CrashCourse - 2015-10-08
This week on Crash Course Economics, we're talking about monetary policy. The reality of the world is that the United States (and most of the world's economies) are, to varying degrees, Keynesian. When things go wrong, economically, the central bank of the country intervenes to try aand get things back on track. In the United States, the Federal Reserve is the organization that steps in to use monetary policy to steer the economy. When the Fed, as it's called, does step in, there are a few different tacks it can take. The Fed can change interest rates, or it can change the money supply. This is pretty interesting stuff, and it's what we're getting into today. 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
You can tell you're a nerd when you binge watch crash course.
I always get laughed at all the time for doing that lol!!! But it's better than most shows out now adays.
I make myself flash cards while watching each episode so that I can quiz myself later...
I love it man!
I do that all too often lol
OakleafWarrior I’m from Google classroom
I... Don't know who it Janet Yellen is, even after watching the episode twice. ._.
+Alderick van Klaveren She is the Chairman of the Federal Reserve. That's the simple part. The more complicated part involves the role of the Federal Reserve in setting monetary policy and why it does the things that it does (which was kind of the whole the point of the episode).
+Alderick van Klaveren
Paper money is by definition legalized counterfeiting, and fractional banking is fraud. We need to return the creation of money from the rich banks, committees, governments, and return it to the PEOPLE individually. Returning to a fully backed receipt currency based on resources, not debt and fraud
That's got to be one of the dumbest things I've ever read
@Dark Serpent Don't fall out of your chair buddy, also maybe pick up those dorritos that violently spewed out of your mouth.
it's ok stop yellen
The guy in this video talks way too fast!! - I had to rewind it after every clip, just to grasp all of what he's saying.
That's true.
You need to do more research, its a language you don’t understand, learn the language and you’ll understand
@t lol
reduce the speed of the video.
Your videos are so knowledgable that I m glued to my laptop watching them 1 episode after another....N my roommates just asked what TV series is so interesting that I said no to a cricket game....Gratitude from India.
this is my sister's birthday and I'm sitting beside her binge watching this crash course lol😂
As great as crash course is, this is an episode with US/Banking Empire propaganda sewn into it. You should do more reserve on the Federal Reserve.
@MitchMBowring1 cricket don't tell you about earning money but economy can
@Joseph Mcqueen 9 year old
@I am ironman wow not to be that person but do you even understand this? (I don't wanna underestimate, just asking to see the minimum level to understand since I can't :)
Missed two important things
1: Money is dept (for the most part)
2: Private banks create most of the money
+Dimonay For f*cks sake. Here's another idiot repeating what he hears without really knowing what he's talking about.
Dimonay ***debt 😁
Hey guys you seem very educated on this subject, what if their was a state bank? to go further in what I'm saying is the abolition of commercial banks, people borrow around 2.5 trillion dollars from commercial banks every year for things like paying mortgages, buying a car, investment loans etc... what if all the money that goes into the banks were tax dollars 2.5 trillion dollars worth of tax dollars to state ran banks with an additional 500 billion dollars just in case their are more borrowers, the money supply for each bank would depend on the area they are in the state/ County will be in charge of this. also companies for example Microsoft would have business cards to back the currency, that every worker will fill out including the ceo, these cards go to the bank to see how much money they earned the company will give the bank the money it needs to pay its workers destroy the old money and make new money which is then deposited to the workers a.k.a atms. so are money will be backed by old money and business cards to prove it's value. Also banks would print money to keep money supply constant and give it to the consumer, but it would be controled do to inflation. Intrest rate would rise as the banks lend out more money or tax dollars, also you only have to pay only 25 percent of the loan plus intrest.
So, let's use an example let's say I work for a company I have a labour card I get paid about 12.00$ an hour and work 40 hours a week that info will be on my labour card so the labour card gets sent to the state bank, but the company has to sacrifice some of their profit (labour dollars) they earned in selling products to the state banks so the company sends money to the bank burns it and replaces it with new money but the only way they can print new money for workers is if they have the labour card to prove the money's worth because they can't simply send money there and destroy them without the main backer of the currency which is the labour card.
So basically companies have to sacrifice some of there money to stimulate the money supply in the economy and that money is given to the workers but the money is destroyed and replaced with labour backed currency or labour dollars.
How would we stop to much money entering the economy? Easy just print less money and if the affects are to far ahead we raise taxes.
Yup, and the bank destroys the created money and amount equal to the principle borrowed, when the borrower pays back the loan. The created money is removed from the economy.
actually the fed is a private bank with private stockholders...
DAMNIT
JANET
me trying to add to your yellen pun
+Aerin L
Nice RHPS reference!
@Macdaddy5539 thanks :D
Is that a ' friends ' reference
The illuminati runs the Fed?! It all makes sense now!
"Who knows how to spell Quantitative?" Is that really a challenging word?
It's a joke
Fed exists to pump up the stock market, rob savers and future generations, and create debt induced bubbles. Economy would TANK if rates were at 3% in America and 1% in Europe or Japan.
4:16 Fun detail: "noli oblivisci mirabilis esse" is Latin for "don't forget to be awesome"
Why do so many people complain about them talking too fast? If it bothers you that much, put the video on 0.75 speed. No one's perfect.
Here come the Austrians.
Again... nothing at all to do with anything being discussed.
But no, that is not the cause of income inequality. Our banking system has numerous massive problems but it doesn't create income inequality. And sure, auditing the fed would be a good idea but the fact that they simply won't even vote on such a bill clearly indicates they don't want to.
However if you look at the enormous and rapid growth of the regulatory burden on the economy you might begin to understand. As an example, the burden grew from $1.1 trillion in 2004 to $1.7 in 2008. All that money is money that doesn't get to the paychecks of the common worker and all those regulations help the big corporations stay in business by preventing new small businesses by making a legal framework that is extremely difficult to navigate without dozens of lawyers.
Though the constant devaluation of the money by the fed over it's history certainly doesn't help anything that does not correlate with the more recent income disparity. There are bigger and more direct causes.
supply side economics is correct. having more supply of goods relative to the currency in circulation is how people get more prosperous. Not the other way around. Idiot lefties think that by making it harder for businesses to operate and produce, along with enabling demand through money printing and debt is better, its not it leads to inflation, debt and a weaker economy. also friedman was right about slashing regulations and taxes, he was wrong about expanding the currency supply.
https://en.wikipedia.org/wiki/Federal_Reserve_Transparency_Act
The Board of Governors of the Federal Reserve System has stated that "the financial statements of the Federal Reserve Banks and the Board of Governors are audited annually by an independent outside auditor." The bill's sponsor, Congressman Ron Paul (R-TX), countered by stating that the present audit process exempts the Fed's "most crucial activities".
Tsvetomir Torozov
Austrians are always right in a sense because they're always saying the economy is going to crash and burn into a million pieces and guess what looking back at history it has a melt down every 10-15 years and does crash and burn every 60-90 years and then need to be totally rebuilt so yeah you'll probably be right every decade and then really vindicated once in your life sweet! We followed Austrian economics in the US in the 1800s and it was a mess though, so it isn't like you have any solutions at all.
Their referring to the Austrian school of economic thought, not Austrian economists.
it doesn't mention that it's a PRIVATE bank...
bump
+A. C. Abbey you sir, among all the trolls and commenters with half-assed knowledge, are a sight indeed. i thank and salute you for your contribution to my limited understanding of economy and your well spokenness of your comments. kudos
It doesn't have congressional over site. That doesn't make it private in the way that Mcdonalds is a commercial company. The word for a branch of government that doesn't answer to a parliament is dictator.
Gregory Mize The Federal Reserve is protected by the federal government. It is the perfect example of crony capitalism/corporatism. If the Federal Reserve were a true private entity, it would be subject to failure if they did not perform their job correctly, as any other business.
Putting Federal in your name does not mean you are a government apparatus.
Its as much a prive company as Federal Express is (FedEx)
Illuminati confirmed! lol
How does the Fed "issue" Bonds to a bank? From the Thought Bubble example
Thunderstruck by that belt.
i didnt think i was the only one who thought his acdc belt buckle was great lol
+Parker Shelp One could says that belt buckle is TNT :D
Feynstein 100 lol good one
The belt shook me all night long
what a rebel, kiss azzezz
Dear CrashCourse,
You're saving me from my Macroeconomics final tomorrow,.
Thank you dearly.
You make it sound like the Federal Reserve is a government body. It's not.
A FINANCIAL INSTITUITION
@Schlomo Sheckleburg another nail in the coffin
The federal reserve was enacted by a bill passed in congress, has its members and chairman appointed by the president and approved by congress, and is legally required to hand over all its profits to the US Treasury which is very much so a government body. So the fed is not privately owned at all in any sense but instead is just a bank with leaders appointed by government that creates money and profits for the US government. However there is controversy that people within government may push to approve people with ties to large private banks to lead the fed into changing interest rates to favour big banks instead of the public. Although this is possible its very unlikely because in order to become part of the fed you also need to be approved by congress which is at its worst in recent politics when it comes to division between parties.
The way the Federal Reserve is structure makes identifying it as solely "private" or "public" or "government entity" a nonsensical effort. Does the Fed looks like a private institution? Yes Does the Fed operate like a public institution? Yes. Does the Fed have government powers? Yes
The most simplest and accurate way to explain the Federal Reserve is that it operates as an independent bank for the purpose of serving the government. It is similar to a single payer system of healthcare excepts there is a bank and only one customer.
Of course they do.
"Contractionary monetary policy"
Now boys and girls, you know how bankers can manufacture economic desasters.
Yul Bahbo or, as they explained a few videos ago, it is how you slow down the economy in a controlled manner before it barrels off a cliff by burning itself out.
Yul Bahbo Bankers don't manufacture recessions because 1) Central Banks don't work for banks 2) bank stock plummets and banks go insolvent during recessions
I'm a business major going into my econ final, and I just wanted to say thank you for clearing this up for me. I've watched most of the crash course economics and they have helped me so much!
Mr. Clifford's "just kiddings" are the best.
yup
This is addictive. My eyes are heavy , its 1 am but I don't wanna sleep!!!! This is so interesting!
So, uh... who is this Yellen person, then?
I've watched this video twice and I still have no idea. They never actually say how she fits into this whole thing... her name only comes up three times.
Is she in charge of the U.S. federal bank?
yeap
Obama appointed Yellen chairman of the Fed Reserve in 2013
It's not federal. It's an, essentially, private institution that loans a country's own currency to its government. Money = Debt
>"The US and other foriegn governments have worked hard to make sure the Fed is isolated from politics and potentially short-sighted politicians." I long for the simpler times of 2015...
These videos just cover the basics. All the 19 year old armchair economists that think they know everything need to chill out
If Dan Brown watched this, he just got another idea for a novel...
+Coffee Abernethy Ha, I get it. Loved inferno. Do you think it will come to that/believe we require culling to survive as a species?
Hey I know Janet Yellen she's the counterfeiter in chief!
hey i know you don't have a brain!
I watch the whole episode on 0.5 speed and I omg they have finally started to speak normal'ish' :D She could be a bit faster but finally I got to understand the fast guy. :D
5:19 quantitative easing? central bank buying govt bonds and securities
Yay, a new CC: Economics!
missed out the muliplier effect of the fractional reserve system - i.e. private bank money creation
my "there's a new cc econ video" sense was tingling
You just saved me from failing my economics exam ahahahhah XD
4:55 I almost caught in heart attack
God bless for helping me pass my final econ essay
8:46 I watched this whole episode and I still have no idea
Fun Fact: Sense the Federal Reserve was created in 1913, the US dollar
has lost 96% of its value, which means a dollar today is 4 cents in
1913, this is caused by inflation which happens when there is more money
printed, when the amount rises the value falls.
"who knows how to spell quantitative" its so easy to guess.
This video is how I learned what my girlfriend's aunt-in-law, Janet, did for a living...
I like how this dude wears that belt like "Hey kids, I can stick rock n roll." and the kids are like, "What is rock n roll?"
Love it. Started watching before my university course started, started watching again today because I'm stuck
he speaks tooo fas.i got headache after watching this video
YAY ECONOMICS I FEEL LIKE THEY TAKE 4 EVER TO UPLOAD AN EPISODE
preparing myself for the BDT!! "BIG DAMN TEST"or so what my econ teacher calls our final lol
Hey, here in my backyard. Everybody always asks me for a tour soo...
I’m sure this is very informative, but you two talk too damn fast. I can’t digest it that fast 😕
Amazing lesson. I learnt a lot from this.
waiting to see when they will mention Panama with it's solid evidence that central bank and monetary policy is NOT necessary for a healthy economy.
This helped me with my homework so much. Thank you!
Сергей Галиуллин - 2016-03-22
Main outtakes of this lesson
1) The Federal Reserve is the central bank of US. Europe has the European Central Bank.
a. Most Central Banks have two jobs:
- they regulate and oversee the nation's commercial banks by making sure that banks have enough money in reserve to avoid bank runs.
- they conduct monetary policy which is increasing or decreasing the money supply to speed up or slow down the overall economy.
2) Interest rate - the price of borrowing money.
a. When interest rates are low, borrowers will find it easier to pay back loans so they will borrow more and spend more. When interest rates are high, borrowers borrow less and spend less.
b. Expansionary monetary policy - when central bank wants to speed up the economy, it will increase the money supply, which will decrease interest rates and lead to more borrowing and spending.
c. Contractionary monetary policy - when central bank wants to slow down the economy, they decrease the money supply. Less money available will increase interest rates and decrease borrowing and spending.
3) Liquid assets - an asset that can be converted into cash quickly and with minimal impact to the price received.
4) Open market operations - this is when the federal reserve buys or sells short term government bonds.
5) Quantitative easing (Q.E.) - when central banks buy longer term assets from banks.
6) Monetary policy - changing money supply to speed up or slow down economy.
Sok Senheng - 2018-12-17
Very useful , please summary like this in each episode , because I'm struggle understanding this course
Ph Army Bangtan - 2019-01-10
Thank you!
Edwin Becerra - 2019-09-18
Ur a legend thank u
hey I hate hemlock - 2019-11-23
Thanks dude!
Cassandra Kemara - 2020-02-11
Thank u they talk too fast for me I have to rewatch heaps