People don't bury money in the ground, they look for a return on their investment. IN GOOD TIMES, PRICES SHOULD GO DOWN because more things are produced. In bad times, less things are produced, so prices go up. AND IN THE LONG RUN, PRICES SHOULD GO DOWN, as we get better at making things. Of course we haven't seen the benefits of falling prices because the Fed prints too much money and causes inflation. The inflation tax steals value from your bank account without you knowing it.
Well, as I'm sure you know Sal, this is a controversial area. I suppose I agree that you can *temporarily* have deflation and an increasing money supply at the same time, but IN THE LONG RUN, there will always be rampant inflation after everyone regains their optimism. That inflation will be at whatever level is necessary to reflect the "new total quantity" of money in the system.
What you have really explained here, Sal, is how the market can be temporarily distorted.
Can you do a video on PPP? You seem really good at all this economics stuff. Maybe you should do global economics after that. I think it would help tons of people.
If the economy is going well, lets say positive growth of 5% and 1% more money is printed then we should get falling prices (what you mainstream's call deflation). I don't see what is so strange about that.
If all people in the world expect bad things in the future then they are probably correct. If productivity is to be lower then it is a good thing that people use less resources or else there will not be enough to go round. The market works.
The problem with your explaination is, gold requires effort to mine and refine. Why would the characters place any value in gold? The current deflation we are experiencing is limited to certain assets such as housing that were wildly overvalued. I'm not seeing any fuel or food deflation. Money only has real value if its creation is a result of human effort. If money is simply printed, it's fucking stealing, PERIOD! Would anyone accept FRNs if we weren't forced to by law?
@rmstorms The point in this example is that the money supply increases, not by what means it increases or what kind of money, gold, paper, bitcoins they use....
@mrhnm And that is why the first act of Congress was to define the metal weight of a dollar in silver and gold. Silver is real money. It's value is the result of effort. In the situation described in this video, gold wouldn't necessarily have value. There are only 2 parties.
Why do investors invest more/customers spend more? *shrugs* who knows.. they must be optimistic!
Why do people hang on to their purchasing power? *shrugs* Who knows .. they must be pessimistic! Damn them hoarders!.. saving for tomorrow? What a bunch of nonsense! Why can't they all be blowing all their money on hookers and beer?
Damn stupid investors/customers/people, why cant they live in the moment? They are ALL a bunch of loony bipolar pyschos!
People don't bury money in the ground, they look for a return on their investment. IN GOOD TIMES, PRICES SHOULD GO DOWN because more things are produced. In bad times, less things are produced, so prices go up. AND IN THE LONG RUN, PRICES SHOULD GO DOWN, as we get better at making things. Of course we haven't seen the benefits of falling prices because the Fed prints too much money and causes inflation. The inflation tax steals value from your bank account without you knowing it.
thesilverjournal 4 months ago
@moguai352 @ProfessorWilbur123
Please don't use all caps. Thanks.
dingusding 6 months ago 2
Well, as I'm sure you know Sal, this is a controversial area. I suppose I agree that you can *temporarily* have deflation and an increasing money supply at the same time, but IN THE LONG RUN, there will always be rampant inflation after everyone regains their optimism. That inflation will be at whatever level is necessary to reflect the "new total quantity" of money in the system.
What you have really explained here, Sal, is how the market can be temporarily distorted.
scwallac 7 months ago
KHAN! PLEASE!!! MAKE A VIDEO OF WHAT HAPPENS IF THE USA DEFAULTS AND WHAT THE REPERCUSSIONS ARE FOR THE WORLD AND EUROPE!
moguai352 7 months ago 9
YAY! I WATCHED ALL OF THE KHAN ACADEMY FINANCE PLAYLIST! ITS LIKE I HAVE A MASTERS DEGREE IN BUSINESS!! WOOOO!!!
ProfessorWilbur123 7 months ago 5
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Can you do a video on PPP? You seem really good at all this economics stuff. Maybe you should do global economics after that. I think it would help tons of people.
KingPtolemyIII 7 months ago
If the economy is going well, lets say positive growth of 5% and 1% more money is printed then we should get falling prices (what you mainstream's call deflation). I don't see what is so strange about that.
If all people in the world expect bad things in the future then they are probably correct. If productivity is to be lower then it is a good thing that people use less resources or else there will not be enough to go round. The market works.
BarrySlisk 7 months ago
Comment removed
BarrySlisk 7 months ago
The problem with your explaination is, gold requires effort to mine and refine. Why would the characters place any value in gold? The current deflation we are experiencing is limited to certain assets such as housing that were wildly overvalued. I'm not seeing any fuel or food deflation. Money only has real value if its creation is a result of human effort. If money is simply printed, it's fucking stealing, PERIOD! Would anyone accept FRNs if we weren't forced to by law?
rmstorms 7 months ago
@rmstorms The point in this example is that the money supply increases, not by what means it increases or what kind of money, gold, paper, bitcoins they use....
SalsaTiger83 7 months ago
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@rmstorms "If money is simply printed, it's fucking stealing, PERIOD!"
Haha, oh wow.
WecksyRex 7 months ago
@rmstorms No I turn all of my money into goods, instead of putting it in a savings account I go down and buy silver...
mrhnm 7 months ago
@mrhnm And that is why the first act of Congress was to define the metal weight of a dollar in silver and gold. Silver is real money. It's value is the result of effort. In the situation described in this video, gold wouldn't necessarily have value. There are only 2 parties.
rmstorms 7 months ago
@rmstorms Yep, silver compensates for the inflation of the fiat system. Because it is actually something as opposed to magic money...
"There are only 2 parties" What pray tell are you talking about?
mrhnm 7 months ago
@mrhnm Did you bother to watch the video? There are only 2 parties...
rmstorms 7 months ago
@rmstorms I thought you were talking about political parties for some reason.
mrhnm 7 months ago
man do vids on microbiology and genetics
420hassam 7 months ago
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The paradox of thrift . Looks like the FED have stopped publishing the deceleration in Velocity of M2 Money Stock tinyurl . com / 26sb2xq
There's confidence for you !
DavidAKZ 7 months ago
Why do investors invest more/customers spend more? *shrugs* who knows.. they must be optimistic!
Why do people hang on to their purchasing power? *shrugs* Who knows .. they must be pessimistic! Damn them hoarders!.. saving for tomorrow? What a bunch of nonsense! Why can't they all be blowing all their money on hookers and beer?
Damn stupid investors/customers/people, why cant they live in the moment? They are ALL a bunch of loony bipolar pyschos!
Except Keynes.. he was "smart".
utubehayter 7 months ago
Uh oh. Expect the Austrian Religion adherents to be pissed about these videos. They demand reality mold to their ideology.
SPQRomantic 7 months ago 2
@SPQRomantic Not really. Austrians except that prices can fall even with increases in the money supply. They just use some non-standard definitions.
NotTheLaw 7 months ago
@NotTheLaw
You mean the ORIGINAL definitions? Like deflation means decrease in money supply, not falling prices.
BarrySlisk 7 months ago
@SPQRomantic No we demand that people acknowledge reality.
mrhnm 7 months ago
@SPQRomantic Treat them like you would a creationist.
WecksyRex 7 months ago
1:43 maybe they are just pessimistic people ;-)
Who are you referring to?
Nice dig.
cosmosgato 7 months ago
Awesome!
krimsonFX 7 months ago