Recession, Hyperinflation, and Stagflation: Crash Course Economics #13

If you're ever put in charge of a national economy, there are a few things you should try to avoid. Before you laugh, just remember, you COULD be in charge of an economy someday. Someone has to do it, and anyway, if it could happen to Alan Greenspan, it could happen to you, too. The first thing you're going to want to avoid is hyperinflation. Don't print too much money, okay? Actually, it's a little more complicated than that. Jacob and Adriene will explain. You're also going to want to stay away from recessions, and especially depressions. In the world as it exists today, continued growth is the only path to viability. While some argue for sustainability or even controlled recession, you're not going to keep a job as head of central bank thinking like that in this day and age. Also, avoid stagflation, which is a stagnant, no-growth economy combined with inflation. It's just the worst. Don't do it. All this and more on this week's Crash Course Economics.
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[@JasonTodd339]

I used to watch these for fun as a teen, no idea I'd be watching in 2022 to prepare myself to dive into understanding a current recession 💀

[@kawgrath1876]

Ayyyy who’s watching this during the economic crash 2020

[@melvinthedeathless.melvint6727]

Money Printer goes BRRRRRR.. Feds inflating a bubble; the best, most tremendous bubble ever....

[@rock3tcatU233]

Bigly bubble pop of 2020.

[@danielmajor1015]

sup

[@aeroball8360]

stagflation here we come

[@scorpisces182]

@@aeroball8360 exactly.

[@user-kf8fj2mc7u]

*Main outtakes of this lesson* 1) *Hyperinflation* - when a country experiences a monthly inflation rate of over 50% or around 13,000% annual inflation. a. Extreme inflation also forces people to _spend as quickly as possible_ rather than save of lend, so there is no money available to fund new businesses. And all that uncertainty _limits foreign investment and trade_. b. The more money you print, the more inflation you get. c. Economists call the number of times a dollar is spent per year a _velocity of money_. When people spend their money as quickly as they get it, that _increases velocity_, which pushes inflation up even faster. 2) *Depression*. a. After the initial crash in 1929 the federal reserve _dropped interest rates to zero_, output and prices fell, and regular people started to expect further price declines. Unemployment rose to _25%_ and the average family income dropped by around _40%_. 3) *Stagflation* - when output slows down or stops, or stagnates at the same time that prices rise. _Stagnant economy + inflation_ = stagflation. a. The FED tried to address this by _boosting the money supply_ and _cutting interest rates_, but output couldn't rise much because of low productivity and the oil shortage. So all that extra money _just triggered inflation_.

[@GuilhermeSilva-kx6ms]

+Сергей Галиуллин Good thing man, for lazy people like me. Not the hero we deserve!

[@Asskickervicky17]

thanks for taking the time to do this, I always look out for your summary. t=They speak so fast sometimes so I don't always get all of their points. It saves me rewatching it ten times :D

[@amphibianvoice]

Thanks for doing this, but this cuts off.

[@AlexCiderGaming]

Hey :) . I was going through this crash course, and I noticed your comments throughout all the videos. It seems like after this video you stopped commenting. Am i just unable to see the comments, or did you decide that It was tedious to continue to make notes? Im just curious because i thought they were very good notes, and was trying to use them as a learing aid :)

[@clarasm5943]

I gotcha bro, I did the summary for the next videos

[@2Sor2Fig]

As a Zimbabwean myself, this is a pretty good summary of what was going on at the time. We actually sell posters now with laminated prints of all the old denomination notes we used to have. Good times, good times (irl, it was actually pretty sucky).

[@roilhead]

I am in New Zealand and I have a $1milion dollar Zimbabwean note on my fridge to remind me of what can happen. The big question is, how many $1million dollar notes am I going to have pinned up below it before this is over?

[@ivanclark2275]

I thought stagflation was when there's too many male deer, thus devaluing the buck.

[@181snake]

Well that made me smile!

[@philipb2134]

+Ivan Clark Stagflation occurs when too many friends of the groom gather to party, and there aren't enough strippers.

[@madman3470]

I'm not sure if this is the best or worst thing I've every heard

[@spectre111]

Oh my god!!! *ROFL* I wish i could show that to my economics professor, he was a deer hunter. XD

[@letsgetreal2501]

Oh, man

[@Rosey00713]

"Anytime you have to express your inflation rate using scientific notation, that's a bad thing."

[@mrgallbladder]

Jacob, please squint your eyes a little bit and blink once in a while. I feel like you are staring into my soul.

[@Ziggy42069]

Squint your eyes like Wayne from letterkenny

[@vaibhavgupta20]

I'll buy that zucchini she was selling last time for 100 trillion Zimbabwe Dollars..

[@Radswa_Chikinora]

@LowJack187 welcome to June 2020

[@BryantMitchell]

I just noticed Jacob's belt buckle at the end of this video

[@Crystalvampire66]

it's been cool the whole time

[@adilsohailpk]

+Bryant Mitchell cool

[@TheAres1999]

It is a different buckle from the rest of the video. They're both ACDC buckles, bu the font is different.

[@biscoito1r]

recession is when your neighbor loses his job, depression is when you lose yours.

[@pepperjeanne1566]

biscoito1r lol

[@2000guineas]

Lol

[@honeymellybee1764]

hahaha Gosh

[@kevinmarshall59]

Kinda true. My great grandparents could barely hold jobs during the depression and when I was a kid I heard of kid’s dads losing their jobs.

[@rayt5520]

Been thru that when all my neighbors lost their jobs in 1984 finally found one after 6 months 4.50 hr my neighbor an electrical engineer 6 hr. whse supervisor .

[@Warhawk666]

my favorite crash course is astronomy. I never thought I'd like economics; I never showed interest in it when I was in school. But this stuff is very informative and I enjoy this crash course a lot!

[@sedthh]

my grandmother used to tell us stories about the hyperinflation in Hungary they mention in the video she told us that whenever they got any money they had to spend it and buy things becuase it would not worth anything tomorrow "if you had the money to buy a cow, you should have bought one on the spot because next day all you could buy with that amount of money is a stray cat" as a kid I couldn't really get my head around this, I was like "how is that bad, who would not want a cat?"

[@vladabuba]

I lived through hyper inflation in Serbia in 1993. We had paper note in denomination of 500 billion dinars. That is 500.000.000.000 dinars. From first hand I have to say that I was not happy nor glad that I had to live through it and experience it.

[@DanThePropMan]

Thanks for explaining the impact of expectations of higher prices on (hyper)inflation. I never quite understood how inflation was allowed to happen in Weimar Germany or Zimbabwe, but that's because I had been thinking about it as if it were entirely the result of the government printing far too much money, which seemed easy - and obvious - to avoid.

[@rjr81]

+DanThePropMan Economics is about trade offs. Hyperinflation happens when the government considers it better than the alternatives. Germany had a lot of debt to pay after World War I. Hyperinflation wiped that out. It's also a lot easier to start than to end.

[@mankytoes]

+rjr81 I don't think the Weimar Government intentionally caused hyper inflation. I'm sure they knew they would cause some inflation, but not that kids would be making kites out of money, it would be burned for fuel, etc.

[@rjr81]

+mankytoes I don't think they started out wanting to create hyperinflation, but I do think that there were a series of decisions where increasing inflation looked like the least bad option.

[@bestpseudonym1693]

+DanThePropMan the Germans gov't's hands were tied they, as according to the treaty of Versailles, had to pay reparations to the allied countries (because of Britain), however ever after having all their stuff blown up and spending a lot of money on the war and the rest on the dept, the German gov't said well i guess we just have to print the rest of the money good by economy.

[@mankytoes]

xpseudonym pseudonym It wasn't because of Britain, it was because of France! We wanted a more moderate course, the French wanted to hit them as hard as possible. Of course, they were the ones who had had half their country destroyed.

I came here in august 2022, trying to understand what’s an stagflation

[@otaku-jl5pt]

That pokemon reference at <a href="#" class="seekto" data-time="403">6:43</a> tho "consumer used bind on central bank, its super effective"

[@BrianSurkan]

I'd also like to see the Crash Course version of Austrian Economics. From what I have seen, the Austrian School would place most of the blame for the crises presented here on the government interventions such as the Federal Reserve. For example, no mention of the end of Bretton Woods in 1971 is made, but the cut to the fiscal honesty forced by the quasi-gold standard under Bretton Woods is the most compelling explanation for the inflation thereafter. Note that without a central bank, the markets automatically raise interest rates when the savings rate is low and lower them when the demand for loans is low. It is only when the Federal Reserve tries to twiddle with the interest rates that there are prolonged imbalances. In other words, the Fed impedes the natural market forces of the price mechanism. We should expect larger, more pronounced economic swings as a result.

[@MichaelRosmer]

In practice it doesn't really work like that and you can see the impact by going back and examining the US in the 1800s prior to having a central banking system (things weren't very good and they routinely had inflationary events and issues). The Fed today dramatically manipulates the market that's true and at some point that will probably blow up but systems without central banks haven't proven to work very well.

[@itssteve6018]

@@MichaelRosmer There is absolutely no evidence that the monetary system in the 1800s was somehow "worse" than in the 1900s. Zero. Evidence. Simply a repeated mantra of "economic" students who know merely how to parrot, and not critically investigate. Inflation in the 1800s fluctuated just above 0%. The only time inflation "events" happened was during the civil war, or when the gold standard was suspended. You're flat wrong to assert that it was somehow "worse" in the 1800s. In practice, central banks don't work as you believe, and there is zero evidence they do. But people like you will tell others to check, despite never having checked yourself.

[@MichaelRosmer]

@@itssteve6018 do you perceive that the only economic or monetary problem that can exist is inflation? If so I'd say that's where we'd strongly disagree. Economic and monetary issues are many. What's the objective of monetary policy? What should a great monetary system achieve?

[@YAOES]

I love this series!!! I wish I had money to support this! I mean, I've loved other courses in the past, but this one has just blown my mind. I might have to go into business in college... Hmm... Anyway, I'm going to get a job in a month or so and I will start contributing through Patreon!!!

[@ceskaKD]

Could u please put the subtitles on all of ur videos? So my students could catch up of what u saying. Cause u speaks soo fast and English isn't our first language. Thank u.

[@swampthingforteinadeyate9007]

If youre watching on yt then slow down to .5 genius

[@ayotanmiwaa]

Wow these guys are amazing. I'm in this thing called model UN and i have Venezuela this year (2019) and its very very crazy there now and i was soo confused and i felt like i wasn't going to do a good job. But this video dramatically helped me in understanding what is happening in my country and how i can help it. Thank you Guys soooo much!!!

[@reyisawesome]

I just saw this subject in my macroeconomics course today. I'm glad i can understand it now

[@daeunpark8173]

NOTICE THAT JACOB ALMOST NEVER BLINKS HIS EYES WHEN HE'S TALKING

[@trustme2001]

Who's here cuz of the coronavirus?

[@Andrew_572]

Me, definitely learning how the $1,200 USD check will be completely worthless.

[@Mabh838]

corona virus call it Chines or CCP virus

[@leifc.6045]

@@Andrew_572 weimar republic style.

[@mohdlubiskhan7713]

Welcome deflation 😭😭

[@jimettamarna417]

abhi sahdev - CCP Virus needs to become the common term for this....

[@benknosby2758]

You all do a great job. Thank you.

[@peterchin7796]

I wish the economic class in school were so fun! keep up the great work!

[@shayson1357]

wow, my first video from this channel....this is great, subbed.

[@bcnicholas123]

thank you for this series

[@megameow321]

Adrienne, I heard you on NPR's Marketplace. Great job!

[@williambruan7319]

This series taught me more than my econ teacher.

[@FloridatedH2O]

Haven't watched this course in a while. I might start again.

[@abhijeetsingh4712]

Great Work Team Crash Course !!!

[@gucciglacierz2146]

Crash Course is so fun to watch!!

[@vivekuniyal3632]

You guy's are awesome! Appreciate it.

[@ULTD8]

one of the most engaging episodes thus far

[@gathukumatheri8091]

Crash Course is my favourite crash course series of them all

[@cyvarios]

OMG the bind animation was the best!!!

[@yomarcelojeje]

Fantastic video. Great work.

[@harperbroome7109]

This was a really good video!!!

[@iampyre2016]

“Everybody’s a billionaire!” I died laughing.😂😂😂

[@nikp6302]

Watching this as the US is plummeting into a recession to know what I should do lmao

[@Anima7e]

Nik P start saving as much money as possible!

[@dan_youtube]

Spend the money cause they will be worthless

[@cheyanne919]

Stock up on food. Mylar bucket and bags. Stock up on seeds. Grow food if you can.

[@h.i.sjoevall4213]

08:56

[@duncanfromunderthebridge]

Lmao whoever said “spend all your money”, what an idiot. You need to save money, but not dollars. Buy gold, silver, etc. so when the crash comes, the value of the money you have right now doesn’t evaporate. In fact it will skyrocket.

[@carlosgavidia6459]

I don't know what I would do with you!!! Thank you!!

[@Mr4thetruth]

Thanks, a difficult subject well explained. :)

[@thespeakingsocialist8732]

I have a test on this in a week! Thanks

[@lonestar98]

This course raises my value

[@stephan2796]

<a href="#" class="seekto" data-time="406">6:46</a> look at the pop up bubble. When she says "bind", the bubble shows the pokemon animation for the move named "bind".

[@alphablitz1024]

I love that I can't tell which school Crash Course Econ itself subscribes to. Great work. Oh, and CHICAGO FOREVERRRR

[@denilsonmoreira8667]

Hi guys! Can you make a video explaining the recent Oil Industry Crisis and its effect on countries like Angola where the economy vastly depends on this commodity? Love your videos! Thanks

[@Mobius14]

"next week we're gonna look at different economic schools of thought" >austrian school of economics TOP KEK

[@notreallymuslim6659]

>Shows Marx waving communist flag >complaining about Austrian economics >greentexting on youtube k

[@RedLeader327]

+notreallymuslim Austrian economics work on paper only.

[@scalp340]

+millenniumdragn Austrian economics pertains to the study and analysis of economics based in Praxeology, not some economic model that makes sense on paper. So I think your premise is incorrect.

[@scalp340]

aNaRcLaSm Nice try: www.goodreads.com/quotes/846342-praxeology-is-a-theoretical-and-systematic-not-a-historical-science

[@aNaRcLaSm]

Nick Tanzillo Interesting, the last part is the only part that matters though.``They are not subject to verification or falsification on the grounds of experience and facts.”

[@GOSUmartialarts]

Excellent stuff.

[@MichaelMillerGR]

Anyone else here for a refresher?

[@Faiselmoha]

Thanks for sharing this important topic. May I know what softwares are required to make such a video for a KZbin

[@RTRully]

That "AC/DC" best is cool!

[@zebulundelgadillo4851]

I learned more in a ten minute video than I ever did in high school economics

[@kr9244]

Please do a video on how increased productivity through technological advances offsets the inflationary pressures of the fractional reserve banking regime.

[@freesk8]

Looking forward to hearing an unbiased summary of the Austrian perspective....

[@juancpgo]

Lovely, beautiful photo at <a href="#" class="seekto" data-time="330">5:30</a>, the whole family looking at dad's face.

[@davidparker7216]

I am glad people see this

[@NguyenNguyen-pi9xk]

<a href="#" class="seekto" data-time="212">3:32</a> I think the column of prices might be maximized before the column of output because the more money you print, the more inflation you'll get so prices rise sharply.

[@Lazarosaliths]

great video!!

[@arimoku972]

hey im a big fan of crash course and i would to know the sources u used for your research prior to this vidoes.I would please like to know coz i have an economics project on the recent recession of NIgeria.

[@21221sara]

Thanks crash course !!!!!!

[@pocok5000]

Yay, my country was mentioned in a crashcourse video!

[@blownspeakersss]

I love this series; I just wish you guys would show more of the math involved. Economics at university is basically applied mathematics.

[@jamescarmody4713]

Math is the work of economics, which is beyond the scope of this course. If you do want to learn the math, though, Jacob runs a youtube channel that really goes into it. Check out his first video on microeconomics. He shows many of the graphs involved: kzbin.info/www/bejne/aJrdqWiNZqt0e7c

[@MultiSciGeek]

That guy is like professor. Everything he says goes over my head. Speak slowly and with meaning.

[@MariaCastilloLugo]

It would be interesting to watch a version of this episode updated to Venezuela's state of hyperinflation

[@thebestnunstopable7759]

it's a very good learning website

[@AAP5522]

Did anyone see Jacob's ACDC belt buckle? Rock on bro!

[@napamodesto8001]

Nice video! What was the deal with the anchovies though?

[@confirmselection8888]

so professional.

[@AlexTrusk91]

<a href="#" class="seekto" data-time="58">0:58</a> note that a trillion in the us number system is "eine billion" in the german system, like in the most european naming systems for numbers :P

[@AlvinRyellPrada]

I am here to understand what is gonna happen to our economy after the Corona Virus outbreak😭

[@LetsTakeWalk]

Is there such a thing as hyperDEflation? And has such a thing happened and is it a bad thing?

[@mbanana23456]

Well the economy would collapse almost completely so yes that would be a bad thing

[@The2005rwb]

+Lawrence Tider Yes, there is, and it will happen if a Republican is elected in 2016.

[@notreallymuslim6659]

+The2005rwb shilling it up hardcore yo

[@neeneko]

+Lawrence Tider It is a thing, but is much harder to pull off. BTC was a candidate, but not enough people care about it. Gold standard can get pretty close though. Years ago I recall reading about examples of rather localized hyperdeflation in poor nations where a single (or group) of investors was able to control the money supply of an entire nation and grind it to a halt, but it was so long ago that I can not recall the specifics and could be misremembering.

[@rjr81]

+Lawrence Tider Bitcoin around 2013/2014 might count. It probably can't happen with a major currency because it requires a massive increase in the amount of goods available for each unit of currency.

[@JamesArdito27]

"In retrospect, it seems that the lesson of the Great Crash is more about the difficulty of identifying speculative bubbles and the risks associated with aggressive actions conditioned on noisy observations. In the critical years 1928 to 1930, the Fed did not stand on the sidelines and allow asset prices to soar unabated. On the contrary, its policy represented a striking example of The Economist’s recommendation: a deliberate, preemptive strike against an (apparent) bubble. The Fed succeeded in putting a halt to the rapid increase in share prices, but in doing so it may have contributed one of the main impulses for the Great Depression" www.frbsf.org/economic-research/publications/economic-letter/1999/march/monetary-policy-and-the-great-crash-of-1929-a-bursting-bubble-or-collapsing-fundamentals/

[@mabada20]

I can't say I've ever heard of a "portmento" i always thought it was "Portmanteau"

[@wiggumesquilax9480]

+Sheath So, a malamanteau?

[@philipb2134]

+Sheath Portmento is a container for carrying mint candies

[@jlindsa]

I hope you discuss why some economies are more prone to these things than others.

[@nbaclips4040]

How can it be educational if there are no sources provided?

[@slaterrox23]

Good point, I wish that were standard practice on these types of youtube videos, helps so much not just with credibility but further reading etc. A lot of the topics covered are so widely accepted as "general knowledge" it's more understandable to see them skip citations. But overall, yeah, agree.

[@notaphilistphilipp3882]

100 trillion Zimbabwe $ was the denomination with most zeros on a banknote ever, but the largest denomination ever issued was the 100 million B.-Pengö (100 000 000 000 000 000 000) note in Hungary 1946.

[@cperez1000]

that guy with the AC/DC belt buckle not blinking looks kind of insane

[@Pedrosa2541]

The could make a especial video explaining the "Plano Real" case, a really interesting succesfull policy adopted in Brazil as a away to countain hiperinflation. It is interesting because brazilians population were so used to hiperinflation that changing currency failed several times, the new currency would just be as worthless as the second. It actually demanded great thought and a really complex plan to estabilize the economy.

[@darkpaw1522]

*Lesson of the video:* Become rich before the next recession, otherwise banks will play volleyball with your money.

[@thevirtualjim]

So, it seems the key is to not increase the money supply if there is no capacity for production/output to increase.

[@traderknightzbitcoinuniver8168]

Oh wow the US is already there, what a surprise....

[@milosplavsic2572]

I like the AC/DC Nerd Belt.

[@rpennington9]

In the part about the depression you left out the part about how the "Smoot-Hawley" Tariff Act started a world trade war and sent us from a recession into a depression!!Just a thought...

[@NewhamMatt]

In Google Images, check out the Hungarian Sextillion Pengo note. These were actually printed, but never issued - the pengo was replaced by the forint before they could be used. (1 sextillion = 1 000 000 000 000 000 000 000 or 1x10v21)

[@user-nf9xc7ww7m]

Could a hyperdeflation occur? Would it bring a loaf of bread back to the value of $0.02 or would redenomination (similar to pound of 1971) be better for the same outcome (bread at $0.02 without skrewing with living standards)?

[@zanealfredmonteiro2016]

Any economics video with Mr. Clifford is one worth watching, in fact just put him in the thumbnail next time

[@juandavidmunoz2781]

This is amazing.. Thank you for your hard work

[@rediius]

"One thousand billion" You mean, a trillion? That's not an uncommon word, you could have used it without too much confusion, you know. But otherwise, thanks as usual for the super compact and informational video Crash Course!

[@AbsolXGuardian]

You should talk about using open market games to test economic plans.

[@bbaker4117]

<a href="#" class="seekto" data-time="234">3:54</a> is that guy in the glasses supposed to be John Green blowing his Paper Towns Fuck You Money on that red refrigerator?

[@maverickmace9100]

love the belt buckle lol

[@kuda4082]

i was there in Zim . Its was hell on earth! u wont wish that kind of inflation on any1 My bus fare went up every minute. i couldnt even count my own school fees as it filled my bag. well explained thou.

[@hellothere4858]

oh man u guys are going to adress one of the ultimate internet landmines , this flame war is gonna be fun to watch

[@shubhankarmote9726]

i didnt know great khali is so knowledgeable

[@KuroGordon]

The FED is so damn cool and badass.

[@ray1983able]

Hyper Inflation , Velocity of money , Depression/Recession , Liquidty Trap , Stagflation .

[@lawrencecoleman3559]

*Rocky voice* ADRIENE!!!!!!!!!!

[@JuukezeBarbie]

I wonder if any countries maintained to keep their economy stabilized with no inflation, deflation,stagnant,and stagflation...

[@therealquade]

if the expectation of higher prices, leads to higher prices, does that mean Hyperinflation is effectively a speculative bubble on all goods and services?