Lesson 2 - The Federal Reserve System Explained (pt. 2)

National Debt Clock http://bit.ly/3Rbt
Milton Friedman vids http://bit.ly/5qbm

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[vipero00]

Why does the Debt/GDP window stay between 70-100%?

You would think as the private sector becomes more productive with technology and capital that the window would decrease. Doesn't productivity have an affect on the window?

[BasicEconomics]

As most economists would say "it depends"

what you laid out in your question is only half the equation. To reduce the Debt to GDP ratio you have to have a set of circumstances where the GDP grows at a higher rate than the national debt.

At our current levels of spending by 2012 we may be well over 200% Debt to GDP.

In order to get it back down to a healthy range we would have to have both a high rate of economic growth and a rapid reduction in government spending.

Taxes also play a role

[legendre007]

Excellent presentation so far. :-)

When U say that the Fed has the power to print cash, don't U mean that the U.S. Treasury has that power, since the Treasury owns the mints that print the paper cash?

[Joey6547]

This is very good. I'm an Economics major and currently in a Money and Banking course. This presentation is very well done and outlines monetary policy very clearly. This is what youtube needs to be like!

[Riddlerx333x]

@BasicEconomics what do you think about sound money? I think your presentation is great, but you are unaware on many issues.

[Riddlerx333x]

@BasicEconomics can you please tell me this? Is the fed a private entity? And if its private who is its shareholders?

[CanadaMMA]

The problem with telling people to go out and "Do their own research, don't just take my word for it." is that people don't. They just assume you are telling the truth. Why wouldn't they? You just challenged them to make sure you are telling them the truth so obviously you aren't afraid of what is out there.

If you really want people to go out and research for themselves, don't tell them to do so.

[cullisonjt]

I feel you got all the facts but your missing big picture. There wasn't always a Federal Reserve System but there were many throughout history. One of the main reason cited for stating our independence was to get away from centralized banking. Follow the money my friend and who wins in both good or bad economic times?  The private centralized bank of America. A.K.A. the Fed. I think a little more detail to fractional reserve banking could be explained to people. Thanks for the video.

[mrpeepswoot07]

i dont believe that just fixing the feds problems will help. maybe for a small period of time, but in time it will go back to exactly that. the only way is to remove its power to manage and print america's money supply.

[2598129]

@Drakhpally Yah why don't we just let the China print our dollars this way we know where the knock offs are.

[jimprjayp]

@BasicEconomics In the video you said the debt to GDP should be 30-70%. If I place the amount of 200% debt/income(GDP) that would mean i owe twice each month what I make. So if the avg person makes $4000 to $5000 a month each year they owe $8000 to $10000 a month. An individual would declare bankruptcy long before that, but we as individuals can't print money. If the fed's job is to guard against inflation, why do they keep loaning them money? It doesn't appear responsible.

[CoombesKidd]

i say we ablish the federal reserve and move back to a system of free banking. If congress only has the power to coin money, then the only paper/digital money that is circulating is securities of the coinage. if a bank prints its own money too much it would be forced into liquidation. This was the best system of money we ever had; from 1840-1862 the dollar rose to the highest value in history and the business cycle nearly ended

[DogWeed91]

you said the fed's printing of money out of thin air can only end badly. but isnt that how the fed funds the buying of US treasuries? through their own printed money that is