💲 Money Creation | How does it work?

Money Creation - how does it work? Is this increasing the money supply - monetary inflation - is good for the economy and for the people? Learn Austrian Economics in a fun way!
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Econ Clips is an economic blog. Our objetive is teaching economics through easy to watch animated films. We talk about variety of subjects such as economy, finance, money, investing, monetary systems, financial markets, financial institutions, cental banks and so on. With us You can learn how to acquire wealth and make good financial decisions. How to be better at managing your personal finance. How to avoid a Ponzi Scheme and other financial frauds or fall into a credit trap. If You want to know how the economy really works, how to understand and protect yourself from inflation or economic collapse - join us on econclips.com. Learn Austrian Economics in a fun way!

[@EconClips]

People complained about the music in the video, so we're reuploading without music. Hope it's better.

[@Laskuna]

Video its sad now :D

[@EconClips]

After all, it's not a very happy subject:)

[@Rostom_aram]

So when centeral banks don't have enough money to pay to other banks . They just buy bonds and bonds are promise to the government that they will print some money and then pay it back. The question is to who they pay back the bonds? From my understanding when everything collapse the government tell centeral banks to print some money and make money with that money and then pay the interest back to the government. So governments can print make the central banks print unlimited money. Can someone answer please

[@nzmak3220]

@@Rostom_aram it is just paper funny money(currency) printing using bank signed paper(cheque) issued by FED paper certificate(iou) generated by empty pawn paper(bond) of the gobberment.

[@herbertspencer8293]

kzbin.info/www/bejne/n5quo2CfZZdlo7s The Progressive Growth of the Money Supply Principle (year 2013) tells us the exact quantity of new money the economy needs to works correctly, driving us to the Wicksell interest rate or natural interest.

[@akiraleva5496]

If I’m being honest this is still really confusing

[@Tonycaveman]

Tell me about it. But don't sweat it - this is beyond even the grasp of many economists. Even people who work in banks don't fully understand this. If I understood correctly, the gist of it is that money is created through lending. Someone, somewhere (a bank, in this case) asks to borrow some money from someone else (the government, in this case) and when they sign on the dotted line of the contract to commit themselves to paying it back in the future... - Poof! New money is created. This is why inflation exists - things get more expensive because "old money" is becoming less valuable because old debts are not being paid and new debts are being created because we need to create more money because there are more and more people. So sellers (the ones who provide actual value in the forms of goods and services) increase their prices because they notice that money is losing its value (because there is more of it). Boom - Inflation!

[@2DanTube]

Oh Okay - I can explain it to you. First of all, he didn't say "economy" - what he actually said was "E-CON-NO-ME." So let's examine a full understanding of the Federal Reserve Bank (FRB). It is a so-called "private" bank (formed - voted into existence by CONgress with a Board of Governors appointed by the President) - "ownership" of the FRB is based on a fixed limit of stock ownership limited to $100 per share - say what? - no real Capitalism here - is there? - price-fixing the value of its stock? - and no one individual or organization or organization parented by others on purpose sub-divided organizations to fill in this loophole system so that jointly these multiple organizations can skirt the rules, are not supposed to own more than $25,000 in shares of the FRB. NOW here is where the real "CON" comes into play. IF the FRB is truly "private" with limited stockholder ownership (no real Capitalism) - How come it took CONgress - (the government to form it)? AND if it is truly a private bank like all other banks are private - how come you can't open a checking or saving account at any of the 12 regional branches of the FRB? WELL most likely because the FRB shareholders all realize that Scamericans are mostly all broke - living paycheck to paycheck or welfare payment to welfare payment or unemployment compensation to unemployment compensation or living off some friend or most likely a relative. Therefore, the Scamerican people are too big a risk to fool around with checking or savings accounts - plus Jed Clampett will never get special treatment at the FRB as he gets with Mr. Drysdale - at a real private enterprise Capitalism bank that will end up being "too big to fail." After all the FRB does not really want a lot of Jed Clampetts running loss in the world. SO because the FRB is supposed to be a private banking system with price-fixing and limits to ownership - formed by CONgress. LETS now get down to the REAL PROBLEM. CONgress forms money if the President does not veto CONgress or often these days the President asks CONgress for (currency) via Bonds that it sells, or auctions, or puts up orders to the FRB to print currency or today digitized monetary systems - (SO - What are BONDS? they are promissory notes with a fixed interest rate of weak earnings to mature at some future date or be available to cash out at the beaten to death value by the inflationary guarantees.) SO take a close look at the currency that is printed as a result of those arbitrary dreamed up out of thin air bonds. Somewhere on it is some "fine print" (you are aware that when someone uses "fine print" they are trying to rip you off) anyway these days this fine print is found on the front lower left-hand side - might have once been on the upper left-hand side on the older currency. Butt, and I do mean Butt - that fine print states, "THIS NOTE IS -LEGAL- TENDER FOR ALL -DEBTS,- PUBLIC AND PRIVATE" So we all gain notice of the two words LEGAL and DEBTS, and I have to ask myself - if this is private money - how come the word LEGAL is there, seems to imply - government involvement. And if it is a private instrument of a private enterprise - would it not be appropriate to state for all DEBT AND CASH transactions. BUTT no it is only for DEBT and God knows "they" have racked up more DEBT than actual net worth or Common Wealth. BOTTOM LINE is this. These are the United Stolen Snakes of Scameria, (and you better be a patriotic fool or else) and thus the Tax Whores (elected and campaigning folk - all of them - the Demonrats, Repugnant, and Liberbratian gold digger Parties) have this Rat-If-fried CONstitution that allows them to freely with no legal ramifications - LIE - all day and all night seven day a week and even on Sundays - they can LIE to the Tax Slaves - vote themselves a paycheck with no roll call vote. And all because the Floundering Fathers failed to rat-if-defy a CONstitution that would make LYING and Wee Weeing on the People a criminal offense. Rather these Tax Whores tell you that it is free speech - yet lying is a form of corruption akin to treason. THE GOOD NEWS is this - It ain't gonna last forever, real solvent nations like Canada, Germany, and China - will one day wake up and realize that doing business and extending loans to Scamerica is a trap of worthless interest rates - and Bond fools will realize they have been fooled too many times - and then the government want be able to pay for the military, the welfare Mamas, retired boomers, boomers on Medicare - and on and on - and it will be lights out for this government - and then we will finally be a FREE people with this shameful government off our backs and out of our lives forever. (The Bible tells of this downfall - Amen! and Amen!). The blinders will come off the blind patriots and everyone will finally realize that this "do-gooder" government was all this time our accidental - nieve - ignorant ENEMY. Please don't get me wrong - I love my country - but I could do a lot better to fulfill happiness if this debt-ridden government was gone - we all would be better off with this government and the FRB gone. Well, I hope this helped make this guys video a litter better to understand. God bless and keep you and yours safe while the Great Wrath leads us to the Great Tribulation. It is going to be a rough ride for a while - but once this government is gone - the fresh breath of FREEDOM will be a wonderful thing. For soon Christ will return and set up His kingdom on Earth and the Meek Shall Inherit the Earth. A wonderful day for us all. Amen!

[@awadz23]

I'm in same side with you.. i did not understand this video try to explain.. if we keep it simple stupid down to the earth, 1) If Fed really take up interest to everybody this will happen: I (fed) give you money 100$ to (gov/bank) which i created, then you make money to circulate the money to create economy, then you need to pay back the interest 10$ which does not exist.. then gov/bank oneday one of them will default because there is no existing money of 10$ to payback.. then they loan again to Fed to avoid default (we can see this on QE and other financial inject to economy).. then the issue still continuing creating more another 10$ of inflation.. 2) let say if Fed does not charge interest to gov/banks... gov/bank is still charge interest to people and oneday one of us going bankrup because there is no 10$ in the market, one of us will suffer or die.. The reality is simple, can we see the sub-prime mortgages crisis? when alot of us loan too much with not existing money and need to pay interest which money not exist.. we all bankrup, then bank bankrup because of this, where they want to find the money? tooo much debt created which debt (money) actually not exist.. now the problem is simple.. INTEREST.. simple.. Learn back the economic/financial crisis we have.. all of this problem from money not exist.. Pheww

[@nzmak3220]

simple, it is just paper funny money(currency) printing using bank signed paper(cheque) issued by FED paper certificate(iou) generated by empty pawn paper(bond) of the gobberment.

[@2DanTube]

@Vear Bici You are correct - everybody should go into the banking business. And stop building things with low profits. Back when we were on the Gold and Silver backed currency - the banks worked hard to determine the value of Gold and Silver every day. The Fiat Currency is supposed to be valued based on Labor - yet the banks do not try and work out the value of Labor. It they did - then printing money out of thin air would end and printing money based on the value of Labor - would be within the boundary of affordable currency creation. I would advise moving toward a Vested Economic System - this worked really well the one and only time it was ever tried and even melted away corruption.

[@stachowi]

How do your videos have so little views?!!! As a student of money/debt for 20 years, it was very clear and dead on (under 7 minutes). Love your channel. Well done!

[@wrathmor1834]

Because that's the education system at work. Compulsory through government funded Indoctrination called education.

[@Ambiview]

I think that everything has a price and that money can be very deceptive. Over time, money has become the driving force behind our decision-making, but is just a mirage that we think is more valuable than it actually is. It's really interesting to think about how money has evolved over time from things with a practical purpose to the digital currency that we have today. If people truly knew the true purpose of money, then I think they could possibly change their approach to life. I recently released a video that examines the evolution of money, its creation and true purpose on my channel. It expands on some of the ideas that you talk about here. Great job and keep up the good work!

[@hatman50]

Sounds like one giant Ponzi Scheme

[@kwubbs9952]

Super helpful video-just started getting into economics and feel this was one of the clearest videos I’ve watched

[@jeddiajones4570]

Boy, you must have really been confused by the others.

[@theinstitutionalized]

Omg thank you for the simple explanation!!

[@KiyosakiSays]

"Money is not the goal. Money has no value. The value comes from the dreams money helps achieve.” - Robert Kiyosaki

[@DavidEVogel]

A bit dry, but very informative. We missed the second way that money is destroyed: When a Treasury bond matures, the holder must be paid the face value. When the central bank cashes the bond, money is destroyed.

[@diontaedaughtry974]

Thank you this was very helpful and informative 👍👍

[@TheLastNappy]

Wow I love your videos! I think I'm going to watch every video on your channel this evening :D

[@EconClips]

Thank you :)

[@pxlaidan]

******* AMAZING! Great description, love the way it was broken down. Subbed.

[@kasperadamson4654]

It can be explained easier. A lot easier. You guys have hearts in a right place and your intentions are great but you need to put bit more effort into writing. Read comments - people lose you. I’ve read books and watched documentaries on this subject (on top of having a financial degree) and I know it can be explained significantly easier. You took a hard road and left great number of viewers behind.

[@widehotep9257]

The subject of money creation is intentionally made confusing with lots of contradictory explanations to hide the simple truth. The simple truth is this: ALL money is created out of thin air when private banks issue loans.

[@josephmerhi9043]

I’ve lost you at 3:31!

[@TheJani15]

Thank you! I hope this process is exactly the same of the European Central Bank!

[@merry1171]

such a great educational video. thank you!

[@ThisIsSolution]

Banks create money by issuing a promise to pay for the lendee. Their signature creates a dollar amount. The bank then uses these new money deposits as collateral to lend again to the next person, interest is also included but isn't the primary factor in creating new money. New money is literally created into existence through your credit worthiness and your promise to pay. So money is created from nothing, backed by nothing and can never return to a state of worth since the exponential curve of its creation can't be reversed. Its only course of action is to inflate until it's worthless and die.

[@libertardsbeware4180]

They are backed. By the military.

[@thestoryofmoney]

"through your credit worthiness and your promise to pay" What you don't understand is that if someone is credit worthy and promises to pay you in the future, that promise is worth something. It has value. It's not backed by nothing.

[@ThisIsSolution]

@@libertardsbeware4180 how is the military paid? The government has no wealth, it has no money, it can only generate money through the taxes, once the money dries up so does the military.

[@ThisIsSolution]

@@thestoryofmoney for moral people, yes, a promise to do something has some inherent value and that person would feel a moral obligation to pay back a loan for example, unfortunately the monetary system isn't built on moral

[@thestoryofmoney]

@@ThisIsSolution We already established that this person is credit worthy. That means they are likely to pay back the loan. That means the loan has value. It's not backed by nothing -- that's incorrect.

[@bammbamm12]

1:51 "There are no savings in the Fed's account." Hey - same with me. So why can't *I* write a check for a government bond and sell it? I'll print some checks up from the bammbamm reserve.

[@thestoryofmoney]

You can write a check, it's just your checks aren't worth anything. The Fed's checks are.

[@bammbamm12]

@@thestoryofmoney - Hmmm........I'll have to think about that.....amazing..........

[@thestoryofmoney]

@@bammbamm12 You should, it's the truth. The debt of powerful institutions like the Federal Reserve are money for the rest of us. It's because of how powerful they are. Our debt is less valuable because we are less powerful / wealthy. This is entirely based on the free market.

[@adrianomattia5625]

What do you think of fractional reserve banking?

[@sara69xd]

If done neatly its cool

[@zhengyue24]

Hello could you explain 3:31? What is the interest the FED gives to the government that you refer to? The FED is holding treasury bills so it is supposed to receive interest payment from the government.

[@ffernand1230]

They do receive the interest from the treasury but part of the obligation of the Fed is to pay back excess interest collected to the treasury after paying its member banks a dividend.

[@brittanym958]

You should add these to your IG TV, especially the fractional reserve clip, I think people have been convinced they hate capitalism when it's really the byproduct of fractional reserve banking

[@freeguy77]

Not a by-product, but a fraud on the people; to create something called "money" from absolutely nothing of any value, except creating gobs of unlimited paper, instead of precious metal coinage of silver and gold. That is why the Founders gave no authority or power to the federal government to create ("emit bills of credit") that was not listed in Article 1, Section 8, the powers of Congress. The Congress could only "coin money" of precious metals, that were accepted by people as the only trusted money (from experimentation of other commodities that failed), pre-dating the government by thousands of years.

[@BB-mr3vy]

At 2:04 you say "the check simply becomes new money in circulation." But as I understand things, if the fed is purchasing the bond from a bank with an account at the fed, the money that is created is just in the form of central bank reserves -- not a checkable deposit that would increase the M2 money supply. Isn't this correct? One thing I've always wondered is how much do open market operations actually increase M2. I.e. do all/some/most/none of the primary dealers of treasury bonds from whom the fed buys bonds have accounts at the federal reserve? If they all do, then it seems like bond purchases by the fed *never* increase the M2 money supply, at least directly.

[@Johnnybgood8]

Bravo! Well done

[@Remyueru]

So what can an individual do to "protect" itself from the negative effects that money creation does?

[@EconClips]

Individually he can try to invest in something, that yields more than inflation or maintain value over long period, but he cannot "protect" himself against distortion of the structure of production or he cannot completly avoid the effects of business cycles.

[@Remyueru]

EconClips what yields more than inflation? Mutual funds? 401K? Roth IRA? Gold? No sure fire way to "protect" rather than to conciously invest? Doesn't it sound like we are screwed either way?

[@kfung]

The investment options you mention are all indirect mechanisms to access the fundamental driver of future wealth. Ownership of common stock in High Quality Businesses delivering value above their costs of production means growing equity is a greater contributor than any short term cashflow to your future purchasing power For example the FAANG stocks have made billions for it’s founders and investors at a rate well beyond the inflation rate. It is how Young Billionaires are created.

[@Remyueru]

kfung , thank you. Sorry I just feel like the rate of inflation should not be this "bad" in the first place... One should not have to resort to investments to "protect" his/her assets... It really sounds like we are more realistically in a dystopia rather than not...

[@kfung]

The blame for this deteriorating debt crisis lies with President “Tricky Dicky” Nixon. In 1975, Nixon broke the nexus between the currency and the value of gold. The USD became a fiat currency beginning a rapidly inflating cycle of paper money supply leveraged by the fractional system that had destroyed 98% of the purchasing power of the USD. The rise of bitcoin was one attempt to side step weak willed politicians from running the printing press to impoverish the savings of citizens. This is the lesson of the poor Venuzuelans workers who are desperate to convert their earnings into a stable currency. Not all politicians are at risk, Germany and Switzerland preserve their citizens’ wealth through a balanced economy and stable money supply. Japan unfortunately is in the process of squandering a previous generations wealth just like Nixon and his successors. It is why the Tea Party Republicans rose up in response to this failure of will to protect the ordinary worker and retiree unwilling to invest.

[@pookie8856]

If all debt were paid off, no currency would exist what so ever. Tell me then, how government spending that contributes to stimulating a Monetary Sovereign (Currency Issuer) Country's economy, eg. infrastructure and decreasing unemployment (which is high in Australia for example) "becomes a burden for everybody and for years to come"

[@pookie8856]

Do some research.

[@widehotep9257]

Government issues no money into circulation. All money is created when private banks issue loans. Government gets all money from taxation and borrowing.

[@georgechristou7982]

After watching this I'm even more confused than before.

[@maymyasoe3540]

What is that sentence mean `` Money that created ceases to exit once the debt is repaid ´´ ?

[@widehotep9257]

ALL money is created out of thin air when banks issue loans. When the principal is repaid, that amount is "extinguished," meaning is ceases to exist. But the interest collected by the bank as profit continues to exist. This video was a bunch of nonsense that is taught in college textbooks. None of what they said in this video is true.

[@gorkemvids4839]

Let say we started a country and there is no money in circulation. Goverment gives bonds to new central bank and now we have circulation. But with interest rate, gov dept will always bigger than money suply, is this right? So money =debt

[@mustafabukhari6088]

@Arsh Anwari The US Dollar is not based off or reliant on Gold.

[@bassintheburgh]

Inflation when discussing money supply confuses me. How does more dollars reduce the buying power of each dollar. They are still all worth a dollar. If all of those dollars are competing for a limited resource and the price of that resource rises from increased demand then that makes sense. but I don't see how dollars inherently weaken other dollars it seems logical to me that its all dependent on availability of resources for those dollars to be spent on. what am I missing?

[@ew6546]

"If all of those dollars are competing for a limited resource and the price of that resource rises from increased demand then that makes sense." You describe inflation here. If productivity increases in line with more dollars then there will be no inflation.

[@wolfharthiphop]

Read a book called The Creature from Jekyll Island

[@kennyblair7311]

The printing and issuance of money is validated by any legitimate labor and production for society. What came first? Creativity and production or paper with numbers printed on it?

[@Alina-ws6ob]

Can we deduce that the government is printing debt (bonds) and the Fed is printing paper currency?

[@NaNa-wj8tw]

Can someone add to my lack of understanding of this if it’s wrong: Surely the money created by private non government banks is inflationary and currency value eroding? When a loan is paid back by the borrower for say a car the money isn’t destroyed like a bankruptcy. Doesn’t it stay on the bank’s positive ledger and still exist therefore still being part of the money supply?

[@widehotep9257]

When a consumer repays a loan, the principal amount is extinguished, meaning it ceases to exist. But the interest collected by the bank continues to exist. This is true for all loans made by banks (consumer loans, business loans, government loans, car loans, mortgage loans, credit cards, etc.). And ALL money is created out of thin air when banks issue loans.

[@thestoryofmoney]

Yes, money creation by banks is as inflationary as any other. About the bank debt, what happens when you take out a loan is that the bank gains an asset (your loan) and a liability (the credit it gives you). When you pay it back, both sides of the ledger are extinguished -- the bank no longer has the asset (your loan is gone), and it no longer has the liability either (because you paid it back). The bank ends up with more money than it started due to the interest -- that money had to come from somewhere else. What you're missing is that the loan is an asset held by the bank and that goes away when you pay it back.

[@thestoryofmoney]

Often the bank will sell the loan to get liquid cash back again, for example mortgages are often sold.

[@qwertyuiop-cu2ve]

If FED gives back interest earned on bonds, then the net effect is that any bond that ends up at the FED, directly or indirectly, is a loan with 0% interest. Due to continuous rolling over of loans, there is no limit to this trick as you never have to actually take the responsibility and pay up. Oh and why at 4:35 is Alaska shown as if it sits south of Los Angeles?

[@widehotep9257]

The Fed gives back all profits to the US Treasury, but most bonds are purchased (monetized) by private banks called "bond dealers," NOT the Fed. For example, last year the Fed turned over $55 billion of profit to the Treasury, but the total of other interest payments paid on national debt by the Government was $550 billion. This video is wrong about almost everything. The truth is that ALL money is created out of thin air when private banks issue loans. Banks charge interest for loaning something they never had to begin with. And the government forces us into endless debt with these legalized counterfeiting bankers by requiring us to pay taxes AND settle most contracts with bank-created digital money.

[@qwertyuiop-cu2ve]

@@widehotep9257 If this money the banks loan out is something they never had to begin with, do they even lose anything if the borrower defaults on their loan? Why did the banks need to be saved with tax money (our money) following the 2008 crisis?

[@widehotep9257]

@@qwertyuiop-cu2ve Banks can loose potential profits when loans default, and if they make too many bad loans they can lose their license. But loan-sharks and counterfeiters have business risks as well, and we don't feel sorry for those crooks! Should banks be bailed out? No! Banks are legalized counterfeiting parasites that enslave us into unpayable debt. Just think: approximately 8,500 people committed suicide and countless families were destroyed due to the financial crisis in 2008...all for money created out of thin air in a bank's computer. The practice of bank-created money should be abolished immediately and replaced with debt-free money. And all the $85 trillion in US debts should be zeroed out and forgiven (this includes every credit card, biz loan, mortgage loan, car loan, and all government debt). The bankers spend millions per day to hide their scam in plain sight. The economics textbooks hide it, and so do the politicians, media, public schools, and of course, internet censorship. And they make is seem really confusing and complicated when in fact the evil scheme is quite simple.

[@bassplayer3974]

trouble is many countries have lost control by deregulating banks , and big banks play safe by loaning for property or risky by gamble on the markets as its easy money, all of that is non gdp creating and bubble forming.

[@DistributistHound]

Try to match this with the circular flow of incomes economic model and kaabooom

[@MengerMania]

The Fed cannot create money because private parties cannot have accounts at the Fed. Money gets created when banks buy bonds (or any other asset, for that matter.)

[@kentheengineer592]

2:00 not exactly what auctually happens is the bank recieves an accounts payable as deferred income & as such a order to print or produce money is made then through supply chains & logistics for multiple industries you recieve set money in the form of Senorage, by the way anyone through a financial institutions treasurer can order money directly no need for a central bank unless of course you have stability problems

[@mrliamalan]

Is the Federal Reserve sustainable? 1996-2008: GDP ↑45%, Monetary Base ↑46% 2008-2020: GDP ↑32%, Monetary Base ↑600% Prior to 2008, the Monetary Base and the GDP were 98% correlated reflecting the reciprocal relationship of money and economic expansion. Can the current rate of monetary expansion without corresponding GDP growth continue without consequence? *Bloomberg sued The Federal Reserve in 2011 and uncovered a $7.7T secret bank bailout not represented here.

[@MrSupernova111]

Money creation and its effect on inflation are very complicated. Not all money ends up in the hands of consumers. I think this video is far too short to offer useful insight.

[@algray5266]

One question. What is this created money backed by?

[@bassplayer3974]

dollar used to be gold and other were tied to the dollar hence a reserve, but nixon took it of the gold sandard so floating on nothing or fiat money. all for a war. totally screwed the world up poor rich devide bigger.

[@thestoryofmoney]

The full faith and credit of the United States government. You're kidding yourself if you think that's not worth anything.

[@algray5266]

@@thestoryofmoney And the national debt is what?

[@thestoryofmoney]

@@algray5266 Can you rephrase your question? What are you really asking?

[@agapheputrasusilo741]

watch mike maloney hidden secret of money

[@Rostom_aram]

So when centeral banks don't have enough money to pay to other banks . They just buy bonds and bonds are promise to the government that they will print some money and then pay it back. The question is to who they pay back the bonds? From my understanding when everything collapse the government tell centeral banks to print some money and make money with that money and then pay the interest back to the government. So governments can make the central banks print unlimited money. Can someone answer please

[@Tonycaveman]

From what I understand, money is created as a form of debt (from banks to the government, for instance). When someone (say a bank) signs a dotted line on a contract that says they will someday pay back what they are borrowing - Poof! New money is created based on that promise. > "The question is to who they pay back the bonds?" No debt is ever fully settled and new debt is always being incurred so more money is constantly being created. That's why inflation exists.

[@Rostom_aram]

@@Tonycaveman exactly man the question is to who they have to pay the dept back? The government is loaning money that they don't have. Its just words on paper

[@Tonycaveman]

@@Rostom_aram > "exactly man the question is to who they have to pay the dept back?" I feel like the answer is obvious, isn't it? You always pay back to the person or institution that you borrowed from. The fact is that, like I said, debts are never fully settled and new debts are always being incurred to pay for interest on old debt. That's how the system keeps on rolling.

[@Rostom_aram]

@@Tonycaveman people borrow from banks banks borrow from central banks from who the central bank borrow

[@Tonycaveman]

@@Rostom_aram Central Banks are an extension of the government. In the end, the government decides how much money is in circulation, because it controls the printing of the national currency.

[@Shadwan11]

Can I Suggestion increasing the speed of your voice-overs to 1.25x, as it makes your projects sound more fluid and exciting to watch. Currently, the tempo is too slow, and I think if you would increase it, it would attract more views to the channel.

[@JackEacher]

hey! not everybody understands these concepts as fast as u do.

[@MrSupernova111]

Listening at 1.25x speed isn't going to help you understand economic policy better. If you get bored so quickly then, perhaps, the issue is your lack of attention span. Work on it!

[@greenpang8483]

fiat money= promise of US government will pay in service/product in the future = debt In order for economy to grow, market need more money supply ,else more product where money supply didnt grow, will come deflation . Value of money increased, depression come. No one will want to buy anything knowing the next day u find it cheaper. this is what happen in Japan. The national debt and the debt that normal people acknowledge are totally different . U can't print the money, but government can.

[@123123mike]

First, go to mises.org, and study everything you can about Austrian Economics. Second, buy physical gold and silver, the best inflation hedge there is. It's easy to buy, any coin shop has silver rounds (1oz .999 pure silver) for sale at spot price +small fee. And third, steer clear of Bitcoin; it's a speculative bubble, no matter what they may say otherwise.

[@widehotep9257]

The Austrians are DEAD WRONG about money creation. They still use the completely debunked "money multiplier effect." The truth is that ALL money is created out of thin air when private banks issue loans. Banks charge interest for loaning money they never had to begin with. This bank created-money is still fiat money because the government forces us into debt with these evil banks by requiring bank-created digital money for tax payments AND settling most contracts (legal tender laws). I was a HUGE Austrian fan twelve years ago, and it was very hard for me to realize and accept that they are pushing a load of crap on people regarding money creation. Even Rothbard, Shostak, Tom Woods, Peter Schiff, and Von Mises get it wrong. Now I can only wonder if they were innocently misinformed, or just another layer of intentional disinformation financed by the multi-trillionaire bankers.

[@123123mike]

@@widehotep9257 Yeah, I hear you. Banks definitely create money out of thin air. But does it really matter? Whether it's the multiplier effect or Banks creating Bank credit, isn't the effect the same? An inflated supply of fiat currency? And are you arguing that Bank credit expansion doesn't contribute to or cause directly the boom-bust cycle? that all this cheap money floating around out there doesn't cause malinvestment and a misallocation of resources on a grand scale which must, must eventually lead to a recession in order to clear out bad debt?

[@widehotep9257]

@@123123mike Yes, it matters. If we wrongly blame government for creating money and we blame all the horrible side-effects on politicians, we are like confused bulls chasing the red cape of the taunting matador. The only real chance of reform and return to debt-free money requires CORRECTLY identifying the perpetrators of this financial evil as private bankers, NOT politicians. And on a side note, it completely ruins the credibility of any economist when they get money creation wrong. I always loved Murray Rothbard and thought he was an intellectual giant until I realized he was pushing the debunked and easily refuted "money multiplier myth." And it got worse when I learned the "money multiplier myth" was started by Milton Friedman and Anna Schwartz in their book "Monetary History of the United States." Rothbard was a huge critic of Friedman, and loved picking apart the Chicago School and their beliefs. So how could he miss this elephant in the room? Was Rothbard part of the disinformation effort to confuse us about bank-created money? And why is Frank Shostak STILL defending the "money multiplier myth" at Mises.org? I will never know, but I will also never fully trust the Austrians again for lying to me about money creation and wasting my time on a dead-end theory for a decade of my life.

[@rs.entertainment3061]

This is why I like bitcoin and commodities

[@jahjoeka]

Hey u got a new subscriber! But honestly this money thing makes no sense. Like there's nobody really keeping track of all the money credited so what's stopping anyone from creating money out of thin air. Also when people rob a bank digitally they're just stealing code, how could that money have value when it's just code, what about physical reserves of money. Idk it's hard to pinpoint the question im asking.

[@truckeralvarez5932]

The FED is just ANOTHER BANK. So, a bank giving fresh PRINTED money to another bank.

[@MrTrollBeast]

so the problem is that the us gov is basically renting money when they could issue it themselves interest free people would argue that the us gov would then make money like crazy but that's not in reality true because money is a special promise made by the obligor(issuer obligated to work to return the money out of the system) meaning that the more money created the more in debted they are which the us gov does not want.

[@christopheb9221]

To pay off all debt isn't possible because of interest right?

[@thestoryofmoney]

Right, in theory. But, if we actually tried it, that's called a great depression -- the greatest anyone has ever seen. You're not getting 100 cents on the dollar of what you're owed in that kind of situation.

[@gabbar51ngh]

You can always push the burden off to other countries by giving them loans.

[@mklik4]

Even his voice says conspiracy

[@christopheb9221]

Money wasn't a well thought out creation it just kinda happened and it does seem ppl did corner the control of money the system will have to fail before it will change. Also with different currencies makes things messier

[@fitnessnature]

I still don't understand why are all those stuff, bonds, numbers on paper connected to material things, people making something, a lot of people don't make any physical things (products), but do some kind of other things like lawyer , athlete, singer.... How is all that connected to numbers on paper and banks. What exactly is money ?

[@WadcaWymiaru]

This is WHY we should keep coin not banknote system. You can't "print" the coins because the amount of avaliable metal is limited (like copper and it's alloy: brass&bronze) But the best would be...silver and gold standard. BTW - the "coin system" is invulnerable to falsyfication because any coin has it's own value compare to useless paper.

[@lollol-ou8tp]

Just read Adam Smith. He said that it doesn’t matter what we use as long as it has value. The problem is not money itself, it is it’s quantity. NGDP targeting or use of Friedman rule is better solution than a return to gold standard.

[@WadcaWymiaru]

@@lollol-ou8tp I wrote what *I WANT* to see! I really like coins: they are so beautifull!

[@WadcaWymiaru]

@Chess Club Man But compare to paper your 1$ coin can't become 1 000 000$ in next day XD

[@WadcaWymiaru]

@Chess Club Man We are NOT living in the ancient time!

[@WadcaWymiaru]

@Chess Club Man Do not ask stupid questions. People will NOT allow for that!

[@davmac6148]

“When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes… Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.” - Napoleon Bonaparte, Emperor of France, 1815 The real truth of the matter is, as you and I know, that a financial element in the large centers has owned the government ever since the days of Andrew Jackson… - Franklin D. Roosevelt (in a letter to Colonel House, dated November 21, 1933) THE POWER OF MONEY ABOVE A FAKE DEMOCRACY, MANKIND ENDS WITH WW3, SO FAR ALMOST INEVITABLE IS NOW BECOMING JUST A MATTER OF TIME. BILLIONS OF PEOPLE WILL DIE BECAUSE PROFIT IS WHAT SHAPES MEN"S DESTINY. THE RACE TO BUILD THE GREATEST ARMIES MAKES EVERY DAY LIFE'S PRECIOUS, LIKE IF IT IS THE LAST DAY FOR EVERYONE.

[@dejavucmail8176]

modern money creation story is by far the greatest mechanic and tool that human had every created, if the government using it right, the will be no problems at all. Low level of inflation is healthy and necessary for economic growth, if newly created money is used for created more goods and services, no inflation will happen. But if you create money just for consumption, you will get hyper inflation and that will be very very bad news for any county who did it.

[@amadoarreola6153]

I saw this on zeitgeist

[@josehawking5293]

Money is a legal unit of account having a fiscal/tax relation between the issuer of the currency and it's users. Unlike States and municipalities, federal government expenditures, not taxes, pay for entitlement/discretionary spending and interest on the debt. Demanding that taxes be paid in dollars, insures the validity of the dollar as the means of exchange. Taxes such as capital gains, dividend, interest, corporate, inheritance, estate and a passive income tax are vital for restraining concentrations of wealth. The National Debt is the amount in dollars spent into the economy that the federal government buys back in exchange for interest bearing Treasury securities, essentially transferring money from checking to savings. Deficits occur when the federal government spends more dollars into the economy then it taxes back out. Deficit spending provides the liquidity necessary for the economy to function. Inflation is a continuous rise in prices across the economy due to a shortage of resources and/or productive capacity. Hyperinflation is a collapsing value of the currency across the economy due to a collapse in resources and/or productive capacity. Stagflation is a decline in economic activity compounded by a continuous rise in prices across the economy due to the scarcity of a vital resource. Deflation is a general decline in prices across the economy due to a reduction in active income, inversely corresponding to an expansion in passive income. Recessions are cyclical contractions of liquidity across the economy that cause a corresponding decline in economic activity. Depressions occur when the federal government runs a surplus, starving the economy of liquidity that cause deep and systemic unemployment and an unsustainable escalation in private debt.

[@magnetmusic4637]

My bank is constantly saveing bank The loan has no intrest The money is withdrown every month and redeposited only the mach you want. In times of fineral excetra problems the bank helps money that is non payeble They are two kind of saveings by csb 1 constanty 2 and date saveing Drop a like if you want to know mach abuot c.s.b bank and how it maneges to help its cleints with loans without intrestl 2

[@kon3688]

Interest is a killer , that is why it is forbidden in Islam. Interest makes rich people richer and poor people poorer.

[@FutureLaugh]

Inflation goes up, your salary stays the same- must be those evil corporations increasing prices. meanwhile Burgerking is desperate to invent a new rat burger for $1 to keep its customers happy lol

[@Emsyaz]

They're able to sell delicious burgers for 1$ because the quality is worse than dog food. Those food contains junk, toxic ingredients to give it a good flavour but its meant to destroy your life and health in the long run

[@user-nf9xc7ww7m]

So if we're gonna have inflation anyway from the creation of money, why not just get rid of taxes?

[@thestoryofmoney]

Inflation would be higher without taxes. You basically answered your own question.

[@dougbillman2333]

DOLLARS ARE a PROMISARY NOTE...or debt note........

[@koeibgm]

so our money (basis, not "money" created via fractional banking) is just a receipt for the debt our government has accrued. If the government was to theoretically repaid all of its debt, then that would require the government to collect taxes and not spend one dime of it for a very long time, and simply repay it back to either a) foreign governments who hold US bonds, or b) the federal reserve who bought those bonds, who created the money in the first place. Either way, the money equal to the amount of federal debt would be removed from US market, and the purchasing power of the remaining money would soar. Since all money in circulation came to exist via the federal government issuing bonds...if US government repaid its debt entirely, there won't be any money in the market, and we would go back to the age when people used minted coin as money. For those who save their money, US government starting to repay their debt would be a great news, as it is equivalent to US government removing money from market circulation (by not spending its tax dollars back to the market). That said, I don't think that would ever happen.

[@nzmak3220]

money is not debt, currency is.

[@jansoriano3889]

Big Ben Bernankey and janet yellin are a yellin and have a frickin a kanipshin !shittin in der pants-

[@shaungorham5479]

Just Curious sometimes...that B me

[@freedomismine4607]

The ship is going down boys

[@johnpanos2332]

watch " money as debt " on youtube. we've been conned by the 1%

[@murrowboy]

Wait, so you can't get bonds from the government directly. Banks buy the bonds from the treasury than you buy it from the banks? And the fed does the same?

[@thestoryofmoney]

There are auctions to banks, and then we buy bonds from the banks, yeah. The Fed as well. It's set up like this for historical reasons. People used to be freaked out by the idea of the Fed monetizing the debt.

[@DizzyNLD]

Look up primary dealers

[@jansoriano3889]

NO SHIT SHERLOCK!

[@mustafabukhari6088]

And debt is repaid to who ? am guessing the treasury, but now the treasury has new money that came into existence by signing those effortlessly written bonds. Sounds like we are getting scammed unless someone has a piece of information that am missing.

[@anuaribrahim3672]

fiat money is not same as debt, the bonds and loans are debt.

[@vb8682]

Currency creation not Money, there is a big difference and you should know it!

[@helenarichard]

It's like making up gold mountains in your imagination and yelling "I am rich!". It's a bubble. It's unbelievably stupid.

[@neilrutan8448]

Where's the XLM, BTC, XRP gain? Fixing the money problem one coin at a time!!!

[@CODE14464]

Xrp and xlm is dead soon

[@MengerMania]

The Fed does not create money. Only banks do. Reserve dollars shown as a Fed liability cannot act as money because the public cannot have accounts at the Fed.

[@marunio435]

That's the main reason of inflation. This year is horrible.

[@DrAAAli]

Still confusing

[@Fakhrihilmi69]

Now I understand why Islam prohibits interest.

[@iminaforever591]

S K what if the government introduces their crypto coins, then make bit coins and all the others people are investing in now ILLEGAL? Decentralised or not, they can simply deem it as breaking the law. Then what?

[@user-nf9xc7ww7m]

@@SJKKA most Islamic scholars regard all interest as haram, much as early Christians did. Islamic banking follows that principle in that no interest is allowed. I do wonder, however, if modern society with smartphones, $45,000 PPP living standards, and multinational corporations could exist without interest...

[@arbercami]

Money is not the same as currency...only gold and silver are money, all the rest is currency. Money holds its value for a long period of time, euro-dollars-pound have lost 95% of their purchasing power, so dollars-euros-pound are all currencies and not money.

[@isawaturtle]

Incorrect !!!!!!!!! So wrong. Fiat currency govt creates dollars when it spends. This increases balances at the Fed called reserves. Commercial banks create their own data entry to reflect the govt spending. Then if the reserves are left in the banking system it puts pressure on the Fed funds rate. So all reserves that get spent into existence are match with bonds ie “borrowing” This video has it back to front and then goes on about fractional reserve lending which the US ended in the 1930s.

[@tyrush7649]

This video is too conservative on a general point of view. And don’t blame the Greed? Really? I mean, really?

[@thestoryofmoney]

It's not a good video, it's wrong on a number of points.

[@shawnzuercher7262]

Liberation

[@dougbillman2333]

Your birth certificate is a bond... this is why it's on bond, WATERMARK PAPER.......

[@ew6546]

It's alarming how few people actually understand money, banking, and the Federal Reserve...even some "educators" like the makers of this video. Today, banks do not create money by lending out deposits. The lending capacity of a bank is not limited by the amount of customer deposits. In fact, a bank doesn't even need deposits to be able to issue credit! Deposits are actually created when banks extend credit (new loans). Reserve requirements do not restrict the amount of credit a bank can extend to customers, rather it is the demand for loans and profitability that determines the amount of credit a bank creates/extends. This is determined by interest rates, if rates are high then people won't be willing to borrow as much (or qualify) and the bank will extend less credit. Banks take deposits to secure reserves because it's usually the cheapest way for them to borrow money.

[@MrSupernova111]

Where do you think these "new loans" come from you doofus? Why don't you try issuing a loan without funding? Whether you get your money through traditional banking deposits, revenues from some form of income, or shadow banking you need funding. Loans have to be backed by cash one way or the other. If anything, fractional reserve banking die-hards are the morons.

[@markm2265]

So money is just created out of thin air? LOL, A BOND is an IOU? lol And we will keep track of what you owe me and Im charging you interest. If you want more, I will give you more anytime. Have a nice day. That's how the whole game starts. They have no care in the world how much they (the government ) go into debt, because after all like he said, its all YOUR MONEY anyways, the future generations will pay, yes, but this game never ends, they make up new rules to the game as time goes by, rules to suit them, (the ones in charge, The Government) in their favor or whatever. What will the game look like in 1,000yrs from now, it goes on forever, and ever. As long as they can service the debt, who cares about the printable. And it is, Just a game knowing $$$ are really created out of nothing.

[@f.e.febriansyahpusatedukas8816]

what if our $1billion paper money burnt? 🙄

[@thomasdavid1458]

This video is not based in reality. You are describing how you want money creation to work not how it actually works.

[@victorbruce3315]

Currency creation not money

[@Ayo22210]

You’re making it too complicated when banks make loans they create that money

[@J6fundsssss]

So is money fake and evil then ?🤷🏽‍♂️

[@_denzy_6310]

So money = dept. Yikes

[@jiomanalo1457]

why cant a country just print money to pay off debt?

[@revid]

They can, but they don't have any debt... at least in the way you are probably thinking.

[@jiomanalo1457]

@@revid oh ok

[@dougbillman2333]

They get their credit, from all the federal CORPORATE PRISONERS, that are there UNLAWFULLY... again, they do it without their permission......,

[@karfar8029]

Base money is created when the federal government spends into the private sector. All spending is funded by newly created dollars. Revenue is not a funding mechanism. Securities are not a funding mechanism. Securities are a timed payout savings accounts and a monetary tool to control the price of banking. Federal taxes are how base money is taken out of the private sector and destroyed. The public sector debt is the private sector asset. The public sector debt is not borrowed and is not something to be paid back. Base money accounts for only 3% of the money supply. Most money is bank credit denominated in dollars. The quantity theory of money as an explanation for inflation is childish and does not explain inflation. Inflation is the result of either demand pull or supply push forces. Simply increasing the money supply does not cause inflation. All money is debt as all assets have an equal liability. Austrian economists are morons.

[@MrSupernova111]

This youtuber has no clue what he's talking about. Probably another college drop out that doesn't want a real job.

[@maoistking7490]

🥴🥴🥴🥴🤕🤕🤒🤒🤒

I dont like money

[@edmarcavage8300]

This is why the US needs Bitcoin

[@idrissberchil25]

Funny they're trying to arrest the creator of bitcoin. Good he's anonymous

[@user-nf9xc7ww7m]

That fluctuates worse than any currency outside of Zimbabwe. I would love to see options on currency though. It would be interesting. Not that it really matters as most currency is just stored numbers on debit and credit cards. Maybe universal gift cards...