CrashCourse - 2015-09-13
In which Adriene and Jacob teach you about how and why prices rise. Sometimes prices rise as a result of inflation, which is a pretty normal thing for economies to do. We'll talk about how across the board prices rise over time, and how economists track inflation. Bubbles are a pretty normal thing for humans to do. One item, like tulips or beanie babies or houses or tech startups experience a rapid rise in prices. This is often accompanied by speculation, a bunch of outrageous profits, and then a nasty crash when the bubble bursts. People get excited about rising prices, and next thing you know, people are trading their life savings for a tulip bulb. 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: Mark , Elliot Beter, Moritz Schmidt, Jeffrey Thompson, Ian Dundore, Jacob Ash, Jessica Wode, Today I Found Out, Christy Huddleston, James Craver, Chris Peters, SR Foxley, Steve Marshall, Simun Niclasen, Eric Kitchen, Robert Kunz, Avi Yashchin, Jason A Saslow, Jan Schmid, Daniel Baulig, Christian , Anna-Ester Volozh -- 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
Main outtakes of this lesson
1) Purchasing power - the amount of physical goods and services that can be bought by a given amount of money.
a. Consumer price index (CPI) - a statistical estimate constructed using the prices of a sample of representative items whose prices are collected periodically.
b. "Real" means that prices from the past has been adjusted for inflation. Nominal means a price from the past that hasn't been adjusted for inflation. So the highest "nominal" box office receipts list is quite different.
c. Since we have to keep the market basket constant over time, a traditional CPI won't adjust for either new products or increases in product quality.
2) Inflation - an increase in a currency supply relative to the number of people using it, resulting in rising prices of goods and services over time.
a. Demand pull inflation - too much money chasing too few goods.
3) Bubbles - a market phenomenon characterized by surges in asset prices to levels significantly above the fundamental value of that asset.
a. Speculation - trading a financial instrument involving high risk, in expectation of significant returns.
Сергей Галиуллин thanks for comming back. 😀You help me a lot
Сергей Галиуллин Thank you
Сергей Галиуллин
Thanks dude!!
@Allison Cost push inflation is caused by a 'supply shock' i.e. when the supply of something gets cut
Inflation is either caused by consumers bidding up the price of stuff or producers raising prices and producing less. Either way, inflation is the result of having more money than goods and services
"They would probably share the pizza. They're brothers!"
That is not my understanding of how brothers work.
Too bad my pants can't be adjusted for inflation.
I completely agree
Joe Young why is this not more liked?!
This series is so underrated
+Ab Sir Yeah, it's the best comedy series I have ever heard. Not really good for econ though
@BUD7H357UD We all hope your economic series will be better
I'm sure he will make great educational minecraft videos
Wait, Thought Bubble is a bubble? Do I risk economic collapse by watching all these videos?
😂😂😂
Yes...
why isn't mongol pizza the exception to inflation?
mongols. we are the exseption
exactly my thoughts
Evan B. I
If you buy from Mongols they will have inflation. If Pizza Hut cant sell any pizzas, they will have to keep lowering prices until they do. Hence deflation. If too many people buy from Pizza Hut. Then Pizza Hut will raise prices, causing inflation. Then the citizens that live in Pizza Hut country will have to deal with higher pizza prices because foreigners are competing against them in buying their pizzas.
they just gave me new business idea thanks CrashCourse
I don't know if this has been fixed in later crash courses, but I would recommend homogenizing the volume across the video. Volume jumps around a lot between segments (thought bubble, when Adriene talks, when Jacob talks, etc.). I find myself juggling between cranking up the volume (like around 6:15) and lowering it when it suddenly jumps up higher than ever (like around 9:35).
THIS
Except yeah, same, I came here late so I presume the later epsiodes have compressed audio :D
I think this is intentional. Monotonous volume level usually leads to lower attention span. It wasn't difficult for me to adjust the volume to a level where I'm okay with the volume jumps.
thanks...somebody has to tell it!
This videos are great, however can you put some sources so we can deepen the research??
@AlbinosaurusR3X I don't necessarily disagree with that, but "power" in private hands through money means something different than in government hands. It just means a business has more flexibility in what it can do or how long it can survive in a deficit. That's not a big deal. It does also mean they can lower prices more to compete, but I think it's a big failing to only consider price as part of competition. To compete, you can do more than simply being the cheapest service or product.
As for private military being stronger, yes that'd be terrifying. But I don't see why that would happen. We still do need some basic level of tax for what the federal government aught to do. Including the maintenance of a defensive military, far larger than anything a private company could afford. Although we certainly could afford to shrink the military we have now. There's such a thing as too big even for a necessary service.
We already have that kind of government. The markets are heavily saturated with insanely complicated tax code and regulations at all levels; federal, state and local. I honestly would rather fight a dragon than attempt to open a business in the USA. It's an utter nightmare. You think that benefits anyone? Almost always it does not. Instead, it just costs us so much in terms of productivity.
I describe a classically liberal system. Minarchism. Basically, I'm just describing what liberals used to advocate for. Smaller government and more freedom (economic and civil). But certainly NOT no government.
@UnknownXV Money IS power. It doesn't matter if the gov't has control over non-monetary assets, wealth can buy whatever results they want. The applications for excess wealth go far beyond maintaining your business.
As for private militaries (mercenaries), such businesses already do exist. They are simply kept in check because they benefit more from gov'ts battling each other than trying to go to war against a gov't. That could change if one of them were to get exceedingly large, though. and that is directly proportionate to gov't size (similar to supply/demand scales). If the gov't militaries were to shrink, the minimum size required for a private military to combat them also shrinks, so if they are already big, it could drop that requirement below threshold. Suddenly the risk is real.
Our system (in the US) isn't quite there yet. As I said, it has a little ways to go before it could be, but it never will take those steps as long as individual greed takes precedence over social need. Smaller gov't won't achieve that either.
@AlbinosaurusR3X Money is the command of human beings. Which is power, yes. But human beings are generally not going to oppose the government, even for money.
At least most won't. The system would be similar to what we have now, some are willing to break the law for corruption, others wouldn't. The difference is there's so little to corrupt in government because it doesn't do nearly as much. Can't corrupt what doesn't exist.
Even if our military was halved in size, a private mercenary group would never even come close to a $200 billion scale. A private merc would be no direct threat to our military.
Smaller government is a more realistic goal than somehow changing the entirety of human nature.
They're writing this from their own knowledge last time I checked
"How an economy grows and why it Crashes", "Basic Economics" and "Economics in One Lesson" are my main go-to books.
8 dollars for a movie?! More like 12-16
+E.T. it costs around 5 dollars in my country
Adult tickets are usually $12.50
But then again look at all the other products (Oreo, lipstick, clothes, Pop Tarts) also here in the Philippines. Obviously, prices here are higher than in the U.S. because all those were imported, which take time and resources. But yeah, the prices of movie tickets are relatively way cheaper. Also, most books (such as The Shining by the much beloved Stephen King) here are cheaper here too. Way over there it costs like, what, $14 while over here, it's around P315 ($7) only. Strange.
Hungary is pretty good
well, they're 40 in norway
Some notes if anyone needs em!
-Purchasing power is the amount of physical goods and services that can be bought by a given amount of money, and is measured by comparing the cost of identical “consumer baskets” through different years
-Consumer Price Index (CPI) is the current cost of a basket divided by a base year to show how much prices have changed
→ CPI = a statistical estimate constructed using the prices of a sample of representative items whose prices are calculated periodically
-CPI is not perfect as advances in technology change the baskets throughout the years
-Demand pull inflation = too much money chasing too few goods → consumers bidding up the price
-Cost push inflation (supply shock) → producers raising prices or producing less because of an increase in production costs
-Housing costs increased because of bubbles → in early 2000s low interest rates and deceitful lending practices encouraged more people to buy homes (and take out mortgages) and then as the prices skyrocketed, people bought more homes hoping the prices would keep going up → called speculation
-Speculation = trading a financial instrument involving high risk in expectation for significant return
-Ninja loans = loans to people with no income, no job, and no assets
Venezuela is a scary place. People at all level do not have any knowledge of economics.
@. In Venezuela inflation is the worst because the demand is not increasing, it is just that the companies that used to produce the services are not there anymore.
I can assure you that the people who govern Venezuela have zero (0) knowledge of economics beyond "What expensive item can I put in my expensive house in Andorra?"
Also prove that they require crash course econ
mundotaku I
The first lesson of economics is scarcity: there is never enough of anything to fully satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics."---Thomas Sowell, Basic Economics
Inflation is the invisible tax.
... that we levy on each other, apparently.
Correction: N.I.N.J.A. stands for No INCOME, No Job, and no Assets.
Nice video, just one small thing:
NINJA = No Income, No Job or Assests
+MrGucunja You are completely right.
>buying neutral milk hotel tickets
>people cheering and fists pumping in the air
what
+therealquade Can't tell if b8 or that much of a newfag
@Kade Hernandez what, because I like ITAOTS?
@. Seriously? not semen stains the mountain tops?
but for real though, some of those lyrics,
"and in the dark we will take off our clothes, and there'll be lacing fingers through the notches in your spine, and when all is breaking, everything that you could keep inside, now your eyes ain't movin' now, they just lay their in their climb."
just, goddamn.
+therealquade /starts moshing at NMH show
therealquade I
WHAT is up with this channel's obsession with the Mongols.
So is there going to be College bubble?
+Jacob Ferreira Thats a very interesting take on the current situation with student debt. I mean a bubble is really just when the price exceeds the intrinsic value of the product, and with how worthless most college degrees are, you can argue that it already is in a bubble. What happens when that bubble burst is hard to predict though. I think a lot of mediocre private schools will go under. For profits are dead for sure. Some bad states schools might go out of business as well.
that's a good explanation. Although credits or degrees are not tradable but if ppl realize they can't get what they paid for they might choose other courses of study or like u said - going abroad
There's already one
😆
The amount of student loan debt is insanely high, and impossible to expect it could ever be completely paid off. More and more students are defaulting on their loans. Eventually that bubble will burst.
luke wartooth many can't default on them any more. You can thank's your goverment for that.
The sound on this video is up and down all over the place.... like the economy.
no one ever realizes that if prices go up, your salary needs to go up by almost double the % of inflation due to the income taxes you pay on that raise. no employer ever cares to consider.
The highest USA tax bracket is currently 37%. Your statement becomes true at a 50% tax rate. At 37%, a wage increase would need to be 59% higher than inflation.
That 37% bracket starts on income over $500K. If that applies to you, I think you'll be okay.
At the 22% bracket (38-82K) you only need a wage increase 29% higher than inflation. That's a far cry from 'almost double'.
All of these taxes only apply after the standard deduction, so add $12K to all of those numbers. The government doesn't even touch the first $12K this year.
"your 40in flat screen."
Lol, newb.
what I think is missing here are the effects of deflation and why most countries aim for a 2% inflation rate
How come schools don't teach how to invest and save money?
+Alex Padilla Oh they do, they just made it elective :P
bud7h357ud moron
if everyone saves money, there will be an deflation caused by decrease of spending.
@BUD7H357UD Well aren't you pleasant.
Schools are made to teach good employees and soldiers to control. Teach them financial education that would break them free of this and you no longer have employees and soldiers which makes schools irrelevant. So they stick to teaching us the "go to school to get a good job" mantra.
I gotta say, I'm slowly developing a crush on her. Love her personality.
8:11 Gray Fox <3 Crash Course showed some love for MGS fans :)
Tulips! I remember that from Extra Credits' Extra History episodes on the South Sea Bubble. (Which was another economic bubble, natch.)
I feel educated.
Thank you crash course for having economics as a main subject, and thank you for getting Mr. Clifford lol
Massive audio gain rise on 09:35. Took me by surprise.
9:00 Ha! Tulip mania, a repeating history. Everywhere. (Remember the Anthurium fad, Indonesia!)
Normies: "You can't bid for pizza"
Everyone else: "Unless you are the Mongols"
I highly recommend "How an Economy Grows and Why It Crashes" by Peter Schiff. Great book.
One of the best economists in America in my opinion. Shame he doesn’t get as much attention as he used to
5:04 aww that's so cute. I wish I had a genius brother😌
Bubbles were always my favourite case studies. Easy to remembers and there's one for any situation.
"the biggest bubble in history" lol
I love it when they reference each other XD
Cool video and very informative, but you have audio normalisation issues. Sometimes your voices would be so low I'd have to up my volume, only for a cut to the other presenter to be incredibly loud making me push my speakers back down.
I recommend watching extra histories series on the South Sea Bubble.
Yeah, financial stupidity at its finest with John Blunt, the Bernie Madoff of Britain and John Law, the Ben Bernanke of France.
Thanks for the animation for "too much money chasing too few goods" tho xD
(And a hello from Belarus with the inflation rates higher than 1000% in the last 20 yrs)
6:37 That photo is actually taken in Hong Kong.
Don't forget prices rising because greedy CEOs need to make more billions
3:47 That kid is playing/watching Lego star wars on an Xbox 360 right?
I was reading my text book for macroeconomics, and realized it wasn't making sense. Came to crash course and learned WAYYYYY more
5:15 🤣🤣🤣 money chasing goods 😍
Stan is such a hipster.
i love this series
This is great 😍 Could you please give us some names of books to study these topics in detail? 🤗
I've watched nearly every video these guys have and honestly it helps! I'm working on my GED as of now and they helped me get higher scores so I for one have to thank you crash course for helping me
3:55, nice to see Heer Maj doing some work
Editor, please deal with the volume, the dynamic range in this video makes me change volume every minute!
You guys have some odd audio quality in this video, hopefully you change it soon.
Quolki - 2019-05-19
Crash Course, 4 years ago: The Venezuelan inflation rate has risen up to 70%!
Me, Now: oooh, you have no idea...
Victoria Panato - 2020-03-06
Богдан Гончарук Exactly, basic logic.
Victoria Panato - 2020-03-06
How much is now?
Victoria Panato - 2020-03-06
All due to socialism. Socialism is hell.
aDoe2aDeer - 2020-03-08
Victoria Panato yeah and the great depression was caused majorly by capitalism. All economic policies can be bad when not checked and balanced
RearViewMirror - 2020-03-28
9586% in 2019