rather the old, than the capitalist pig Mystic... anyway

[johntheunique]

In order for the Fed to create capital where there is no capital, it is borrowing from the future. To do this it needs other countries to buy into our future through Treasury Bonds. China is the primary credit provider to our country since it owns so much of our Treasury debt. Everything works fine unless we default on our loan payment to them, either outright or through substantial inflation. We've seen this same scenario play out before in post World War I Germany.

[DynaCatlovesme]

I think talking about the Fed printing money confuses the issue. The vast majority of money lent by the Fed is not represented by currency notes.

[pronchie1]

I understand your explanation but what is missing for me to get the full picture is the reason of why we need compounded interest. I get the inflation part and so if your salary increases to match, that should somehow balance out. Yet if you look at the rate the banks are lending and calculate over 20 or 30 years like for a house it seems to me that a huge chunk of profit is being made on top of the inflation and admin charge. Just for using currency to do a transaction or is it a risk fee?

[petesangyal2]

f*ck i want a bank...you dont have to have sh*t...so the feds give you free money,with what i buy a house,and sell it for 50% interest...and after all that they still ask for bail out money....man...the systems f*cked up

[EthanJM]

I appreciate the effort in this Gary, although honestly I still don't totally understand it, I will watch the video again in a while.

[mlyjohn]

What about the 50000 interest where does that come from ?

The Fed did not print that !

[AndyMH182]

The video cut off right at the end there. I don't know if you were finished or not, but some people have had problems with this before.

Awesome video. Very informative.

I do appreciate your work and effort you put into them. I look forward to the next one.

[GlobVetus]

Given back old money .

Do you mean old papermoney ?

[inmendham]

yes

[Sindyr1974]

I have to disagree with the low interest rates being a good thing. I think we need some respectable interest rate so that there is not a outpouring of money into the economy driving up the price of everything. I think there needs to be a balance, and part of our current world problem is that it has been out of balance by having the interest rates too low.

[SufferingSucks]

higher interest-rates would certainly create less investment and less consumption... which would also mean less employment. The bulk of the economy is a zero sum game tending towards a good balance... the one problem is the consolidation of wealth and the capacity of a very few to extract huge quantities of productive value and encourage all manner of highly profitable but socially unproductive investment.

[Sindyr1974]

I agree, but what you describe is the complete opposite, high. I specifically did say balanced. Too low (like the near 0 we have now) encourages the glut of consumption and the descent into unpayable debt. When people can borrow for free they will and they will consume until they can't. I think a balanced level that is sustainable is what we need that does not create bubbles of unemployment or gluts of consumption and debt. Just my borrowed 2 cents though.

[johntheunique]

The problem with capitalism is that it assumes perpetual growth. It's always borrowing against a future that it expects to grow in order to sustain itself. You can't have infinite growth in a finite world. At some point this finite planet just won't have the resources to support all these claims on the future.

[oldhacks]

gary, unblock me. I said "srious" making light of the situation. wasn't siding with anyone. I'm friends with the both of you...

[SufferingSucks]

"I'm friends with the both of you"

I don't go both ways

besides if you're going to do some "Irrelevant " begging do it in a p.m.

[oldhacks]

don't be an ass. it aint my fight so I can stay neutral. I'm switzerland yo.

[RibbitAfterMe]

I have a question, if I may. Does it matter if, in a crisis, the Fed doesn't get back the monney it gave to the now insolvant bank as it is as I understand only printed paper with no "real" value that the fed lent. If the fed didn't print it in the first place it wouldn't exist anyway as it was not originally attached to any deed.

Sorry if my question is stupid. I still have much to learn.

Great vid 5 stars.

[DoNotGod]

when the amount of money in circulation is increased beyond growth, or without monetizing an asset (without collateral) all assets, including money, you possess will decrease in purchasing value.

[RibbitAfterMe]

I think I understand, thank you.

I am going to abuse your kindness by asking another question. Do we really need the banks? Could the fed rather than to lend to banks that lend to us not directly lend to us. In short is my bank just a middle man?

[SufferingSucks]

YES

[RibbitAfterMe]

@SufferingSucks

That I am sure I understand : )

Merci.

[johntheunique]

Yes, you can take out the middle man, but then you have one big central bank. That's financial communism. Since our government still wants to operate under the guise of capitalism, it allows these puppet private bank to run under the Fed. Communism is thriving in education as well. You have all these colleges that are heavily subsidized by the Federal government. They will teach government curriculum because they won't be able to compete against the other schools unless they do.

[RibbitAfterMe]

I understand what you are saying. Are you sure that you can call it financial communism though. Even with a "big central bank" and no middle men, it would still be a system where individuals and corporations would be able to borrow money to finance there capitalistic entreprises. I am not preaching for it as I know too little, but as the actual financial system has shown its vulnerability I am wondering what are the options?

[johntheunique]

America is in a quasi-state between capitalism and communism, usually referred to as socialism. If the government controls an industry and the government is controlled by the people (a democracy), that industry is being controlled by the people. That is communism. The question is, Who is really controlling the government? If the wealthy are controlling the government, then it's an oligarchy.

[johntheunique]

A Federal Bank wouldn't be such a bad idea if you could trust that bank 100%. The problem is the same with putting all your money in one stock. If that stock does really well, you do really well, but if it does really poorly then you do really poorly. Multiple banks creates redundancy which in itself is inefficient, but it's necessary for risk management.

[oojamaflipper]

great explanation

[Epihash]

It's like Czarny Zazul, except with economics.