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Inflation Explained
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- Опубликовано: 13 апр 2011
- Bernanke footage courtesy of the National Press Club (www.press.org)
Dudley footage courtesy of the New York Federal Reserve (www.newyorkfed.org)
Video footage of Bernanke contradicting himself can be watched on the 60 Minutes website: newvideos.xtran...
I encourage everyone to watch all these speeches and interviews in full while making up their minds.
by Omid Malekan
www.omidmalekan.com
@malekanoms
I really want to thank you, so sincerely, for your videos. I have learned so much from you and your videos have been helpful in informing my work. Respect.
Your videos are great. Would be great for school kids to really have a good grasp of how the economy's currency works. Best wishes.
"In a world where cartoon bears on RUclips are the most reliable source of information, anything is possible."
That line will become famous in the coming decades--and for as long as civilization survives.
Thanks to the bears I get it now
1:02 "How exactly does printing money cause inflation?" Answer: If the cook adds additional water to your bowl of soup, the nutritional value of each spoonful of the new mixture is diluted and it takes more spoonfuls to get the same value as before the water was added. Same with money; if more money is added to the money supply the purchasing power of each dollar is diluted and it takes more of them to buy the same goods and /or services as before the "new" money was added. THIS IS INFLATION.
Excellent video, I really needed this one.
The whole subject is so complex but this made it a piece of cake, thank you !
Sharkie
These videos are fantastic! So creative! Thank you.
'He probably doesn't know what a poor person is'. Hahahaha. Love it.
Watching in 2021 and is this video is an amazing playbook. Thanks for the excellent video
Nice video, and I really like the last sentence!
Politicians owned by big corporations? Hardly. The biggest political donors have all been unions. Not corporations.
rofl:
male: "dumb logic is at the core of modern economic theory"
female: "so is there a good alternative to modern economic theory?"
male: "yes, it is called common sense"
Finally enlightened! So our seniors don't get cost of living increases because food and gas prices are not counted in calculating the cost of living.
Thanks for the vid, really helpful! I also found a good explanation of inflation and the equation of exchange in "Great Formulas Explained" by Bektas.
Volatile does not mean up and down. Instead, it implies a large variance.
Hi! I'm trying to find other videos like these, I distinctly remember these particular "oh no why" cartoon videos featuring a guy and girl talking in an office years ago about society/politics. Can someone please help me find them???
"The Bernank" :)
Omg I found this gem today. Hitting subscribe harddddd
@milnekevin QE is like throwing a lick of paint over an old rusty motor, at first the car looks like brand new but after a few months the rust starts to show again and the problem has become much much worse.
There are 2 possible causes for inflation: either the cost of producing goods increases or people spend more money on goods and thus bump up prices. The reason many economists favor inflation is because when the Fed injects money and lowers interest rates, the inflation is consumer driven inflation. People simply spend more and get the economy moving. Confidence goes up and up until a bust comes and people realize that the wealth they thought was there really wasn't.
LOL --that last line!
I did not mean there will be a "100%" decline in healthcare issues, I said that 100% for sure you will see a decline in all diseases with proper nutrition being key in our society.
How do you know Bernanke is lying?
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His lips are moving!
Whoa! Those talking dogs were on tv!!! hahaha
"...taking both sides is the only way you can be right." Doublethink is here, my friends. George Orwell was right.
You can't get something for nothing. "That new money is confused for real loanable funds, but it's just inflation..."
I did not mean diseases will decline 100%, I said you will 100% see a decline in all diseases like I already explained. Don't know why this is so hard to understand for some people.
Those were bears?! I thought they were pigs xD
female "but what about people who cannot afford a fancy phone"
male "they are screwed"
in response to your "The most basic necessity of life is healthcare, not food or gas!" see which one you can survive longest without
I made a typo, instead of most, all should be in place.
Printing more money doesn't necessarily implies inflation; it implies more demand; whether this results in inflation or more production depends on the slope of the curve of aggregate supply. More money means lower interest rates, more investments, more jobs, higher wages, more production. Enemies of money printing are always friends of high interest rates and low wages.
Brilliant Stuff
- Is there a good alternative to modern economic theory?
- It's called the common... ism!
Try going for 6 weeks without visiting a doctor
then try living for 6 weeks without any food
See which one is tougher
Great explanation of how inflation works. Day Trader and Speculators watch this stuff all day long. whats your point of view?
Mortimer strikes me as a troll. However, a 100% decline in healthcare issues? Please. Healthcare is very important. For years our system has forced people to chose between getting needed care and being financially ruined or taking unnecessary risks and not getting care.
You are forgetting that as demand increases, the prices rise. Printing money would only cause inflation. Also, you are assuming that by having more money, the country will have more wealth, and that isn't true. Money represents the wealth of a nation, and more recently, the promise that a nation can pay (countries have debts). If you divide that wealth into more parts (printed money), everything would cost more and production costs would rise, and the price of the finished goods would go up too.
But even those who are not extremely familiar with economics know that more money means lower interest rates and increased demand, which in turn implies more investments, more production and more jobs!
And lower rates and increased demand affect positively also those foreign investors who want to borrow and invest in the country in productive business.
To the contrary, only WEALTH (value) increases increase production. An increase in the money supply will increase production wherever the funds are injected into the economy but the devaluation of the remaining currency reduces production elsewhere. Employment levels behave similarly, regardless of whether full employment has been approached or not.
Apparently, you've been wrong for weeks.
That part is actually true, because wages don't increase at the same rate inflation does.
This isn't true, some have been unions sure, but not most.
My point being that politicians are bought out.
To the original point, wealth inequality doesn't exist if you have money. Then it suddenly disappears.
I am not arguing, but i would like you to further that statement, how would it make it worse?
Very good video and very well done in high quality
I love the final sentence
The minimum wage is a legal constraint. It has no connection to what people are typically paid. Only about 2.5% of the labor force makes the minimum wage or less and, as most are teenagers and other people living in a household where someone else is the primary income generator, virtually NO ONE lives on it. And home ownership, education levels and car ownership has BALLOONED as the minimum wage has remained unchanged so your conclusion is entirely false.
How is that working out for you?
You're wrong. It's a math question. But if you don't want to do the math, consider that when demand increases, suppliers can also increase production (NOT JUST PRICES) to meet increased demand. Concurrence prevents them from JUST raising prices. In case of unemployment, with unemployed resources, you can raise production without raising mean cost, so that prices should not rise much.
ONLY IF THE SUPPLY CURVE IS VERTICAL ON THE POINT OF FULL EMPLOYMENT THINGS BEHAVE AS YOU DEPICT THEM.
I don't see a causal relationship between the qe and inflation in consumer goods. I thought it was a flight of capital away from real estate and into commodities.
Yes thank you for another one!
You are forgetting that increase in money supply increases production, so that it is not the case that you must divide more money by the same number of goods.
Have you ever operated with global supply and demand curves in Cartesian coordinates? Please, do it and you'll find that increased demand causes more production except in the rare case in which the supply curve is completely vertical.
Please, do it.
The economy is not a zero-sum game. You can, in fact, get something for nothing.
Its actually not really printing money. They are issuing debt. Not the same thing, but close.
If you read closely:
If, however, there is little or no spare capacity, an increase in nominal aggregate demand (printed money creates demand) is likely to be purely inflationary, or virtually so. This would the case at point b in the diagram. Real national income cannot expand beyond the full-capacity level, YFC. Under such circumstances, any attempt by the government to stimulate economic growth should focus on the supply side and attempt to shift the aggregate supply curve to the right.
If there's more money printed, the currency has less adquisitive power, and the country is no longer a good place to invest. I think that's what he meant.
Because not only has socialism failed in practice, but also in theory. A group of people in a command economy simply cannot attend to the unlimited wants of society. Only individuals can meet their own needs.
I agree with this but the main thing I get from this is that it is better to be rich than poor....so learn how to be rich.
Just because the money has not made it's way into the economy does not mean that cost-push inflation cannot mainfest itself and affect everyday consumers. The fact the excess reserves are high and the money from QE2 hasn't made it's way into the economy overlooks the fact that investors chasing yield have been pushed out of fixed income assets and have invested their funds in commodities, stock and high yield bonds. Inflation is the only way to get debtors (Americans and America) out of debt.
To compute a min. wage in USA, general economic conditions as measured by real & nominal GDP; inflation; labor supply & demand; wage levels, distribution & differentials; employment terms; productivity growth; labor costs; business operating costs; the number & trend of bankruptcies; economic freedom rankings; standards of living and the prevailing average wage rate are used. Obviously this gives a lot of play.
Australia is $16.45/hr., perhaps the highest, is an interesting experiment.
Firstly, in most Nations, minimum wage increases at a similar rate to inflation which is controlled by the central bank to around 2-3% (really low). Secondly, inflation is required so that "unconventional" monetary policy can be used in times where the cash rate is 0 to stimulate the economy. ie quantitative easing to increase inflation to decrease real interest rates!
Money simply facilitates the way people trade goods and services. There is only so much demand for all the goods and services generated in an economy, so if you suddenly start printing money, you get more money chasing the same amount of goods and services. This causes the value of the money to go down, thereby causing the price of all goods and services to go up (wealth cannot just be generated out of thin air), and since you can't print raw materials, there can't be more production.
So much common sense and basic fact insight packed in six and a half youtube minutes.
@FedupwithR The feeling of guilt is a barometer with which to gauge your social and moral boundaries. IT is there to remind you that there things we do and things we don't do to one another. If one does not feel remorse for behavior that is destructive the individual will continue in the wrong direction and may impart their poor destructive behavior to someone else.
Just so people don't believe this. Inflation doesn't make the values of stocks increase. If anything inflation makes the value of investments go down because whatever interest rate your bond for example is getting will decrease in real value because of inflation.
As for why QE occurs, it's because it puts liquidity into the market, which increases GDP growth and reduces unemployment.
Hence, ONLY if there is no unemployment will more money induce ONLY higher inflation and no additional production. That's what I've been saying for weeks.
Of course, with full employment economic policy should focus on supply. Agreed.
invest your savings in gold and other precious metals. These commodities have intrinsic value and are not vulnerable to inflation. In fact, while the value of money decreases in the future, the value of gold will increase.
coming from a poor person, who is also educated...I think the video is brilliant. However, I think the research I've had to do on QE to write my paper on THIS video is pretty stupid. QE in and of itself is pretty stupid. And I agree with Omid - this is the beginning of the fall of Rome. We pulled ourselves out of this in earlier years because we were smart enuff to watch ourselves - now we just want to spend, spend, spend.
Yes but typically economic growth(jobs/increase in wages) backed the inflation rate increase... I think they are saying the money is still coming into existence somehow(inflation), but the jobs/wages to support it haven't been up enough. Yes/No? There are a lot of explainations and the Bernank (Bernanke Bank) one is the most obvious to a lot of people.
You are assuming wages increase at the same rate of inflation, and this is not true. If things become more expensive, and you still earn the same as before, how can you possibly save money. And would you mind giving me some examples of "inflation resistant" investments available to the average citizen?
our government is OUT OF CONTROL
/watch?v=QPKKQnijnsM
this link will save me words
American Capitalism starves the poor. A country ran by politicians that are owned by big corporations is not the best system for those of us that are not in the top dollar bracket. That is a fact that can't be ignored.
I prefer the bears, but am glad to see inflation discussed by people too.
Hahahaha cool video! "bears most reliable info". lol. Nice!!!
Yes, the Ben Bernank!
Free markets cause inflation? Do you know ANY history? Prices have fallen constantly in countries with freer markets.
I expect that you will continue to purchase delicious Nutella™ Hazelnut Spread regardless of the cost. If the price were to rise to $8.50 per unit, i'm certain you would continue to purchase Nutella™ Hazelnut Spread. The flavor! The ease with which it spreads! The creamy texture! What would the world be like without Nutella™?
The real question is..."What will you have to give up to continue buying Nutella at $9.00....$10.00...$11.00...?"
But if you barely made it through the week with your paycheck before, wouldn't the inflation make it even harder to save money?
@BMac7773 You're correct. The issue is that all money in the US is created in this manner (apart from physical coins). Recommended reading: monetary.org
as other countries develop, wages go up making it less desirable to produce things there, this is beginning to happen in china and india
That was pretty good with including news clips in the video. "Dumb logic" does not mix with "common sense."
Year- 435630 A.D. (In a non-violent thriving society)
Scientist 1: Hey scientist 2 lets look at these species, they are very interesting.
Scientist 2: Yes, they seam to have chosen this "Bernank" to "lead" them.
Scientist 1: This Bernank used big words in his speech to trick the rest of the species.
Scientist 2: What's even more fascinating is that they trade this inedible cotton (money) that decreased in value every day for food!
S1,S2: Conclusion, these species have devolved in intelligence.
@tatomuck18
For example (to explain real vs. nominal)
Person A holds stock worth $10. Inflation is 10% so all the prices, stock prices included, go up by 10% (obviously this is a gross generalization). As a result, Person A now has $11. But bread which used to cost $1 now costs $1.10 because of inflation. As a result, real wealth has not changed since buying bread takes up the same proportion of your assets. Nominal wealth has increased because in $11 is more than $10. Hope that clears it up.
American Capitalism leads to the best system. Wealth inequality is a divisive and subjective term that has no meaning. People with different incomes exist in every economy.
So true, I think the world would work a lot better if everyone used common sense.
I would urge everyone out here watch Hidden secrets of Money by Mike Maloney on youtube its an eye opening watch.
There must be 14 people working for Bernanke. lol
What do you mean by the Fed backing up the printed money? That makes no sense to me.
Money is no promise to pay; money is simply power of demand; more money is more demand. If you plot global demand and supply curves on Cartesian coordinates, you'll see that increased demand means increased production, unless the supply curve is completely vertical, which is extremely rare. Please, do it and tell me.
It'll show you that money is real, it's real demand, hence real production, hence real jobs.
Thanks I appreciate this tons
Even though it brings up a anger 10 times more powerful if someone cuts me off on the road.
Yes, yes, yes . . . printing money is a stupid thing . . .
BUT guess what people who owned homes did before the crash 07/08 -
They took out 110% loans on the value of their homes' "equity" to buy cars, computers, vacations, etc. **Home owners "printed" their own money, too!**
Anyone with any kind of financial sense knows taking loans on unrealized gains is a very risky idea.
And today, 2013? People are taking loans against their investment accounts greater than on home values pre-crash as above.
@MortimerTheClueless , yes you are clueless. Without quality food you will NEED healthcare because of heath issues. If we focused on good food, getting the proper nutrients day to day, you will 100% see a decline in all diseases and reducing the "need" for heathcare.
Liked it. Also liked the QE video with teddy bears. I couldn't give it a thumbs up because of the lanaguage. Clean it up and you might get more exposure
@FedupwithR Well put.
"Its called Common......Sense" haha
Commun- sense
Having stocks doesn't mean you make money from inflation. It just means that you are not degraded by it. A share in, say, Exon, is still worth a share if inflation hits 10 or 20%. Unless the companies have a lot of cash reserves. If that is the case, then that company IS hurt by high inflation. Apple, with it's high cash reserves, will be negatively impacted by inflation.
Really good. When Ben Bernanke is talking he is lying.
@JonnyRocketfingers Yes, 'Austrian right wingers' like, erm, who? Austrians are (almost entirely) libertarian in one way or another. They get information from other sources (such as mises dot org) and the fact is, our current economy is essentially a pantomime between the public sector and corporations.
Inflation is a legitimate concern, yet it isn't. For all the hyperventilating about the oncoming hyperinflation apocalypse, inflation rates dropped in 2009 and 2010 to their lowest levels in decades. In 2010 there was almost no inflation at all. So when libertarians insist that all this money-printing is going to render the dollar worthless, and instead inflation rates drop to historic lows....ehhh....
@buaguy No its really not the same thing. Think about it. Someone hands you $10,000 dollars, what are you gonna do? Go spend it right? Someone loans you $10,000, your not gonna be so quick to run and spend it all right? It is a subtle difference, but issuing debt instead of printing money, really makes a huge difference. Now just do that on a bigger scale, the fed loans banks huge sums of money, but those banks have to pay it back at interest, albeit very low interest, same with the gov.
Good video except the line "Economists like to ignore the obvious, so they can sound smarter than us." Yeah okay, as if economists do their jobs in order to be smarter than the average citizen. Food and gas prices are volatile.
Bear Markets, The Bear necessities, The Bear Facts..
I think I'll vote for a Bear in the next election. :)
Bastiat, Mises, Hazlitt, Paul, etc etc.
Read "Economics in one lesson" Less then 200 pages and perfect in explaining basic Macroeconomics.