What gives a dollar bill its value? - Doug Levinson
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- čas přidán 28. 05. 2024
- View full lesson: ed.ted.com/lessons/what-gives-...
The value of money is determined by how much (or how little) of it is in circulation. But who makes that decision, and how does their choice affect the economy at large? Doug Levinson takes a trip into the United States Federal Reserve, examining how the people who work there aim to balance the value of the dollar to prevent inflation or deflation.
Lesson by Doug Levinson, animation by Qa'ed Mai.
Our economy struggling with uncertainties, housing issues, foreclosures, global fluctuations, and pandemic aftermath, causing instability. Rising inflation, sluggish growth, and trade disruptions need urgent attention from all sectors to restore stability and stimulate growth.
Things are strange right now. The US dollar is becoming less valuable because of inflation, and other powerful nations waking up to trade in their own currencies. Good thing is, a lot of people still turn to the Dollar because of the safety is somehow assures. I'm worried about my retirement savings of about $420,000 losing value because of these factors and more. Where else can we keep our money?
You have a very valid point, I started investing on my own and for a long time, the market was really ripping me off. I decided to hire a broker, even though I was skeptical at first, and I beat the market by more than 9%. I thought it was a fluke until it happened two years in a row, and so I’ve been sticking to investing via an analyst.
Impressive can you share more info?
Cant reveal much here,Carol Vivian Constable oversees my portfolio, and I recommend researching her credentials on the net, she's well established.
Cant reveal much here,Carol Vivian Constable oversees my portfolio, and I recommend researching her credentials on the net, she's well established.
LOL they allowed him to finish burning the bill in jail.
haha lol
sdrtyrty rtyuty 😂😂😂😂😂😂😂😂
well there's nothing they can do except maybe recycle the 3
embers soooooooo
🤣😂
😂🤣😘
"Hey I just sold my company"
"What did you get out of it?"
"a million pieces of paper!"
Even when you had the company you earned some thousand pieces of 'paper'.
(But special papers 💵)
Well not even that actually... You probably just got a number bump on some digital data visualizing screen next to the words: "your account balance"...
Investing early can greatly increase the potential for long-term growth. According to a recent study by Vanguard, if an individual invests just $3,000 at age 25, they could have over $500,000 by age 65.
Investing in alternative income streams that are independent of the government should be the top priority for everyone right now. especially given the global economic crisis we are currently experiencing. Stocks, gold, silver, and virtual currencies are still attractive investments at the moment.
We must consider safer investments with promising returns in order to plan for the future. If you approach investing with a five-year perspective and simply DCA whenever you receive a check. Under the direction of my investment advisor, "Eileen Ruth Sparks", whose expertise in portfolio diversification is unsurpassed and client-focused, my portfolio has gained almost $643k since January 2022.
@@joesphcu8975 I was listening to a podcast when I heard a line about taking calculated risks while remaining within your risk threshold that really stuck with me. How can I get in touch with the financial advisor you use?
Just look her name up on a browser, she's quite popular so it shouldn't be a hassle finding her.
Investing in what exactly
The only thing that makes money have value, is the fact that everyone BELIEVES that money has value.
+Farmer Nate Everyone AGREES that it has value, not that they believe it.
yep
+Teddy Dunn unless 2008 happens again...
I said that they AGREE that money has value. That doesn't mean that it is inherently valuable, of course it isn't, it's paper. The value is created through agreement, not by the material itself.
I don't.
Here's how I can explain it in the most simplest form... If money grew on trees, money would be as valuable as LEAVES. Hope that helps. :)
Hi that's a nice one, I'm going to use it! thanks :)
Wouldnt the overall number of leaves deplete that means leaves would be worth more than money?
Until more grew, sure. I mean, in that same case, you could plant an orchard and counterfeit/debase your heart out.
But that would be equivalent to burning money. This is illegal, as explained in the video.
There is no way you can burn every tree in the world and techincally burning forests is illegal too
Even if bond yields are increasing and stock prices are falling, the markets continue to have doubts about the Federal Reserve's commitment to sticking to its strategy to raise interest rates until inflation is under control. What is the best way to profit from the present bear market while I'm still weighing my options on the sale of my $401,000 worth of stocks?
Even though there will probably be more pain in the future, without a doubt, the Fed is to blame for the exceptional catch-up measures currently in place since they were initially too slow to control inflation. Many people do, in fact, downplay the value of financial professionals until they are experiencing emotional turmoil. I definitely remember needing encouragement to continue running my business.
You're not doing anything wrong; you just don't have the knowledge to profit in a down market. Only experts with great knowledge who must have seen the 2008 catastrophe may earn considerably during tumultuous times like these.
@@oscarjiron6974 I need advice on how to rebuild my portfolio and come up with new strategies because of the significant drops. Whereabouts of this advisor's city?
@@waynestones It's amusing that you brought it up since I completely understand. I'm not sure whether I can mention this, I have dealt with a lot of investment advisors, but so far ''sharon lee casey'' has proven to be the most capable and educated. My portfolio is also managed by her.
@@oscarjiron6974 I can see why she is so busy because she has an impressive profession and excellent credentials. Therefore, without further ado, I immediately copied Sharon's complete name and typed it into my browser.
At the end of the day, its all a game. Like literally a game. We just need to know how to play this game. And they don't teach it in school either. Which in turn, makes it a game, inside a game....I hope y'all get it.
Exactly 👍
A minigame ( ͡° ͜ʖ ͡°)
Yep
You hope people get it bc you dont understand yourself
They don't need or should teach you in general school this.
Here is an easier example of why currency is the medium for trade:
Person A and Person B produces two types of goods. Person A has cows and regularly milks them so he ends up with a lot of milk. person B on the other hand produces cheese but needs milk in order to produce them. Since he doesn't have any goods yet he tells person A if he could have some milk and in return he will give him a portion of the cheese he's made. Person A sees the merit as producing his milk is a lot easier then producing cheese but he thinks person B will forget or pretend to forget that he owes him cheese so he ask for person B to give him some kind of insurance to pay him back. So person B takes a piece of paper and signs his name on it and says to person A that for every piece of paper I give you, I will give you a wheel of cheese. Months later person A needs a wheel of cheese to make his food a little bit more tasteful so he goes to person B and asks him for a wheel of cheese and since person B was given milk he was able to produce 2 wheels of cheese, so he gladly takes the piece of paper he signed and gave to person A before hand and traded it for a wheel of cheese. Person B who wants to produce more cheese now needed more milk but since he doesn't have another wheel to trade since he needs the cheese he has right now for himself, he gives person A the piece of paper back so he could trade it for cheese at a later date. Person A who just claimed his cheese takes the piece of paper back again since he now knows Person B does not go back on his promise.
Now the piece of paper that is signed now has a value: A wheel of cheese. So as you can see the signed piece of paper represented the dollar bill. Money is rooted from debt owing because all goods and services cannot be produced at the same time, but given value by all the goods it can be traded for.
@Deathcap Rabadon, that was such a good explanation, I always thought of currency to be valuable on its own. But by your explanation money, in fact, doesn't hold any value at all, its the assurance of debt. The value is of good only.
It's also a trade medium for when our interests as buyer/seller don't align. We can agree that this piece of paper has a specific value, without tying it to a specific product.
Essentially what you described is a first type of currency, in the form of coupons. Many coupons as many as the goods traded. The second step is to evaluate a common "price" for all these coupons, so we're not always obligated to trade specific coupons for specific goods. Besides, the value of each product might change, as the supply and demand changes. With money, that problem is solved, because it's not dependant on the product.
Thanks you man, answered my conondrum all this time
Why didn't you just give them names?
@@NPCrash Such an important point.
It was funny when the man was throwing money like a ninja
not too far from the truth!
JaJabor LEL SO TROO😂😂😂😂😂 I was LMAO
"It was funny when the man was throwing money like a ninja"
Is that all that goes through your head after watching this?
How about the free market, don't you think a Federal Reserve restricts the freedom in a free market?
What about our constitution? Only Congress has the right to print and coin money.
If the 'Federal' Reserve is not federal, why doe the name bear federal on it?
-_- wow
he just wrote a comment about something that was funny, chill out
JaJabor
I have learnt so much through the internet than I did in school
You are absolutely right, the internet is very educational and informative
@@anitayuhasmccury1905
wonder what our live would have been like without the internet, I happened to learn to invest in assets through the help of the internetwonder what our live would have been like without the internet, I happened to learn to invest in assets through the help of the internet
@@michealcadang861 This are assets that can actually really make you rich in no time by investing In Them, bitcion, stocks, real estate and crypto, and one can do this through the help of the internet
@@danielluckas2143
The best time to invest in the stock market was always yesterday and the best is today
@@danielnguyen1667
You are absolutely right, and also at this point finding the very best stocks to invest in right now that I'll generate massive gain is important
Well put. This is a really nice introduction to the nature of currency. I've never worked at the Federal Reserve Bank, but it has one of the most interesting (and difficult) jobs in the federal government.
The feds isn’t part of the federal government
@@freeeggs3811 The operations of the Federal Reserve System are funded by US taxpayer dollars; and the Federal Reserve's governors are appointed by the president and confirmed by Congress. Maybe you have another set of criteria in mind, but to me this constitutes it being part of the federal government.
@@normanoro206 you are really clueless aren’t you?
Funny how he talks about how the Federal Reserve controls very "delicately" how much money there is in supply. He conveniently forgot to mention that in 2009 the Federal Reserve printed over $2 trillion and went to foreign banks. And when questioned about it from Congress they basically gave no answer and stated they didn't need to tell Congress. how's that for transparency?
Yeah it's quite convenient, isn't it? I love how he makes private control of the Federal Reserve seem amazing because it's not under the big bad control of the politicians.... the people that the people elect, much better having some dude you didn't vote for control your money. Did I say your money? Oh, that's right it isn't is it?
Yeah agreed
@@InsanePorcupine on point
@@InsanePorcupine Don't kid yourself into believing it's not all part of the same crony military-monetary industrial cabal. The washington establishment, the fed, the "private" interests all collude to run the show and line their pockets with the wealth they bleed from the sedated and propagandized masses through tax and inflation.
@@Ones_Complement pretty much the same in most other country , just with a little bit shaping...and different scale. Thats why they all called politician.
"The government is the biggest counterfeiter of money" - someone in youtube comments who I don't remember
Yes, that's why they prosecute only illegal counterfeiters.
Inflation begins when dollars are printed. Printed dollars are a data input to the CPI. The CPI print is the feedback loop from printed dollars. Keynesians have been trying for decades to print dollars to create inflation-used as a signal to show the stimulus is working. Then before inflation gets entrenched, deflate by destroying printed dollars. The problem here is the Fed didn’t remove the dollars it printed to stimulate. So the higher prices are here to stay for a while. The dollar strength is transitory. You will see a weak dollar once those bonds the fed has on its balance sheet become difficult to sell as higher yielding assets will be more desirable to investors.
I lost everything in the last recession and learned from it. I made sure to live below my means and save every possible dollar. I also invested correctly and diversely instead of buying material things, restaurant meals, and expensive vacations. I've been waiting all these years for the next recession so I can capitalize on irresponsible debt. If this video is correct, it will be a very exciting investment shopping spree for me
Consider the economy as one huge engine that produces the life styles that humans live & prosper & create a healthy financially secure future for their families . Corruption, manipulation , creation of unhealthy political policy & diplomatic environments is a recipe for engine failure. People are equally losing money in the financial market in the midst of all these.
Inflation is gradually going to become part of us and due to that fact any money you keep in cash or in a low-interest account declines in value each year. Investing is the only way to make your money grow and unless you have an exceptionally high income, investing is the only way most people will ever have enough money to retire. Personally I hired ‘’Nicole Ann Sabin’’ a financial advisor who I copy her trades and with a good 7% in ROI monthly.
@@marianparker7502 I wish people can see things from this perspective sooner than later. Things are really going south and everybody is acting cool. How can one reach this advisor?
@@PhilipMurray251
Look her up on the web if you need guidance. People do not want to wake up to the reality.
0:50 Throughout history, most currencies were linked to valuable commodities and the amount of money in circulation depended on a government's gold or silver reserves
0:58 The U.S. abolished this system in 1971 and the dollar became fiat money (not linked to an external resource)
1:27 The United States' Fed is made up of 12 regional banks
1:37 All of the Fed's profit goes into the U.S. treasury
2:02 If the total amount of currency in circulation increases faster than the value of the goods and services in the economy, inflation happens and dollars are worth less
2:07 If the amount of dollars in circulation stays the same while goods and services available increases, the dollar becomes worth more (deflation)
2:26 Too much inflation makes people want to spend right away (because their money will be worth less in the future), turning people into hoarders, causing shortages of products and causing even higher prices and even higher inflation
2:45 Deflation would make people not want to spend, which would decrease corporate profits, which would cause companies to fire people, which would cause even less spending in the economy and even more deflation
3:01 A small, consistent amount of inflation encourages economic growth
Awesome! Thank you for the recap. ^-^
this helped my mind map
If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks…will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered…. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs. - Thomas Jefferson in the debate over the Re-charter of the Bank Bill (1809)
It's amazing how pertinent that quote is today. Those founding fathers described almost perfectly the threat that has manifested in America right now.
It's also amazing that you fail to understand what the word private means. The Fed is not a private bank. The Fed regulates private banks with tools like reserve requirements to keep them from over-speculating, but is also there to loan them money. If the banking system were to collapse, it would take any capital heavy business that requires financing with it.
It is in the control of the people you idiot, how would a million people control it better than the people who control it today? They ended the economy crisis in 5 years, I say they did a pretty fuckin good job.
Jefferson said no such thing, and he made the Louisiana purchase with discounted junk bonds.
Monticello.org says that your Jefferson quote is bogus.
Jefferson must be the most consistently MIS-quoted person in world history. Especially by armchair Internet rebels.
It might sound dumb, but I always wondered about this. Thank you so much Ted!
Watch ray dalio Video on this it is amazing
Same.
Same
Same not embarrassing
I think this is a very helpful video for non-economists and specialists.
It's an excellent introduction to economic science. There are many people interested in understanding economics, and more economists are necesary to share these topics.
Even a small amount of inflation can be destructive. A rate of 2% is considered ideal by some economists. How did they come up with 2%? They made it up. If inflation is just 2% that means that the dollar loses half of its value in 36 years. This makes saving for retirement mission impossible and forces people who are not sophisticated investors to invest in the stock market. The current way that inflation is measured doesn't include food or gasoline prices. This means that the official inflation number quoted in the media is bunk. On the flip side, deflation is said to be very bad. Why? Because it rewards savers and punishes people who take on debt. So what is your government telling you to do? Don't save. Take on more debt. Spend more. Play the stock market.
It's in the interest of your local businesses and national business that you spend more, now, than to save for later. If you buy more products, you will be 'investing' in your local or national business. Plenty of respectable, well intentioned, small-to-mid-range business models depend on sale of goods heavily. If you don't buy their goods, the small companies with good ideas will be 'eaten' by the large corps. TV culture helped create something like monopolies for big business. Internet gives you the option of finding new businesses with ethics you might favor.
Keep in mind, 36 years is a long time. The Median Household Income for the US worker gravitates around ~45000. 36*45,000 = 1,620,000, 1,260,000 after tax, with no adjustment for inflation. Take out (~100,000 = 250*12*36) for car insurance, 60,000 for 3 bought-new cars, 650,000 for a decent house, 750,000 for the best-case scenario mortgage. Let's say ~600/month (259,200) for groceries. At the bare minimum, if you are never promoted, and never make over 40k, over 36 years, you can save up. $90,000 over 36 years assuming you buy new cars and are divorced: without tax breaks. If you own a house, you can certainly live decently for some time with part-time income, or Social Security Income.
If you want to live above your means, take some risks and invest your capital in a company. If you lose, that's the price of doing business.
Brian B Fine, but then I don't want to hear anyone say that the government protects the environment. Inflation is one of the most destructive things for the environment because it encourages consumerism and consumption.
"This makes saving for retirement mission impossible and forces people who are not sophisticated investors to invest in the stock market."
Expected inflation is a component of interest rates, so it makes stuffing your retirement account under the mattress a bad idea. However, it would still be a bad idea with no inflation to make a 0% real return when better options exist.
"The current way that inflation is measured doesn't include food or gasoline prices."
Yes it does. The BLS computes a whole bunch of price indices - some with food and energy and some without. The ones without are there because they're more informative for policymakers looking for the underlying trend that monetary policy affects. The "official" CPI figure that gets reported most of the time includes food and energy.
Unexpected inflation or unexpected deflation are bad. If you expect them then it doesn't hurt lenders or borrowers all that much because it just gets built into interest rates.
"Inflation is one of the most destructive things for the environment because it encourages consumerism and consumption."
Consumerism and consumption keep the lights on and pay the food bill.
grinstall It turns out you were correct on the CPI. Some of the baskets cover food and energy and others don't. I'm not afraid to admit when I am wrong. That being said the index is also supposed to cover "shrinkflation" which is sometimes difficult to measure. Bags of chips are sold by "Net Wt." but there are ways to cheat the numbers by increasing the air pressure inside the bag. If at a restaurant the sandwich still only costs $5 it may be because the shop puts in 5 slices of ham when they used to use 6 slices. The CPI is supposed to account for this but it is easy to miss sometimes.
I still think saving is better than spending. Ten years from now if you come up with a great business idea are you going to be glad you blew your money on the BMW leases and always having the latest gadgets or will you wish you had some money saved up to start that potentially billion dollar business.
Patrick Dukemajian What if I have a great business idea today, but no savings? I might want to take out a loan to start my business. However, maybe demand in the economy for my product is too low for the going interest rate, so I don't take the loan and don't start the business. Your spending is my great business idea's income. My spending is your great business idea's income. As long as my additional income in that next ten years minus the interest I owe is greater than it would have been from waiting, I should be borrowing now.
I'm not saying individuals shouldn't save, but inflation is low despite extremely low interest rates at the moment because the macroeconomy consists of a lot of people trying to save income at the same time resulting in an extended slump.
Power resides where one believes it resides, same goes with money. As long as people believe it has value, it has power.
So yeah, just transfer me your useless money to my bank account so I could show you how stupid money actually is, don't worry, not a scam.
If u got a pdf I would buy it.
antwalk 777 sorry but thats not how things work. Thats like saying "if we all believe god is real then god is real". No, pretending something has value doesnt give it value
whow
Demand gives it value and that demand is created by income tax and property tax. Hence two unconstitutional agencies were born in 1913. The IRS and the Federal Reserve. Demand was also created when the Petro dollar was created....only Federal Reserve Notes could purchase oil.
Domo you're only looking at one side. Demand is meaningless without supply, and thanks to the fed, the supply of the USD is essentially infinite. It's artificially kept low through the petro market, but now that china and Russia are stopping their use of the USD, that extra money will make its way back into circulation in the US markets. With this massive drop in demand and increase in supply, prices will plummet. However, since the US dollar, or any fiat currency, has a marginal utility of 0, they are all worthless at their core.
It’s kind of sad how many of us didn’t fully understand this already.
Best comment. The US dollar is criminal
"The fed uses vast amounts of data to determine how much money to print" lol omg, i wish people knew what actually happens in thag building 😂
It's funny how our economy is based off of trust and a free handshake
they make up any data that lines with their agenda lol, data can be anything you want it to be
@@alexei3755 not all country. America only i think. I might be wrong tho
In fact, the government does not print money. Government takes it as a loan from the FED. Please correct me if I am wrong.
Jovica Kričković You are pretty right, plus the money is loaned at an interest.
Jovica Kričković and then we need to "print" more money to pay the interest on the money we just printed.
@@mickymtl And then the government taxes us to pay off that interest.
We are forever in debt because of this system.
ETA We should storm Fort Knox.
Deflationary spiral is a myth. It assumes most people will have a low time preference for goods if the supply of goods increase relative to the money supply. It's like saying Bob will wait forever to buy food if food prices fall. Or Jill will wait forever to buy a phone or computer because they keep on getting cheaper. If she waits just 3 more years to buy a phone, it'll be half the cost and 5 times as fast. Why don't we all wait to buy our tech when all the economic incentives suggest we should wait?
The assumption that all or most people will have a low-time preference in a price inflation situation is simply hubris. Sometimes, Bob might buy the donut because he's hungry and couldn't care less what it costs tomorrow. Sometimes Jill might need to phone or computer today and is willing to pay more because she prefers to have it now rather than later.
We don't know how many of the "hoarders" are out there who are willing to wait for long periods of time before purchasing goods. Individuals have different values and different time preferences.
Plan ₿
Even FED knows it's a myth
They just don't want to lose control on the money
except the feds now are going to take plan bitcoin and privatize it.
Coronavirus deflation: Yes! Is my time to sh...
FED boiz: *AGRESSIVELY BRRRRSSS*
Inflation is needed so that companies can make more profit.
The United States central bank rate, Our country's debt levels and the strength of our economy etc are among the factors that determine the value of our money. when this factors are strong, so is the value of our currency's. Most countries have a flexible exchange rate and allow forex trading to determine the value of their currencies.
Your right, forex trading and stocks has proven to a major factor in some countries economy. That's why it's the wisest thing for any citizen to invest on. I am an investor but haven't understand bthe fundamentals properly.
@@anthonyalphonsus9454 exactly, our generation might not see the impact of this investments platform but I think this current generation should be fully involve in the up and doing of this Investments opportunities. The few lucky ones took advantage earlier on and today we are the ones buying there shares.
@@novakrico4306 That's why Warren Buffet Said " if you don't make money while you sleep, you will have to work till you die". I started investing 3years ago and it's really rewarding if you understand the fundamentals and go through right setup and strong strategies. I recently Invested in RESP to fund my childrens University education.
@@aaronkent575 this is a critical thought! Most times I feel depressed for wasting 4 yrs of my time in college. Trading looks easy until I lost $8500 while trying trade on my own.
@@aaronkent575 wow, you have been into this market for 3 years !! That's is a whole lot for you to be perfect. Do mind you sharing your contact, so we can share I sense manner, I started last year September.
It seems to me that it is an interesting topic to which many of us do not pay the necessary attention, but if we analyze it it can be of great help
2:32 This is how I make it rain in the club.
This made me laugh harder than it should of
Codie07 Same here! Lol.
The problem with having ANYONE in control of the Inflation/Deflation "Lever" is that NO ONE is wise enough to know exactly what the right level should be. Not then, not now, not ever.
Since 1913 the Dollar has lost 95.8% of its value due to gradually accumulated Inflation. In the 34 years of the Gold standard, from 1879-1913, a $10 Gold Eagle coin very slightly increased in value, though largely remained stable. A gentleman in 1879 and 1913 could both purchase a decent suit of the same quality for $10.
In that same 34 year period, from 1913-1947, Inflation claimed 55.6% of the dollar's value. To match the Purchasing Power of the $10 Gold Eagle coin required an additional $12.53. A decent gentleman's suit in 1947, the same quality as the $10 1913 and 1879 suits, would cost him at least $50. Included in that cost are the associated increases in the cost of materials, manufacturing/labour, &c.
This year (2014) you would have to add an additional $230.30 to match the Purchasing Power of a $10 gold-backed dollar. That's only matching the Legal Tender value, not the current gold value. (Source: usinflationcalculator)
Roosevelt's Great Gold Theft of 1933, in which he issued a series of Unconstitutional Executive Orders outlawing the Private ownership and holding of gold, also effectively prohibited the exchange of dollars to gold. People could no longer redeem gold from a face value of paper cetrificates (dollars). However, large Banks were still allowed to trade and exchange in gold until the Nixon Shock of 15 August 1971.
The value of the Dollar at present is far from stable, and is on track to lose even more value. When you see the cost of everyday items going up, it's not so much that prices are increasing as that the value of the dollar is decreasing. Increased prices are symptomatic of Inflation. We will never regain a stable currency unless we Abolish the Federal Reserve and Fractional Reserve Banking, and return to a commodity-backed Standard (preferably gold and/or silver).
Gold based currency can't compete with fiat currency. China loves gold, they will exchange all US dollars into gold. We'll be left with deflation.
***** You need to be re-educated to get rid of brainwash.
1. US dollars always reside in US. US is the only nation that accept US dollar as payment of service. One cannot redeem work in foreign nations (beside zambawe or minor exceptions). with US dollars. That money that you said the foreigners own is already in US growing interest. They money NEVER left US even though the transaction is done somewhere else. There's no imaginary tons dollars under some mattress ready to be ship back to US. All US dollars are in the economic pool already. We do not see hyperinflation now.
2. Hyperinflation is due to government not controlling how much it prints. US government is not printing unlimited money to support its debt. It is printing a targeted amount (2% inflation). You cannot have hyperinflation if you target 2% inflation rate.
***** The people who did all those trading eventually has to put money into a US account. The amount of illegal US dollars that's not legally tradable is so small that it's laughable for you to cite it. You can go to any legit business outside of US and ask to pay in US dollar, you won't be able to. They trade with their sovereign currency. Only a small percentage of people who actively trade internationally use US dollars. Nations like China collects all US dollars and put them in US. There's no other way to convert US dollars into products or works beside buy US products and hire US workers. The people trade with US dollars outside of US can buy Euro with US dollars but whoever get the money will need to trade with US to get the actual value.
That's why your assumption that other nation dumping US dollars will somehow make US economy bad is totally false.
Dumping means somebody is getting that US dollars for cheaper price. That somebody is assuming all responsibility of using that US dollars and buying US goods. Selling US dollars at a cheaper price will only devaluating US dollars and make US economy better since US products can be exported at a cheaper price.
So far, Belgium, Chinese, Japanese do not want the US dollar to depreciate. They want to maintain their export mode. They want the ink on the paper. The increase in trade deficit shows you that.
BTW, Chinese and Japanese are having bigger inflation than US do. If you know anything about Chinese National bank taking that US dollars\Euros and print their Yuan to give it to business men, you would understand that the trillion US dollars China has in US, the same amount of Yuan is printed in China to cause inflation of Chinese Yuan.
***** Tell me, what can the Chinese buy if they dump US dollars?
"Since 1913 the Dollar has lost 95.8% of its value". Yes it has, but wages have gone up as well. You are not getting paid .25 cents an hour to work. You are not looking at the whole picture. The problem with gold standard is that we cannot control it. Look at the business cycles prior to the U.S. going fiat. They were very unpredictable and we had a lot more recessions and depressions when we were on the gold standard.
Biggest lesson i learnt in 2023 in the stock market is that nobody knows what is going to happen next, so practice some humility and low a strategy with a long term edge.
Crafting your unique approach, mitigating risks, and steadfastly adhering to your strategy, regardless of challenges, is essential. Concurrently, embracing a culture of ongoing learning from errors and striving for enhancement remains paramount
Uncertainty... it took me 5 years to stop trying to predict what bout to happen in market based on charts studying, cause you never know. not having a mentor cost me 5 years of pain I learn to go we’re the market is wanting to go and keep it simple with discipline.
Could you kindly elaborate on the advisor's background and qualifications?
SONYA LEE MITCHELL is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
Thanks a lot for this recommendation. I just looked her website up, and I have sent her an email. I hope she gets back to me soon.
I think the video its interesting and comprensible,the knolewdge for the people didnt now its so precius and practic
All people should know about the inflación and deflation to increase their economy
Incredibly simplified explanation. Loved it !!!
Everyone should watch mike maloney's hidden secrets of money.
Exactly!
Exactly. Highly Recommended
It is a very light video, because it teaches us to know who is in charge of the reserve, it really teaches us a lot about inflation and deflation and the federal reserves
One of my favorite lines in a movie was uttered by Jeremy Iron's character in "Margin Call." He said "it's just money, pieces of paper with pictures on them so we don't kill each other just to get something to eat."
"Give me control of a nation's money and I care not who makes it's laws" - Mayer Amschel Bauer Rothschild
I always thought it was David Rothschild
Learn the difference between "Its" and "It's"
This video is gravely mistaken in it's assertion that inflation helps an economy grow. Rising prices is the ultimate effect of inflation which halts a businesses growth because you can't sell more products to your consumers when those commodities cost more.
When the poor learn the rules of the game the rich cry foul
Yeah! I agree with you sir.
If you want to be successful have the mindset of the rich, spend less and invest More. Don't give up your dreams.
@@peterbedley2719 People come here with the aim of chasing money more than knowledge and that will damage your progress, trust me. Chase knowledge first and I promise! The money will follow you just like it's following some of us now.
@@itoboreoghenevwegba4306 That's very correct sir!!
And that is why most of them end up losing they money to scammers.
Don't be in a haste to invest. Know what and who you are investing to and be sure that the person will deliver before investing.
FED-Ed.
FED IS NOT A GOVERNMENT AGENCY, BUT A PRIVATE BANK OWNED BY BANKERS.
D. H. Its a joke
No it's not. The Fed's chairman is appointed by the President of United States and the members are appointed by congress approval. The profits of the FED go to the US treasury... Is that something close to a private company?
True but technically it is an odd bird for sure because the owners / shareholders are private banks. I have come to conclusion that convoluted structure primarily serves as political cover for who ever requires it (the gov't, The FED or the banks) given the circumstances.
Rodolfo president pick one from the choice given to him by the fed. You people are refusing to believe the reality
Lol at "Totally legit ~ Barry."
+Happy What does that mean? I did not get it. >_
@@xiaotinghu8479 barry
This video is very interesting because it is a topic of much disscusion now and it starts from a basic point, it also integrates many examples to better understand
I really love how you animate while explaining your video... thank you so much.
Petrodollar is one of the major things (if not THE major) that is keeping the US dollar strong... so yeah, while it is not linked to any resource internally, it is backed by resources externally.
2:32 is just soooo cute lol, I love the animation on that!
"The value of money is determined by how much (or how little) of it is in circulation." This is false. The value of money is determined by the price level: P = MV/Y. The numerator, MV, is spending, which is equal to national income. National income is influenced by exogenous government spending (injection) and taxation (leakage) (directly affecting M, the money supply, and indirectly affecting through stimulus V, the so-called "velocity" or turnover, which is the average number of times each dollar changes hands in the accounting period), as well as by difficult-to-predict psychology and savings decisions of the nongovernment sector (affecting not only V but also M, given that the private sector can endogenously expand credit/loans), which fuel boom-bust cycles.
The denominator, Y, is the purchased final goods and services - the real output of the economy that is purchased with the currency. Y, obviously, is determined by productivity - in particular, the value of Y is increased by employment of labor in production, or by any technological advancements or investment in real capital/infrastructure and/or education by the government or nongovernment sector that increases productivity.
It is especially important to emphasize the role of *taxation* in driving the value of currency. The fact that fiat money is required to pay taxes and government fees guarantees that people will always have a logical reason for wanting to accumulate it. Without taxes, V could be highly volatile (think of Bitcoin), or Y could drop to zero if people decide to not accept it as payment (there being no reason to accumulate it if it's not needed to pay taxes).
The supply of money, M, does not by itself determine the value of money. If the government prints 1 trillion dollars for some guy to keep in his swimming pool (so he can literally swim in money), and the guy never ever spends it, then this $1-trillion increase in M will have zero effect on the price level (with the value of V decreasing to reflect the hoarding of the $1 trillion).
The price level is determined by the quotient of aggregate effective demand (expenditure, MV), divided by the real output (Y) of the economy that is purchased with the currency.
Please senpai explain in 180p
The thing is, value is decided by people. We agree as a society and as a people to use as a medium of exchange.
Lot's of things are missing from this video. It feels like an initiative to keep people from thinking badly about the fed.
You mean the propaganda that has clogged your mind is missing from the video? All they did is not include fictional bullshit in the video, that does not mean its to keep people from thinking badly about the fed, it means its real accurate information.
If you knew anything about the system then you would know how much is missing. A little research goes a long way my friend.
***** It's correct in normal times. We just don't happen to be in normal times. Monetary base is way up while currency in circulation is not. I don't think they were trying to complicate it to the point of explaining the difference between monetary base and currency in circulation and QE. People looking for that probably aren't looking for it on CZcams.
I thought it was a good introduction to the topic.
It would be great if you'd explain them here )
As long as you claim to have free speech in America you won't get in trouble
Instead of printing hundreds of hundred dollar bills and giving them to everyone so everyone can be rich they instead give those newly printed hundred dollar bills to themselves and their friends so only they can be rich.
logic
True... They're basically just "stealing" the wealth that all people would gain by printing more money to counter the effect of deflation. Why would people buy cars and food if they knew it would be cheaper the next year? The whole system would end up like the tech market! Nobody buys an iPad with the knowledge that they can buy a cheaper or better one next year! That's why we need government!
If everyone's rich. no one is.
Meanwhile in Zimbabwe...
That's not how the economy works, my friend.
Please, here's the matter. If you're ignorant on a matter, don't pretend to know about it. I maintain that same ideology, so I can have my mind open and learn about matters that I don't understand. The same goes here for you, as you're filling your mind up with faulty information that is based off of illogical conclusions and misinformation. Do some research, and I don't mean watching a video. If you want to become thoroughly knowledgeable on a subject, that will take years of practice and study.
Shiron I run a private economy called "Numero Set". I am one of only a handful of people who knows how an economy actually works from top to bottom because I am one of only a handful of people who actually runs an economy.
Best YT video that implicitly explains the difference between currency and money
0:38 , if didn't have a PhD in physics i wouldn't have noticed this easter egg , good job , btw the easter egg is (pi) which starts with 3.14 , they wrote it in the right side as serial number .
0:40 lol next to the bottom 100 it says 314145265359, and pi is around 3.141592653589
Illuminati confirmed
every single person in venezuela should see this to understand whats hapenning in their country
Wrong! A good old fashion American coup.
I think they're all aware of it lmao
US print money and export it to other countries
Thank you Ted Ed, this is valuable information that we don't hear in schools.
Money is not the goal. Money has no value. The value comes from the dreams money helps achieve.” - Robert Kiyosaki
He doesn't answer the question. Why is fiat currency worth anything? you can exchange it for goods, but why would anyone part with goods to obtain paper? A partial answer is that the government insists on currency (or a proxy) in payment of tax obligations, fines, and various services it charges for, such as bus fares. Also, once people are in the habit of accepting fiat currency there is a cost associated with ceasing to do so. Each person can see the advantage of everyone continuing to accept fiat currency and can rationally gamble that peer pressure and legal pressure will keep the fiat currency fungible and so they continue to use it. But is that the whole source of its value?
Fiat currency worth is solely based on the government support behind it. It is worth "something" because you and everyone else in the country believes that one can go in to a store/bank/whatever and use that paper to buy whatever they want. There is nothing to back that paper up except the trust of the government.
refik13203 What is it we trust the government to do?? They won't give you anything for your dollar bills other than what I said: they will take it in payment of taxes, fines, and bus fares.
You are looking at it the wrong way. The government is not really a variable in this equation. The government is there to keep things in order, and protect you and all that bs. What makes paper money valuable is that EVERYONE believes it is worth something. That's the important part.
The reason I want money is because I know other people want money, I can use my money to get goods and services from other people in return. They can then use that money to purchase goods and services that they want. Goods and services are what ultimately matter in the economy, and money is a way that allows people to give up goods and services which are less desirable to them, and get ones that are more so.
Imagine you are a auto mechanic and we lived in a place where money did not exist. If you want to buy a TV, you would have to find someone that wants to sell a TV AND needs his car fixed to make a fair trade. It would be very inconvenient for everyone.
refik13203 you haven't explained why it is rational to expect other people to accept your fiat money. They don't do it in a spirit of charity. I think it's because we all know that the government has the means to see that we don't regret accepting payment in fiat money, and its usefulness for paying government obligations is part of that. Of course they don't remove ALL the risk.
DucksDeLucks
Stop bringing government in to this equation. The government does not have anything to do with people using currency. If everyone decided not to use the dollar, then the dollar would be worthless and the government can't do anything about it. If we didn't have currency, than we would still pay taxes to the government, but it would be in form of goods and services. Currency just makes the whole economy more convenient for everyone. It also makes it run smoother, which in turn grows the economy as a whole.
Re-read my last paragraph. I gave an example of the car mechanic and the TV. It's all about convenience. People can't go around trading goods and services for other goods and services. You need something that can convert everything in to the same equation. That something right now is dollars. It might not be dollars in the future, but something else will take it's place. You can't have an economy without some sort of currency set as a base.
Clear, simple, and well done explanation of a VERY important topic, that most of my fellow Americans don't understand or care to understand. Well done.
The best way so far to explain what the inflation and deflation are rather than start by throwing the terminology to a student.
The guy slapping the other person was hilarious.
"money doesn't make you happy, but if you don't have money, you will never have" happiness :)
what
very well explained... Great work guys keep it up....and thanks for the video.
Still the best video today to explain the value of money.
1:51 the dancing animation makes my day
This is super, duper interesting.
It's this fairly accurate control of our money that makes it an excellent reserve currency, for other countries to be looking at.
It appears that they have a really good system going, here.
It definitely keeps the world on its toes.
It's because of US naval powers, it being everywhere means it protects the notion of free trade and her military reach is what makes USD the global currency.
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A very simple way to build wealth for future generations is to consistently invest over time in reputable firms that pay dividends.
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this already is too much publicity, but the internet has more info on her, so you just check her up
I'm glad to see so many individuals prospering. I appreciate the clarity of this channel.
Are you all bots
Excellent video, good information and very creative. The content very important for those who care about the economy.
0:32 i died ! need more of those visual puns! hahaha
the FED acts as an arbiter, intervening in any of the foreseen crises
Toilet paper amongst the “other notes”: *okay, my turn*
When you say I want money . You can't just have it , you earn it . Not because it's the ' right ' thing to do . But because earning money will keep the money valuable. For money to remain valuable it has to exchange hands , it has to be limited in number . So what we need to understand is we are supposed to have purchasing power and not currency as such.
To bad they don't teach this in school the way you explained it. That's why we are screwed sadly.
Best video on understanding money that I've seen
Watch hidden secrets of money....It's better
@@misemefein100 Thanks! I'll check it out.
So lets all thank our wise central planers for the pitiful economy, and diminishing value of our money.
Why do we pay interest to borrow our own money? Where is that in our constitution? I thought our money was to be gold, and solver?
They just let more debt than real money in circulation it's actually a creative financial con
i know this...people(corporation banks) are buying interest on all loans and then they gamble with that on the market...How in the world that is even legal i have no idea.
Interest is the cost of borrowing money. You pay more money to the bank lending money to you to make up for the fact that that money could be spent doing something else. It's the same reason why when you work you get a paycheck: because your time spent working a job could be used to make the things you want to buy.
John Gossett The federal reserve act has never been ruled on. I think our constitution says our money would be gold, and silver. The main reason for the revolutionary war was the Bank of England, and fiat currency. It's not taught in our schools now.
Just because you think something is true doesn't make it so. The constitution says nothing about gold or silver.
Your representation of the "day-to-day vicissitudes of politics" is the best I've ever seen.
used this info for an economy project, thank you!
Very nice and simple explanation for those that are unfamiliar with how fiat currency works. However, there are obvious issues with a currency that is not backed by material goods, like gold for instance.
To not make this too complicated: since each dollar is not backed by gold somewhere, which makes the dollar a fiat currency, the ability and freedom to print without limit is a hazard in and of itself. Namely, the problem of debt will only escalate.
money : oxidizes
the us government : "wait, that's illegal"
@@mardismardias2373 He meant the US government / USA government
At last! A quality educational video without incessant, pointless, distracting background music. Sincere thanks!
(A home-schooling father)
That slap at the beginning😁
This is too much power in the hands of a few, which is why the US Constitution explicitly laid out a gold standard to keep the government accountable and transparent.
the US constitution in no way "laid out a gold standard".
Not enough gold on the planet to run this global economy, friend...
Section. 8.
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
To borrow Money on the credit of the United States;
To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;
To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;
To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;
although I would like to see a system of money that wasnt tied to a lever (from the video) the US constitution never said that
Raphael Sloan
Explain your ridiculous broken argument. If you think through that ridiculous excuse, you'll find it's total nonsense.
Crazylalalalala
Article 1 section 10
Our money is backed by debt m8. It is, just is.
+RichireX spot on, u just said more than him in 4 min.
Money is debt => debt belongs to banksters => profit? :/
What? If I owed a small loan of a million dollars to a bank, and it today was what it is, but tomorrow was the cost of a piece of bread, then the debt would almost be gone, and if everyone earned 5.000.000.000.000$ A month then a 1 million dollar debt wouldn't be bad
And debt is future labor.
The US Dollar is green. Green has 5 letters. 5 x 5 = 25. People who are 25 are adults. Adults run the government. The government is run by a democrat. Democrats are donkeys. We ride on donkeys. We also ride on roller coasters. Roller coasters are fun. Fun has 3 letters. Triangles have 3 sides.
Illuminati Confirmed.
how much time do you have
We have to prevent the money laundering, it is an important part of the fight against the use of resources of illegal origin that weakens the financial system and the national economy.
I agree with what you said, the democrats make more and more programas to help “ people “ however what people don’t know is that it’s hurting the economy in a significant way. By them making more programs they print more money to “help people “ and then eventually that’s were we have to pay more taxes because their spending money they don’t even have
amazing video We all want to live better lives and be financially independent. The appropriate investments, frugal lifestyle, and budgeting can easily help you achieve this. I'm pleased I was taught early on to work hard for financial independence.
My belief is that making a wise investment is a fantastic way to save money for the future as well as a way to generate passive income. Those who make poor mistakes early in life regret them later in life. But, if done alone, investing may be challenging and risky. For this reason, I suggest consulting experts for advice (financial advisors). The difficulty lies in effectively employing it, not just watching videos and reading investing books.
@@Brittany-reeds Sincerely, I'm genuinely moved by what you said. I have a sizable amount of money that I am willing to invest if given the appropriate knowledge and I am highly interested in investing. My greatest concern is losing money on a bad investment. I'm open to hearing your advice on how to make sensible investments as a result.
@@anyadni As an OAP with extensive experience, I firmly think that having the appropriate information is essential to the success of any investment. Regardless of what others may say, do whatever you set your mind to. Warren Buffer frequently advises, "Be fearful when others are greedy, and greedy when others are fearful." The secret to succeeding even while others fail is undoubtedly this. Working with financial advisor ALICE ELAINE HAYHURST, I earned $100,000. So far, working with her has been a promising experience.
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"Trust" is the only thing that gives paper value. And cooperation from people to allow themselves to believe it has value. What a great system right? It's not like it could collapse at any moment. Then all your paper would be just that.
Yup then my last name wouldn't be anything special anymore
JFK: Is it me or it is specious that this is the only branch of government in whic- *Gets shot*...
F
JFK was assassinated because he simply wanted to end the federal reserve...
So does Lincoln.... They were both assassinated but had JFK Ended the Fed, Rothschild had lost its control over the USA.... The Illuminati Has Something To Do With That 😐
'specious' lmao, r/BoneAppleTea
00:58 1971
03:01 a small, consistent amount of inflation is necessary
지폐에 가치를 주는 것이 무었인지 배우는 시간이 되었습니다. 지폐를 너무 많이 만들어도 너무 적게 만들어도 않된다는 것이 가장 인상깊었습니다. 좋은 영상 감사합니다.
Today's currency and economics are set by the Captains of Industries (in particular Banks) and Politicians who looks ONLY into their welfare and perhaps the welfare of the few they choose to favoyr..!
The rest of the World are "slaves" to this modern "Kunta-Kinta" system...!
Until the cost of labour is equal around the World in the particular vocation ..., the system is always subject to manipulation by the rich & rich countries etc....!
Printing US Dollars indiscriminately year on year by the US Treasury has only benefited without burdening the US Dollar because the printed currencies are distributed to their banks and networks all around the World..!
The same cannot be said of non-dominion currencies like the Indonesian Rupiah or the Indian Rupees which will attract untold inflation and currency deprecation ...!
That is why, China is working hard to making their currencies a dominion one in the World Currency Basket..., AND that is why USA & Nato is against it as they were with the YEN...!
The Western World has found a way to enslave the non-White countries from the 1970's using currencies...!
This Covid-19 conspiracy has caused nearly all countries to print fresh currencies...!
The US, £ & € along with those in the US ally list, will benefit from the printing if these fresh currencies while the rest will suffer untold inflation...!
The raw products and natural resources of the developing countries would be bought cheeoly while the US and their gang of mobsters store it and control the price of the commodities for decades to come ...!
ASEAN MUST START TO APPOINT LEADERS THAT REALLY ARE AWARE OF SUCH CONSPIRACIES AND ARE PREPARED TO TAKE THE BULL BY ITS HORNS....!
ASEAN NEEDS TO CREATE A SINGLE CURRENCY OR JOIN CHINA TO FIGHT THESE IMMORAL PRACTISES...!
THE MODERN MAN (99.9%) ONLY APPEARS TO BE CIVILISED BUT UNDERNEAT ALL THE EXTERIOR, WE ARE GREEDY, CORRUPT, SELFISH, INDIVIDUALISTIC AND INDIFFERENT TO THE PLIGHT OF A TOTAL STRANGER. ...!
SCENARIO
>>In a ferry disaster that killed more than a thousand souls, we can hear the cries of the family of the few survivors, who repeatedly cry out in joy .. "Thank God for saving you"..!
"God really loves you"..!
>>We are so happy to see our love ones alive, that in the mist of it all, we forget about the loss of the majority lives on the ferry AND of the disaster ...!
>>At that moment, the death of the Thousand strangers does not mean a thing as long as our love ones are safe and alive ...!
>>After that fantastic moment have long passes, then our hypocrisy slowly creeps in and we are so called saddened...!
SOUNDS FAMILIAR...???
WE NEED THE RIGHT KIND OF SPIRITUAL AWAKENING - - NOT FROM ANY PARTICULAR RELIGION BUT FROM SELF-REFLECTION..!
And then there's the $2 bill, which isn't printed often, allowing people to assume they're rare and are worth more than $2, when actually neither is true.
This is not too accurate. Firstly fiat money is not money that is not linked to a resource or based solely on government policy, it is simply what it says it is a fiat, a decree by whatever the alleged authority is that demands you must use this money.
Gold and Silver was actually also a fiat currency for the US, the alleged authority in this instance was the US Constitution which gave out the fiat that only gold and silver could be used as currency.
Furthermore it does not actually answer the question as to why a dollar has value it simply makes the statement because its limited in supply and is issued by a trusted authority it has value..... well thats not an answer. You need to first answer what is value? which is this, value is the time and energy of people, this is why things that are seemingly worthless like paper money or bitcoins can have value because all that it takes for any medium of exchange to have value is for a userbase to accept it as payment because that userbase their time and energy IS the value which is then represented in that medium of exchange.
You accept a dollar as payment but its serverly flawed as behind the scenes huge counterfeiting is going on officially via banks printing of money at point of loans which in turn is diluting the value of your time and energy your labor your wage and stealing from your savings.
This cannot happen with Bitcoins for it is a far superior form of money, it is also not a fiat money because unlike the dollar there is no demand that you settle your tax's and debts with it, so bitcoin is more democratic because the choice is yours, the choice is not yours with the dollar your compelled and if you understand now where the value of the dollar is coming from you will also understand exactly why its fiat and why they want to compelled you to keep using it.
I haven't chafed at having to spend dollars to buy things nor has anyone scoffed at receiving them. It may be "fiat" but it only necessitates a light touch. I'd rather use that than cattle.
It's simple maths:
Purchasing_Power_of_Currency = Total_Amount_of_Currency_in_Circulation / Total_Value_of_Goods_and_Services
If Purchasing_Power_of_Currency > 0, then it is "Inflation"; else it is "Deflation".
well explained and concise. Would like to see more though
I've been trying to determine what is value and it's meaning. What I have determined so far is that value is an illusion. Something we have created as a means of measuring importance for survival.
Plot twist: the switch got stuck on too much inflation.
Loved the spending annimation :)
Excelente explicación
I would love to see another video breaking down how our money USED to work, when it was still based on the Gold Standard. I wonder, what is WRONG with the Gold Standard? It seems to be the most steady form of regulating a currency. And doesn't rely on human prediction of the market, which is never going to be perfect. There aren't going to be HUGE amounts of gold discovered all at once that could bring instability to the value of the currency. And, even if the discovery of new gold came to a halt and the currency was simply based on a set amount of stored precious metal, would that cause problems with inflation or deflation? I wish TED-Ed were commissioned to write many of our textbooks, or at least make videos based on classes we take in K-12 for public schools to use in the classroom. Their videos are so precise and to-the-point. They are always a perfect starting point in learning about a subject.
Thanks TED-Ed!
that's because the gold standard has many many problems, for example a gold producing country would have a great advantage in comparison to countries who would have to buy their gold to have reserves, gold reserves also hinder economic growth, with fiat, as the economy and demand on money grows more can be printed, but with money that needs to be backed up by something with worth unless you acquire more gold if you would print more money the individual worth of every bill would decrease since the gold backing it up isn't becoming more, the gold standard helped contribute to the great depression since banks couldn't increase credit fast enough to compensate for deflation since they needed gold to do that not to mention that the more or less gold being produced would also cause deflation or inflation, the worth of gold on the market as well, if gold suddenly became scarce as well it would have major repercussions on the market, so each monetary system has it's ups and downs.
Like Daniel said, the gold standard was a system that was just too rigid. The current system is more dynamic and serves our economic needs better, as these needs fluctuate through time. It's not perfect but it is the most efficient way we have.
Yeah, the gold standard was so great! Just think about how stable the economy was! You know, except for the financial panics we had 1873, 1884, 1890, 1893, 1907, 1930, 1931, 1932, and 1933. But those don't count, right?
Just kidding. The gold standard is a comically terrible idea. There is NO insulation from market fluctuations. Also, prices were much more unstable under the Gold Standard than they were post-stagflation.
Any time your GDP outgrows the production of gold, you hit deflation, And well, considering how many americans we have, you should get the idea that GDP has been outpacing gold for a while.
The rest of world isn't going to let you keep your gold. They'll produce products in exchange for gold and keep it. They'll pay their workers with unlimited fiat money. Pretty soon, US will run out of gold.
This video just proved money is bullshit.
yes but a very needed bullshit for our society to function
I can prove to you mathematically why money will always be around. The intrinsic utility of money is the fact that is reduces almost to zero the cost of bartering, and allows for complex, virtual exchange of goods.
The Algorithm analysis:
Home economies are planned by the 'breadwinner(s)' according to the understood needs of the household consumers. Households are communal, or communistic. This is because the value of accounting for different consumption and 'production' ('buying', in this context) is greater than the cost of allocating resources communally. For example, it's not worth your time to write down that you owe your sister 23 mL of Orange Juice because she used more than her share, you just ask dad to buy more orange juice.
The decision complexity of planning a household economy, indeed any communal economy is O(n^2). The breadwinners interface with the macroeconomy in the form of prices. To decide what to buy, they most consider the demands of the household and the supply of the economy. The demands are difficult: if Alice eats a bag of potato chips, Bob might have less orange juice available to drink because Alice drank it to compensate for the salt. But the breadwinners do not care what happens in the economy, because they can make the supply decisions based on the prices alone. In one direction, the breadwinners' job is more difficult: O(n^2), but in the other direction, his job is relatively simple O(1). Prices are determined by countless other households and businesses' similar decisions. He doesn't need to consider how much orange juice his neighbor will buy because all of that information is encapsulated in the price: the price reflects the supply and demand of everyone else in the economy. There is no intrahousehold monetary system so the decision making is much more complicated in terms of scalability.
Communal planning: O(n^2)
Market price planning: O(1)
There is a certain size at which it becomes more useful to implement a monetary and accounting system than it is to keep planning communally because the difficult just scales so horribly. Eventually, making decisions based on prices will result in more accurate decisions and reduced cost than trying to plan communally without price signals.
Price signals are a matter of decision making efficiency.
In fact, the people who will be hurt most be removing a price system are the same people who are least likely to organize businesses or communal enterprises. The working class benefits greatly from a monetary system since they have neither the resources nor the know-how to hire someone who can make economic decisions for them. All they need to consider is the needs of their family and the prices, which are determined by the needs of everybody else's family.
Currency was invented by peasants, not rich people. Checkout crash course on the Indus Valley civilization.
Well....rich people were Kings and Queens back then..............
***** And they still are today. They don't have to follow the same laws as us.
no it explains how money works. it's a mean of exchange. we haven't found ways to really go without it and we have to manage it as well (or as bad) as we can.
thanks for the translation
still one of the best finance videos i have watched to date
A great industrial nation is controlled by its system of credit. Our system of credit is privately concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men who, even if their action be honest and intended for the public interest, are necessarily concentrated upon the great undertakings in which their own money is involved and who necessarily, by very reason of their own limitations, chill and check and destroy genuine economic freedom. This is the greatest question of all, and to this statesmen must address themselves with an earnest determination to serve the long future and the true liberties of men.
Section VIII: “Monopoly, Or Opportunity?”, p. 185.