current account deficits and exchange rates

[moviemaker1395]

OMG! This makes total sense now. I tried for hours to get this concept on my own, but the textbook just doesn't explain it well.

THANKS YOU!!!!!

[Prinxali]

unbelievable.. your an excellent teacher.

[rogerb1860]

Great work Phil - what new videos are you working on ?

[THEZACMAN212]

thumbs up if you think pajholden> keynes.... ;p

[bdmntnfan]

who are those 11 fools?

[THEZACMAN212]

@bdmntnfan  accountants....

[metanujai]

Dear Sir,

Can you put in something about Euro zone Crisis??? What is it & how is it suddenly so many countries "together - at about the same time are suffering??

Also, what is the role of Credit Agencies & why their rating about USA is making so much of a news??

Regards,

One of your universal followers..

Abhay, India

[unomnacajit111]

@metanujai basically, the elite want to create the United States of Europe and need to trick the population somehow so they created this crisis and are keeping it alive with the help of the media and blind economic analysts. On top of that they also get some perks like a few state-owned companies of Greeca and Portugal and some islands sitting on top of oil reserves in the Aegean Sea...This artificial crisis will go on for at least 3-6 months until the they get what they want...

[BigJohnno2]

this is wonderful :D, wouldnt mind a recent update to this, just so I can use more recent data to relate to

[87amalendu]

People like you are making learning easier. Thank you.

[weapwn]

you sir, should be knighted.

[harrywbfmv]

legend :D

[zefvor]

Listening to mainstream economists is like listening to autistic people. There is an account identity that binds current account and capital accounts together. When there is capital account surplus there have to be current account deficit and vice versa. For example, when China buys dollars on open market (to maintain it's beg) there is capital account inflow to the us and corresponding current account outflow, as simple as that. Foreign currency lending does the same thing.

[TheMurderedangel]

Thankyou thankyou thankyou!!!!! i have my exam in a few hours and even though I practiced all my past papers. Your videos just cleared ALL doubts. ALL.

Amazing way of teaching. Superb. !

=D Please don't stop teaching economics. You're the best :)))

[iamtheimmaculateone]

that was amazing

[Romeowasbleeding1]

Once again, a wonderful explanation.

[jf713jf]

my macro professor could learn a thing or two from you... i wish i could give you the boatloads of money i'm paying him.

[raisahaapala]

thanks for all the videos, great revision material!

[Astronomer7698]

Great Work. I would have given anything to have had you as my teacher in high-school, then i wouldn't have such difficulties undersatnding the basics of my macroeconomic uni course

[fionaNESS]

hey but now i think the us has realised this huge CAD (especially after the GFC) so their dollar has depreciated forcing their consumers to buy just US and had also made them more internationally competitive, encouraging consumers from other countries to buy their exports. HENCE reducing their CAD!!

[MaryamYusuf94]

When the supply of the $ increases then will the price of the $ fall

[MaryamYusuf94]

Wow-this is such a clear explanation!!! I'm doing O level Economics and we haven't learnt about the Marshall Lerner condition so I don't really understand it... -_-''

[Reactive808]

Wow!!! Great vid. I subscribing.

[TheTubeofmatt]

You are the clearest economy teacher EVER! Seriously. Do you happen to give online classes? I'd pay for them.

M

[1987bugsy]

you make my teacher look rubbish. its just so clear and i understand everything you say.

[maddder]

i dont get it why would an oversupply in the dollar make it weaker or drive the demand of dollars down? is there an implicit move within this correlation ?

[Pemberdeer]

@maddder banks make their money by exchange currencies, not by holding them. If there is an oversupply of dollars they drop the exchange rate to ensure the currency is exchanged.

Supply does not drive demand.

Demand falls because when in deficit money is flowing out of the economy to the external sector. In other words imports exceed exports, to facilitate this dollars are sold for the yen bought.

[Yochananable]

Thank you very much for those inlightenings !

[selfrealizedexile]

There is no free currency market. It is artificially in disequilibrium because of the various nation-states and their respective currencies. If it was in equilibrium, we'd be employing gold and silver again globally. The whole reason an exchange rate even exists is because of state intervention in the global market.

[shutupcaf]

after studying economics for 2 years i finally understand parts of economics by watching your videos! i have unit 4 A level economics tomorrow and am sincerely grateful for these very helpful videos! :)

[sharky506]

I have economics Unit 4 on Friday, i hope your videos get me through itThanks for the clear explanations

[gazakhstan]

@sharky506 as do I, best of luck.

[bigbawsdogg]

great video, but americas dollar is only sustained by the capital flows surely. apparently based on the current account the dollar should have depreciated by 20%

[gazakhstan]

This time in 30 years when the UK Chancellor of the Exchequer and all of the economic advisers are asked how they saved the nations banged up economy, they will answer 'pajholden'

[sodijgosdjgosdjgojsg]

@pajjolden Just wondering, what are the benefits of having a currency that has a high value?

[thefrenchmen]

Im with mrklax on that one

[mrklax]

this is just FULL AND CLEAR! if I pass my economics bac I will send you a bottle of champagne I swear! :D

[pajholden]

@mrklax looking forward to it!!

[mrklax]

@pajholden can you pm your address? :)

[ratchettie]

@pajholden

I think you made a mistake when you were saying "The demand for exports and the demand for imports have to be very INELASTIC". However, the Marshall Lerner condition states, like you said very clearly, that PEDx+PEDm >1. BUT this condition says that the elasticity of the demand of Exports AND Imports have to be ELASTIC (greater than 1) and not INELASTIC (like you said)

I may be wrong, and please tell me if I am, become I'm a bit confused :P

By the way, I LOVE your videos!!!!!

[UltimateX16]

@ratchettie Same question has been bothering me.....

[ratchettie]

@UltimateX16

I asked my economics teacher about it, but it was hopeless lol He just complicated things all over again :P

I just hope Phil will answer us :( Got my final exams coming in less than 3 weeks! D:

[UltimateX16]

@ratchettie Exactly, igcse boards next month. Phil helped me a lot in business studies and economics

[ratchettie]

@UltimateX16

I'm jealous. I'm in Australia and have my final IB exams in 3 weeks... Phil taught me like, 80% of what I know now through his Youtube videos.

[UltimateX16]

@ratchettie Woh !! Best of luck..

[K1TKONG]

@mrklax did you?

[barcelona4life1991]

what college do you teach at ?

[o0jules0o]

I think that the reason the dollar has not dropped too much is because we have a floating exchange rate system but there is still some control, meaning the US government is probably controlling the exchange rate to some extent, so the price mechanism of the floating exchange rate cannot have its usual effect.

[jordanelka]

All I wanna say is... Thank you!

[thostrup16]

Brilliant!

[tkdlax32]

Love it! Do you have a video on why the IS curve takes the shape that it does in the monetarist view vs keynesian view?

[laurabramwell]

I am telling you Phil, you are a life saver! These videos really explain things so much clearer than any of my economics classes. Thanks you so much. Could you please explain the win win model in International environment? thanks again!

[Jasonleezzzzz]

could someone give a title to the graphe he's talking about?

i'm guessing, but could it be 'demand and supply of american dollars'?

[Shantu7777]

Ur explanations are so simple. Thankx Prof.

[xmizzrachx]

your so helpful thank you! made macroeconomics so much easier :D thanks xx

[rayarurello]

thanks! very clear explanation :D

[xhappyberryx]

thank you! i wish you're my economics teacher... hopefully this will help my ib exams

[MilenaTsi]

I agree!

[MetalSupra1982]

it will

[khanpreston1]

how does fixed exchange rate controls inflation?is the procedure used in today's economics?

[shujaatmubarik]

Thanks professor for providing such a helpful lecture

[TheOxtailSoup]

Excellent stuff! You make economics easy to understand. Thank you!

[Karoobeast]

Thank you for your explanations!! I challenged my lecturer to do the same, but he refused. I guess he is scared he is not good enough and everyone will see.

[logpos]

My god, you are going to save my A levels!

[hkuskyer]

very carefully illustrated , thank you!

you are much better than my lecturer

[connorbag]

my lecturer looks like a old michael j. fox

[leela2790]

thank you! this was really useful

could you please do something on the marshall lerner condion? =)

[yokohgohwei91]

thank you!!This video was really helpful

[dalesalsa]

Awesome. Thank you so much!

[sallythompson3636]

As usual....terrific.

Such a clear explanation.

I would challenge anyone to pick up any book by Keynes and find one paragraph as clear as this video.

PLEASE keep up this sort of transmission. You are doing a wonderful sevice.

Sarah

[franks2732]

@sallythompson3636 Marshall Taught Keynes and his claim to fame is to use "science" empirical data. Lerner was a Keynes supporter. So the two guys who "Marshall–Lerner condition" were in fact ahead of their time. Lerner was a Keynes man to his bones

[santoshpsingh]

such a clarity is very rare.

[killerbudd]

You are crazy... ppl sell this stuff for $3000 per semester.

[chauhdary1]

wonderful want more from this great guy

really appreciating

GG great greek

[rfvo]

Short and to the point, awesome.

[y3zdi]

Thanks a lot... Good job

[XtremePolice]

Ur much greater help than my economics teacher... thankyou sir.

[alejitoo]

dale guachooo!

[stevo22222]

You da man

[huntinx]

wow ,these lectures are outstanding.i love the videos. sir,ure exellent.thanks alot

[supermajic]

Great work. Extraordinarily helpful.

[georgehammer]

I am an economics teacher as wel and I mst say that I find this guy right up there with the best. Easily explained in simple clear language. I love economics. Its a subject for serious students with a passion for current affairs, production management, business, banking and the like. You don't have to be natually high achieving to do well in it, but you must have a passion for whats going on around you today and thats why I love teaching it. You're teaching your kin!

[cheew08]

oh my god.

There's no point of me going to my college anymore.

This is more interesting and more easier to absorb than what my lecturer is throwing at us.

[joes250]

great stuff. u make me understand this in 5 minutes where my teacher tried for a week and i still didnt quite understand it.

[Chopsta123]

excellent

[inziderhh]

I just signed up to post this comment.

I really like ur videos, GREAT work. It really helps to improve the understanding of this topics.

To bad that not many ppl know that they could actually search for phillips curve etc. on youtube. It was more an acident that i found ur videos here :)

Looking forward to see more from you.

Thanks alot

[wuking090909]

nice work

[fedroger]

beautiful analogy of account currency.  Thank you, Brit.

[aryaldo]

great stuff again, this is so useful!