CrashCourse - 2015-10-30
If you're ever put in charge of a national economy, there are a few things you should try to avoid. Before you laugh, just remember, you COULD be in charge of an economy someday. Someone has to do it, and anyway, if it could happen to Alan Greenspan, it could happen to you, too. The first thing you're going to want to avoid is hyperinflation. Don't print too much money, okay? Actually, it's a little more complicated than that. Jacob and Adriene will explain. You're also going to want to stay away from recessions, and especially depressions. In the world as it exists today, continued growth is the only path to viability. While some argue for sustainability or even controlled recession, you're not going to keep a job as head of central bank thinking like that in this day and age. Also, avoid stagflation, which is a stagnant, no-growth economy combined with inflation. It's just the worst. Don't do it. All this and more on this week's Crash Course Economics. Crash Course is on Patreon! You can support us directly by signing up at http://www.patreon.com/crashcourse Thanks to the following Patrons for their generous monthly contributions that help keep Crash Course free for everyone forever: Fatima Iqbal, Penelope Flagg, Eugenia Karlson, Alex S, Jirat, Tim Curwick, Christy Huddleston, Eric Kitchen, Moritz Schmidt, Today I Found Out, Avi Yashchin, Chris Peters, Eric Knight, Jacob Ash, Simun Niclasen, Jan Schmid, Elliot Beter, Sandra Aft, SR Foxley, Ian Dundore, Daniel Baulig, Jason A Saslow, Robert Kunz, Jessica Wode, Steve Marshall, Anna-Ester Volozh, Christian, Caleb Weeks, Jeffrey Thompson, James Craver, and Markus Persson -- Want to find Crash Course elsewhere on the internet? Facebook - http://www.facebook.com/YouTubeCrashCourse Twitter - http://www.twitter.com/TheCrashCourse Tumblr - http://thecrashcourse.tumblr.com Support Crash Course on Patreon: http://patreon.com/crashcourse CC Kids: http://www.youtube.com/crashcoursekids
Ayyyy who’s watching this during the economic crash 2020
Money Printer goes BRRRRRR..
Feds inflating a bubble; the best, most tremendous bubble ever....
Bigly bubble pop of 2020.
recession is when your neighbor loses his job, depression is when you lose yours.
Wow, never heard THAT one before
@FreeThinking TruthSeeker It's so good it's even statistically coherent. 1 guy loses his job in the neighborhood vs everyone or praticcaly
So very true I'm sure glad I got into sales at an early age I've always had complete high-paying job security for 35 years now
That is why you hold metals for dear life.
Is that a quote or did you come up with it. That's brilliant.
I thought stagflation was when there's too many male deer, thus devaluing the buck.
I'm not sure if this is the best or worst thing I've every heard
Oh my god!!! ROFL I wish i could show that to my economics professor, he was a deer hunter. XD
Oh, man
Needs a lot more likes golden
I thought it was when there is to many stag Beatles and that means the stag ways are clogged
So, what I'm seeing is that Economy has a lot to do with Psychology
Or very pendejos inteligentes comparadas con sus otros amigos animales.
YES!!!
That's what economics is... The study of choice and value
Laura Amelia Rodríguez Reyes indeed! That’s what earned Kahneman and Tversky the 2005 Nobel Prize
SOCIAL SCIENCE!! ;-)
Jacob, please squint your eyes a little bit and blink once in a while. I feel like you are staring into my soul.
Squint your eyes like Wayne from letterkenny
Main outtakes of this lesson
1) Hyperinflation - when a country experiences a monthly inflation rate of over 50% or around 13,000% annual inflation.
a. Extreme inflation also forces people to spend as quickly as possible rather than save of lend, so there is no money available to fund new businesses. And all that uncertainty limits foreign investment and trade.
b. The more money you print, the more inflation you get.
c. Economists call the number of times a dollar is spent per year a velocity of money. When people spend their money as quickly as they get it, that increases velocity, which pushes inflation up even faster.
2) Depression.
a. After the initial crash in 1929 the federal reserve dropped interest rates to zero, output and prices fell, and regular people started to expect further price declines. Unemployment rose to 25% and the average family income dropped by around 40%.
3) Stagflation - when output slows down or stops, or stagnates at the same time that prices rise. Stagnant economy + inflation = stagflation.
a. The FED tried to address this by boosting the money supply and cutting interest rates, but output couldn't rise much because of low productivity and the oil shortage. So all that extra money just triggered inflation.
Thank you so much
Thanks for making this, now i can effortlessly complete my father's assignments without him noticing :DDD
Real answer is"Jews"
@Jake Robert real answer to what?
@M Hmore like the bv,sn
Watching this as the US is plummeting into a recession to know what I should do lmao
@Garrett Powell typical effects of compliance costs and regulations which The Democratic just love to put on businesses. Recessions are cyclical. Best not to sit around and worry about it. Need to pivot and control our own economies. Many Industries are very strong right now also.
@JM M Not anymore lol
@Howard Kunz not anymore what?
@JM M Most industries aren't doing well rn lol. I just meant it as a joke
@Howard Kunz oh hahaha. Unfortunately true. We'll all come out of this stronger than ever. GODSPEED and Stay healthy my friend
I'll buy that zucchini she was selling last time for 100 trillion Zimbabwe Dollars..
Can't wait for the next version of the 100 trillion Zimbabwe note! Should be out by June 2020!
"next week we're gonna look at different economic schools of thought"
>austrian school of economics
TOP KEK
@quagmire444 Austrians view mainstream economists as a joke. For instance, you say they "ramble about how they think the economy ought to function under limited variables in a vacuum not how the economy actually functions in the real world."
But that is the Austrian criticism of mainstream, econometric, mathematical modeling. In order to make their mathematical models, they have to look at a limited number of variables in a vacuum. And they have been known to say things like "I don't care about the real world. I only care about my model."
One of the worst things about mainstream economics is apoplithorismosphobia. Austrians see falling prices as a good thing. That's the whole point of economic activity, to obtain goods and services with as little effort as possible. Low prices are a signal that we are actually accomplishing the goal. Mainstream economists see low prices as a bad thing. Absolutely bizarre.
Mainstream economists think that low prices are bad because producers struggle to make a profit. But its actually necessary that that happens. It is a signal to some that they need to get out of that sector of the economy and do something else. But mainstream economists want to subsidize farmers to remain farmers when we have enough food, keep housing prices up when having a bubble is what caused the housing crash in the first place, and so on and on. It is BRAIN DAMAGED!
And Austrian economists have scientific papers, too.
SaulOhio Keynesianism only existed from 1950-1970 and it was the so called golden years of capitalism in Germany it is known as (literally translated) „economic wonder years“.
It wasn’t used afterwards and Japan is going a Neoliberal way since decades as companies are savers where in Keynesianism Companies where Debt takers for the private households who were savers.
Star trek economics...
"We don't use money."
@SaulOhio apoplithrismophobia? Was that a typo or economicalneologismophilia? Genuinely interested. Let me know
I just noticed Jacob's belt buckle at the end of this video
it's been cool the whole time
+Bryant Mitchell cool
It is a different buckle from the rest of the video. They're both ACDC buckles, bu the font is different.
Could u please put the subtitles on all of ur videos? So my students could catch up of what u saying. Cause u speaks soo fast and English isn't our first language. Thank u.
If youre watching on yt then slow down to .5 genius
As a Zimbabwean myself, this is a pretty good summary of what was going on at the time. We actually sell posters now with laminated prints of all the old denomination notes we used to have. Good times, good times (irl, it was actually pretty sucky).
Your so wrong, Germany in the twenties had its debt denominated in French Francs compounded with a twenty five percent decline in productive capacity. In Zimbabwe, productive capacity collapsed.
Hyperinflation is a collapsing value of the currency across the economy due to a collapse of resources and/or productive capacity.
Let's start with the basics.
Money is a social unit of account having a fiscal/tax relation between the issuer of the currency and its users, where spending precedes taxation.
Government expenditures and not taxes pay for entitlement/discretionary spending and interest on the debt. Demanding that taxes be paid, and in dollars, insures the validity of the dollar as the means of exchange.
Deficit Spending is the government spending more money into the economy then it taxes back out. Government deficits provide the liquidity essential for an economy to function.
Taxes are vital for restraining concentrations of wealth and include capital gains, dividend, corporate, inheritance, estate and a progressive income tax.
The National Debt is the amount in dollars spent into the economy that the government buys back in exchange for Treasury securities, essentially transferring money from checking to savings.
Inflation is a rise in prices across the economy due to a shortage of resources and/or productive capacity.
Hyperinflation is a collapsing value of the currency across the economy due to a collapse of resources and/or productive capacity.
Stagflation is a rise in prices, compounded by a decline in economic activity across the economy due to the scarcity of a vital resource.
Recessions are cyclical contractions of liquidity across the economy that cause a corresponding decline in economic activity.
Depressions occur when the government runs a surplus, starving the economy of liquidity that cause deep and systemic unemployment, and an unsustainable escalation in private debt.
Thank you! Finally someone who actually gets the underlying mechanisms. So many people miss the foreign denomination of debt and importance of production in the equation.
That pokemon reference at 6:43 tho "consumer used bind on central bank, its super effective"
Oh wow the US is already there, what a surprise....
Economist Dr. Admiral Akhbar:
It's a liquidity trap!
Jacob's lack of blinking while talking makes my eyes feel dry.
I'd also like to see the Crash Course version of Austrian Economics. From what I have seen, the Austrian School would place most of the blame for the crises presented here on the government interventions such as the Federal Reserve. For example, no mention of the end of Bretton Woods in 1971 is made, but the cut to the fiscal honesty forced by the quasi-gold standard under Bretton Woods is the most compelling explanation for the inflation thereafter. Note that without a central bank, the markets automatically raise interest rates when the savings rate is low and lower them when the demand for loans is low. It is only when the Federal Reserve tries to twiddle with the interest rates that there are prolonged imbalances. In other words, the Fed impedes the natural market forces of the price mechanism. We should expect larger, more pronounced economic swings as a result.
In practice it doesn't really work like that and you can see the impact by going back and examining the US in the 1800s prior to having a central banking system (things weren't very good and they routinely had inflationary events and issues). The Fed today dramatically manipulates the market that's true and at some point that will probably blow up but systems without central banks haven't proven to work very well.
Is there such a thing as hyperDEflation? And has such a thing happened and is it a bad thing?
And here we are in 2018 where the economy has actually increased.
neeneko damn Bitcoin has come a long way since two years ago. post bubble again atm
@The2005rwb hmmmmmmmm the GDP and unemployment are doing really well so not sure you're on par there. I am a proud Democrat but all of the assumptions people are making nowadays are annoying me...
Yes it is Jews
@Millikan MTC welcome to 2020 now.
Thanks for explaining the impact of expectations of higher prices on (hyper)inflation. I never quite understood how inflation was allowed to happen in Weimar Germany or Zimbabwe, but that's because I had been thinking about it as if it were entirely the result of the government printing far too much money, which seemed easy - and obvious - to avoid.
+DanThePropMan the Germans gov't's hands were tied they, as according to the treaty of Versailles, had to pay reparations to the allied countries (because of Britain), however ever after having all their stuff blown up and spending a lot of money on the war and the rest on the dept, the German gov't said well i guess we just have to print the rest of the money good by economy.
@xpseudonym pseudonym It wasn't because of Britain, it was because of France! We wanted a more moderate course, the French wanted to hit them as hard as possible. Of course, they were the ones who had had half their country destroyed.
+DanThePropMan The expectations are a consequence of the government printing too much money, so it is still entirely the government's fault.
And the French government took that stance because of the reparations that the Germans forced France to pay them after the Franco-Prussian War
@Theodore Neill Very important to note that this debt was denominated in foreign currencies, if it wasn't inflation wouldn't have been nearly so bad.
my favorite crash course is astronomy. I never thought I'd like economics; I never showed interest in it when I was in school. But this stuff is very informative and I enjoy this crash course a lot!
I honestly love this Course, but goddammit, Hungary is not pronounced as "hungry":(
+SpeakShibboleth I prefer Chile con carne.
+SpeakShibboleth
Not if it's served with too much Greece
Curiov how would you know are ypu native speaker of english ? Or are you refering to how the people of hungary prounounce it ? Cause if you do then i hate to breake it to you cause each languages use differente prounouciation to prounouce other countries names and also use sometimes other words to call those other countries
nice one
@EatenByAGrue
Ghkjdf Hbjhffh It’s simple syllables. Hungary has 3 (hung gair ee OR hung gar ee) where hungry has 2 (hung gree)
NOTICE THAT JACOB ALMOST NEVER BLINKS HIS EYES WHEN HE'S TALKING
6:43 Is that a pokemon reference?
@Max Donovan XD I knew it
Omg, I didn't notice that at all xD
+AngelHQ highfives
I don't get it
@IILMTII the animation in the background
70s stagflation without mentioning the collapse of Brenton Woods preceeding it nor the accent of the petrodollar following......
+Isaac Karjala Petrodollar is only a term used by Alex Jones sheep and RT followers. It simply is a dirty word used to describe a complicated geopolitical forex situation.
........ for some time the USD was the only currency accepted for the sale of oil, then at some time in 2000 Iraq stopped accepting USD as payment for oil. This was also the point at which the US started making preperations to invade Iraq and when the US did invade the very first action of the interm government was to discountinue the sale of oil for EUD and resume the exclusive sale of oil for USD. Venezula announced plans to stop accepting USD around 2002/3 and about 6 months later there was a failed coup after which Venezula accepted USD alongside EUD, JPY, Venezulian money and IOUs issued by Latin American nations. In 2005 Iran announced plans to phase out USD acceptance by 2008/9, in favor of EUD, JPY and their own currency, with notable upticks in war rhetoric against Iran coming both from US Media and Hillary Clinton at both points. In 2009 Russia announced plans to phase out USD acceptance in favor of EUD, JPY and RUR. You may of noticed that relations with Russia became increasingly advisarial in 2009, with rhetoric coming from the State Department and mainstream media.
In other news, China and Russia have both held off on investing in an Iranian oil refrinary and facilities that'd enable Iran to sell refined petroleum products in response to US threats against Iran and US saber rattling towards Venezula stopped almost immediatiely after Venezula accepted a shippment of 100,000 AK47s from Russia. Make of that what you will.
Anyway, the term "petrodollar" or "petrorubble" or "petropeso" or "petro-pickanycurrencyyouwant" is not constrained to just AJ or RT, also Zerohedge and a bunch of respected journals, the effects of backing a currency with oil is discussed by professional and amateur economist all around. The only question really, is the USD a petrocurrency? Well given that prior to 2000 it was the only currency with which to buy oil and the US has been by all apearences intent on keeping it that way the answer would seem to be "yes".
@Isaac Karjala
Cringe.
"Anytime you have to express your inflation rate using scientific notation, that's a bad thing."
that guy with the AC/DC belt buckle not blinking looks kind of insane
Adrienne, I heard you on NPR's Marketplace. Great job!
Isn’t Zimbabwe entering another period of Hyperinflation. I read that the inflation rate increased 500% during 2019
6:20 incorrectly refers to a "deflationary spiral" as a "liquidity trap". A "liquidity trap" refers to the situation where interest rates are zero (or close to zero) so that monetary policy is no longer ineffective. This is a very different concept from a "deflationary spiral". (Check out my economics channel.)
Econ Cow you mean it is no longer effective?
“Everybody’s a billionaire!” I died laughing.😂😂😂
when I need a fridge I need it now, I can't wait for the price to drop...my milk will go off.
Looking forward to hearing an unbiased summary of the Austrian perspective....
OMG the bind animation was the best!!!
6:46 look at the pop up bubble. When she says "bind", the bubble shows the pokemon animation for the move named "bind".
8:42
The Federal Reserve isn't a part of the federal government.
I am here to understand what is gonna happen to our economy after the Corona Virus outbreak😭
7:38 george harrison after he left the beatles
"let the economy rule itself"
That guy is like professor. Everything he says goes over my head.
Speak slowly and with meaning.
I can't say I've ever heard of a "portmento" i always thought it was "Portmanteau"
+Sheath So, a malamanteau?
+Sheath
Portmento is a container for carrying mint candies
6:46: Citizen used Bind! The wild Central Bank was trapped!
I love this series!!! I wish I had money to support this! I mean, I've loved other courses in the past, but this one has just blown my mind. I might have to go into business in college... Hmm... Anyway, I'm going to get a job in a month or so and I will start contributing through Patreon!!!
I just saw this subject in my macroeconomics course today. I'm glad i can understand it now
Haven't watched this course in a while. I might start again.
Haha hyperinflation? cough Gaiaonline cough
"keep this free for everyone by paying for it!"
yep, sounds like an economist doublespeak to me.
Seriously, say something that actually makes sense, like PBS does.
Politician speak is bad mmkay?
I like your Chanel ... I can feel secure with my gold with you 😁
Anyone else here for a refresher?
look down - 2020-03-19
Who's here cuz of the coronavirus?
abhi sahdev - 2020-03-29
corona virus call it Chines or CCP virus
Leif C. - 2020-04-01
@Andres Velazquez weimar republic style.
Mohd Lubis Khan - 2020-04-03
Welcome deflation 😭😭
Jim Ettamarna - 2020-04-06
abhi sahdev - CCP Virus needs to become the common term for this....
Dominique Ferguson - 2020-04-09
@Andres Velazquez not if you turn it into gold!