, with rising prices the result. Good topic. More along similar lines please Michael.
You have confused 'Currency Depreciation' with 'Currency Devaluation.' Currency Devaluation is the deliberate downward adjustment of the value of a country's currency, done by the government of that country typically to make exportable goods cheaper. Currency Depreciation, on the other hand, is when the value of a country's currency falls in the exchange market. Your explanation of inflation is also not fully right.
In 3 years 20-21-22 , they printed more money than in 100 years. It's a factor. But the US dollar as a currency is different from others. Don't forget in a 'normal' year us-dollar inflation is 3%. The average price of a car sold in the USA in 2001 was a 20K Honda Accord, in 2019 it was a 35K truck. Anytime the US goverment prints money it is loaned with x % interest by a group of 12 private banks called The Federal Reserve that itself creates inflation . If you recall the only guy who wanted the Federal Reserve out , wanted the US gov't to print its own money and also wanted to make peace with Cuba and didn't want to go to war in Vietnam was J.F Kennedy, in 1962 started printing a 5 dollar bill without the legend of the Federal Reserve , but the legend US Gov't the famous collector's item 'Kennedy-bill'. A couple of months later his head was blown off in public in Dallas.All allegedly.
Bunch of inaccurate stuff here, conceptually you're describing a couple of factors but without context of others. I'd urge you to check out the other videos I've made on inflation explaining a bunch of the mechanics, which people don't seem to understand.
The Federal reserve system happened with the collapse of Bretton Woods in the 1970’s it was Nixon who dropped the gold standard which obviously came after JFK 💯
This is a very optimistic point of view that politicians are trying to sell. The fact that the USA dollar hasn't devalued against other currencies, doesn't mean that there's no devaluation. It means that the other currencies have "devaluated" more than the dollar. Also the dollar is strong because people are pulling off investments and putting that into US dollars. This is basically a time bomb... Let's imagine the whole market is undergoing inflation except for houses. It's obvious that's a market timing issue influenced by external causes. The market will always self correct!
Here's a good way of thinking about it. Let's say we have a country that uses 1 currency, but it is divided into two parts. You have the dense city where there are higher paying jobs, but higher costs of living, and then you have the real communities which have lower paying jobs, but lower living expenses. In the big city, someone might earn a wage of 20 dollars per hour, and flour costs 2 dollars per bag. While out in the countryside, the wage might be 10 dollars an hour, but flour costs 1 dollar per bag. The GDP per Capita of the city is technically higher, but that dosen't nessessaraly mean they are better off. In both the countryside and in the city, one hour of work means 10 bags of flour. It's citizens still have the same reletive access to goods. The dollar is 10 times more "Valuble" in the city, but all that means is that the money will stretch 10 times as further when trading with the countryside. This is what purchasing power parity means. Even if you convert to pesos, which is fundamentally different from inflation. The differences in inflation between currencies are a major cause of devaluation, but trading costs, currency pegging, foreign investment, government debit, or any sudden discoveries of natural resources play a role too.
As I understand it's about perspective and the relationship between currency and services. For devaluation, the absolute value of the currency decreases, and you can see evidence of this by comparing it to other currencies. For example, the value of the US dollar might decrease relative to the euro; yesterday it was 1:1, now it's 0.98:1. Inflation is when the absolute value/cost of goods or services increases; a big mac was $3, now it's $5. The change in the absolute value of the currency isn't necessarily directly proportional to this, it's about the goods and services themselves. The two are related and impact each other but the frame is different and they're not the same thing (i.e. they don't necessarily have a 1:1 proportional relationship).
When more dollars are "printed" by borrowing without an increase of productivity, more dollars chase fewer goods. Prices goes up. Producer Price Index and consumer price index measure inflation. When currency exchange rates go down (due to too many dollars for fewer goods) we have devaluation. Currency devaluation and inflation is really the same thing isn't it?
That's not what this is about. WHY it goes down matters. There's a consequential difference between inflation & devaluation even though they look similar
When a currency Devalues, do the numbers on the exchange rate go up or down? If the Euro is currently rated at $1.40 if it devalues is it goidng to be $1.60 or $1.20?
Cool, first of all I feel bad for ppl that lost everything they had in it, even though you shouldnt have ALL life savings in any crypto, i put $50,000 in at .004 cents that i dont care if I lose, I will sell it if it gets to $100. Its the craziest thing I have ever saw in crypto, I hate that it crashed even though I owned none because its another reason for gov to make the excuse of "this is why free markets cant be trusted and we need our 1984 fed coin." Prolly 0 way to know but gotta wonder if the attack was just q couple smart ppl or someone close to Wall Street, banks, or gov....kinda strange while it got attacked is the same time Yellen is talking about regulation. Most of all I hope ppl that lost everything dont take their life or feel hopeless and can find a learning experience from it. I think you will see it go up at some point. That is what I think.
There is no difference to most people. The only people who care about this distinction are those who have enough money to have invested it in resources. To people living paycheck to paycheck its literally the same thing.
Good video, thanks. I am inflation's biggest fan, since they started printing my business more than doubled in a matter of months because of rising asset prices. It is just hard to understand why we are trying to "stop inflation", as if it is the bogeyman..
Do you live in your own navel? Bet it didn't even connect in your brain about the situation of retired old people whom are on a fixed income and are living on crackers and jelly. (See, prices go up but their income doesn't.)
To throw a bit more confusion into the mix, inflation is actually an increase in the money supply, with rising prices the result.
Good topic. More along similar lines please Michael.
Thank you, Steve! Stay tuned :)
What makes you interested in these topics?
As Michael just got done explaining, it's not that one-dimensional.
You have confused 'Currency Depreciation' with 'Currency Devaluation.'
Currency Devaluation is the deliberate downward adjustment of the value of a country's currency, done by the government of that country typically to make exportable goods cheaper.
Currency Depreciation, on the other hand, is when the value of a country's currency falls in the exchange market.
Your explanation of inflation is also not fully right.
In 3 years 20-21-22 , they printed more money than in 100 years. It's a factor. But the US dollar as a currency is different from others.
Don't forget in a 'normal' year us-dollar inflation is 3%. The average price of a car sold in the USA in 2001 was a 20K Honda Accord, in 2019 it was a 35K truck. Anytime the US goverment prints money it is loaned with x % interest by a group of 12 private banks called The Federal Reserve that itself creates inflation . If you recall the only guy who wanted the Federal Reserve out , wanted the US gov't to print its own money and also wanted to make peace with Cuba and didn't want to go to war in Vietnam was J.F Kennedy, in 1962 started printing a 5 dollar bill without the legend of the Federal Reserve , but the legend US Gov't the famous collector's item 'Kennedy-bill'. A couple of months later his head was blown off in public in Dallas.All allegedly.
Bunch of inaccurate stuff here, conceptually you're describing a couple of factors but without context of others. I'd urge you to check out the other videos I've made on inflation explaining a bunch of the mechanics, which people don't seem to understand.
The Federal reserve system happened with the collapse of Bretton Woods in the 1970’s it was Nixon who dropped the gold standard which obviously came after JFK 💯
This is a very optimistic point of view that politicians are trying to sell. The fact that the USA dollar hasn't devalued against other currencies, doesn't mean that there's no devaluation. It means that the other currencies have "devaluated" more than the dollar. Also the dollar is strong because people are pulling off investments and putting that into US dollars. This is basically a time bomb...
Let's imagine the whole market is undergoing inflation except for houses. It's obvious that's a market timing issue influenced by external causes. The market will always self correct!
I'm trying to understand devaluation, since I'm told that's where the Government is headed.
This made absolutely no sense to me.
People who are knowledgeable in their field have a hard time explaining things in lamen terms.
Here's a good way of thinking about it. Let's say we have a country that uses 1 currency, but it is divided into two parts.
You have the dense city where there are higher paying jobs, but higher costs of living, and then you have the real communities which have lower paying jobs, but lower living expenses.
In the big city, someone might earn a wage of 20 dollars per hour, and flour costs 2 dollars per bag. While out in the countryside, the wage might be 10 dollars an hour, but flour costs 1 dollar per bag.
The GDP per Capita of the city is technically higher, but that dosen't nessessaraly mean they are better off. In both the countryside and in the city, one hour of work means 10 bags of flour. It's citizens still have the same reletive access to goods.
The dollar is 10 times more "Valuble" in the city, but all that means is that the money will stretch 10 times as further when trading with the countryside. This is what purchasing power parity means. Even if you convert to pesos, which is fundamentally different from inflation.
The differences in inflation between currencies are a major cause of devaluation, but trading costs, currency pegging, foreign investment, government debit, or any sudden discoveries of natural resources play a role too.
As I understand it's about perspective and the relationship between currency and services.
For devaluation, the absolute value of the currency decreases, and you can see evidence of this by comparing it to other currencies. For example, the value of the US dollar might decrease relative to the euro; yesterday it was 1:1, now it's 0.98:1.
Inflation is when the absolute value/cost of goods or services increases; a big mac was $3, now it's $5. The change in the absolute value of the currency isn't necessarily directly proportional to this, it's about the goods and services themselves.
The two are related and impact each other but the frame is different and they're not the same thing (i.e. they don't necessarily have a 1:1 proportional relationship).
When more dollars are "printed" by borrowing without an increase of productivity, more dollars chase fewer goods. Prices goes up. Producer Price Index and consumer price index measure inflation. When currency exchange rates go down (due to too many dollars for fewer goods) we have devaluation. Currency devaluation and inflation is really the same thing isn't it?
Yes, yes it fucking is.
Compare currency A and currency B and found out they both go down, one just faster than another
That's not what this is about.
WHY it goes down matters.
There's a consequential difference between inflation & devaluation even though they look similar
When a currency Devalues, do the numbers on the exchange rate go up or down? If the Euro is currently rated at $1.40 if it devalues is it goidng to be $1.60 or $1.20?
So is it like when a stock gets devalued vs when there is a stock split? Only you don't get twice your shares.
I love the thumbnail
Will you do a video on what happened with Terra Luna....it is fascinating. Thanks
Right? What do you think of it?
Stay tuned :)
Cool, first of all I feel bad for ppl that lost everything they had in it, even though you shouldnt have ALL life savings in any crypto, i put $50,000 in at .004 cents that i dont care if I lose, I will sell it if it gets to $100. Its the craziest thing I have ever saw in crypto, I hate that it crashed even though I owned none because its another reason for gov to make the excuse of "this is why free markets cant be trusted and we need our 1984 fed coin." Prolly 0 way to know but gotta wonder if the attack was just q couple smart ppl or someone close to Wall Street, banks, or gov....kinda strange while it got attacked is the same time Yellen is talking about regulation. Most of all I hope ppl that lost everything dont take their life or feel hopeless and can find a learning experience from it. I think you will see it go up at some point. That is what I think.
If one cannot convert gains into stable coins because they can be de pegged from one day to the next....that definitely makes things difficult.
What’s a legit way countries can bring inflation down..
Innovation drives prices down
There is no difference to most people. The only people who care about this distinction are those who have enough money to have invested it in resources.
To people living paycheck to paycheck its literally the same thing.
Welcome to the channel
How many citizenships do you have ?😜
Good video, thanks.
I am inflation's biggest fan, since they started printing my business more than doubled in a matter of months because of rising asset prices. It is just hard to understand why we are trying to "stop inflation", as if it is the bogeyman..
Do you live in your own navel? Bet it didn't even connect in your brain about the situation of retired old people whom are on a fixed income and are living on crackers and jelly. (See, prices go up but their income doesn't.)
It tends to create inequalities in distribution and subsequent social problems.
"Money" is only worth what you can physically get for it, either goods or services. This convo is masturbatory and stupid.
It's important if you want to understand mechanics driving outcomes to better predict those outcomes and improve your decision making.
terrible teacher