Where Does Money Come From?

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Part 1:
• Why do we Trade?
Thanks to my Patrons:
Leilah Ruan
Guillermo Guzman
Jonathan Rieke
Cesar E. Lopez
Remy Rojas
August Noë
Levi and Dalton
Ravish Shetty
Eduard Kieser
Sergey Dubovik
Niklas Meinzer
Trent Lloyd
Reinhard Pointner
Paul C
Soji Ladele
Joe Mako
Paul Reeves
Sumit
Abhinav Ayri
Octo Kilos
Noah McCann
feruq
Pascal Wilhelm
A. Skinner

[@johnbeach7564]

You manage to explain the premises of economics in a few minutes better than my professor can in an hour and a half lecture, definitely subscribing 👍

[@kcwidman]

Please make a video on why different currencies are worth different amounts and why they all fluctuate and inflate at independent rates.

[@marknay01]

Kai Widman money supply and commodity prices put simply

[@homelesshousemusic7801]

Power pf d 4 not ... Also Wepkns Facok u!

[@Harperrr.99]

Currently I'm just being smart and frugal with my money, I'm in the green 47% over the last 15 months and l've accumulated over $700K in pure profits from DCA’ing into stocks, ETFs, dividends and futures. However I’ve been in the red for a month now. I work hard for my money, so investing is making me a nervous sad wreck. I don’t know if I should sell everything, sit and just wait.

[@sherryie2]

Nobody knows anything you need to create your own process, manage risk and stick to the plan, through thick or thin while also continuously learning from mistakes and improving.

[@corrySledd]

@@sherryie2 I agree, that's the more reason I prefer my day to day invt decisions being guided by a fin-advisor, seeing that their entire skillset is built around going long and short at the same time both employing risk for its asymmetrical upside and laying off risk as a hedge against the inevitable downward turns, coupled with the exclusive information/analysis they have, it's near impossible to not out-perform, been using a fin-advisor for over 2years+ and I've netted over 2.8million.

[@McElvinn]

@@corrySledd I actually subscribed for a few trading courses but it didn't help much, been getting suggestions to use a proper financial advisor, how did you go about touching base with your coach?

[@corrySledd]

@@McElvinn My Financial Advisor is NICOLE DESIREE SIMON. I found her on a CNBC interview where she was featured and reached out to her afterwards. She has since provide entry and exit points on the securities I focus on. You can run a quick online research with her name if you care for supervision. I basically follow her market moves and haven’t regretted doing so.

[@McElvinn]

@@corrySledd She appears to be a true authority in her profession. I looked her up online and found her website, which I browsed and went through to learn more about her credentials, academic background, and career. She owes me a fiduciary duty to act in my best interests. I set up an appointment to use her services.

[@The-Rest-of-Us]

Finally Part 2 done. Thanks for waiting. Hope you enjoy. *Share if you liked!*

[@vavin1881]

The Rest Of Us it's amazing

[@vavin1881]

It's a world record no dislike me 2 mins in

[@patriknemeth133]

Dear The Rest Of Us, Don't you feel like doing a couple of videos about the topics which you classified as "a story for an other time."? For example in your Automated Economy video.

[@TechnicalTrack]

yeah you are always best

[@capfer77018]

You wrote tillions on a subtitle

[@Zahlenteufel1]

Great video, great jokes, really interesting, minimalistic title that represents the videos content exactly? I like!

[@tipoomaster]

"The Japanese used to have rice money lol" Lol!

[@vladimiryuriev2641]

"Publicly owned central bank" Right

[@The-Rest-of-Us]

+Vladimir Yuriev Not my quote. It's not publicly owned. Just public, as in it's official goal isn't profit but stability and wealth for the people. Make of that what you will.

[@JamBos11]

The Rest Of Us I believe the Fed pays out 6% dividends to its public shareholders.

[@therealnoodles7638]

@@JamBos11 dividends are not guaranteed though

[@therealnoodles7638]

@Bhavesh sinha the fed gives back all the leftover profit to the treasury. Don't make it sound like a conspiracy. It's available in their website.

[@markjones6916]

A public body accountable to the people and elected should issue money.

[@ALNYTheGreatScientist]

1:54 "tillions"? xD

[@The-Rest-of-Us]

Yea, these mistakes are unfortunately inevitable until I can put some crowd-pre-checks in place. If I ever have enough Patreon supporters, I will give them a preview for feedback 24 hours before I publish on KZbin.

[@ALNYTheGreatScientist]

Great video though! :D Now I'm gonna go build a house.

[@mikerice5298]

how much did too big to fail cost ?

[@hyugo1359]

mike rice i'd be curious to know that as well

[@mikerice5298]

(A) 9 trillion 2008 . (B) 16 trillion (C) QE for years that a 85 to 100 billion each mo (D) rates at 0 for years (E) Over 700 trillion in derivatives (F) bush ask for a 150 billion jan 2008 (G) Mar 2008 Bear Stearns stock was going down when they rated that office they found billion and billion in sub prime loans and mortgage backed security and something worse Credit Default swaps. Bear Stearns Made credit Default swaps up and down wall street and all over the world Fed central bank TOO big to fail US Financial system was interlinked in dangerous ways as the chart shows fed pass 30 billion to Jp morgan Chase to help purchase bear Stearns indy mac failed jul 2008 and gas took off . US Government seized Fannie Mae And Freddie mac sep 2008 TOO big too fail and i need 700 billion right now . 2009 i need 800 billion right now . stock market crash 2008 they let Lehman Brothers fail sep 2008 the next day AIG TOO big too fail pass 185 billlion to them

[@TNTMADNESS]

"Pray to there god, Monetus" i died, can i join that religion plz?

[@The-Rest-of-Us]

+TNT MADNESS I'm afraid if you already died it's too late for that

[@miniyodadude6604]

We can make a religion out of this

[@carlewen-lewis3305]

The way he said it killed me lol

[@DaveAp7]

I paused and immediately scrolled down to see if anyone else was laughing X'D

[@dannielpayne3045]

I loved that part too hahah

[@tobiasgrubbe6432]

great videos (part 1 &2) that quickly summs up what I learned in school. yes, of course everything could be described even more and in details, but then we wouldn't have just 7 minutes of video. thumbs up for good work that does its job well!

[@husainismaeel2981]

Short, sweet, and to the point! Loved it. ❤

[@Whatwhat3434]

New viewer - nearly instant subscriber. Great work, man! Excited to binge your stuff.

[@youyou333222]

the best channel i subscribed to in a long time ! thank you for the tremendous amount of knowledge your giving us :D

[@SOPM2007]

Brilliant presentation! The first time I noticed how rogue the reality of money is, was, as I watched "Money as Debt".

[@NAHRRATED]

Great video! Very informative! Keep them coming please

[@harryschinas4028]

You are hilarious! 😂 Thanks for the great video!

[@Neslyd]

You are one of my favorite youtuber i forget I'm subscribed to. You make really good and interesting vids :)

[@AlexVoxel]

One of the best Economy video I've seen here on youtube!

[@dannielpayne3045]

This video is soo funny haha, a big round of applause for the channel, nice job man!

[@semkovych]

You produce really good content! Earned yourself a subscriber

[@sundarlundar533]

Well done on these videos

[@kia808]

Wow, you are great at explaining complex concept clearly ❤❤❤

[@zync1000]

thanks for doing this!

[@Fummy007]

What program do you use to make/animate your videos? Looks amazing

[@marcosalcantara8050]

best youtuber of all, you explain everything crystal clear, I hope you keep doing economy videos

[@XLpacman805]

"like a fucking magician"! lol

[@zhxzhxustcsu]

really easy to follow, great video

[@ANigerianPrince]

"Go build a house..." I like you. Subscribed.

[@SOMEONE-eq5bu]

I really impressed with your channel every time i ask myself about something in finance KZbin recommends a video and through your videos i find answers. I really would like help you in future by patron but unfortunately now I can’t sorry 😐 Thanks for providing all this information to us I appreciate it a lot.

[@92WayToTheMoon]

These are great keep it up

[@francescakray233]

Thank you.

[@nigellllllllll]

This is fantastic :D

[@smudgepost]

I really enjoy your videos, this one also being superb. I do think the fiat element of money you describe is really the difference between money and currency. Although both are used in the same way, money itself has enduring value (e.g. gold) where a paper coupon is just a promise or right to exchange against something of value based on trust.

[@yuanjyechong8834]

i like the humour side and intelligent video presentation

[@DuncanandDawsonvideo]

Is it possible that you could do a video on money creation and banking in general that goes more in depth? That would be very interesting, I understand you are very busy but I really am enjoying these videos, and want to see more!

[@shubhamshinde3593]

Finally you uploaded!!!

[@martinschurig1131]

very nice one, as always :)

[@Resistanceproject25]

Great video, like a less intense zeitgeist

[@maurijnmaurijn4631]

nice video, glad im subscribed :)

[@finnhambly]

this is excellent

[@riverradau5863]

1:54 "TILLIONS"

[@djVania08]

Just went through if anybody else has noticed! :D ok, won't write the comment, i'll just support yours!

[@SinaCupcake]

Great video 👌👌

[@saintdenis11]

I'm glad someone is calling out all the conspiracy theoriest for there lack of understanding of how the economy works.

[@LuxFerre4242]

The house building example works perfectly to illustrate the point. It's a bit shit when all the money you bring in just gets sent out again and you're value change is a perpetual 0 and you never get the option of building a house.

[@krombopulos_michael]

I don't understand. How can banks lend out more money than has been deposited? I understand fractional reserves that let them lend out most of it, but not a multiple of it. If they don't have it and can't make more like the central bank, then what are they giving people? Like, if I take out a loan to buy a car, the car dealer needs to have that money, so how does he get it?

[@The-Rest-of-Us]

Unfortunately such short videos don't allow me to go more into detail without losing too much of the audience. If you want to understand it better - and it's quite interesting indeed! - I recommend you just google it and you'll find tons of more detailed material!

[@foobargorch]

it's literally just legal magic, the figures don't add up to zero because the law allows it. it's just a centrally controlled but distributed throttling algorithm that tries to quantise the actual production and value in the economy so that the amount of stuff to buy and the amount of money to buy it with follow slow gradual divergence (usually inflation) controlled to encourage people to keep buying and take on more debt in order to make more money to buy more things, etc, maximising the transaction throughput but without overdoing it so much that people actually notice that all of this is basically just a kind inter generational pyramid scheme, a state sanctioned belief that the future holds prosperity and economic growth is the one true way to achieve it, and that enough people will make good on their debt to absorb the misbehaviour of those who don't.

[@kuyaleinad4195]

Krombopulos Michael Banks also make money by interest I guess :/

[@pjweiner8700]

Krombopulos Michael In a perfect hypothetical situation: I put $1000 into Bank A for a savings account. Bank A then loans out that $1000 to Steve so he can buy a house. Steve is now $1000 in debt to Bank A. This is a liability for Steve and an asset for Bank A. With this $1000 asset, Bank A can now loan out $1000 to Nancy so she can buy a car. In this situation, unlimited money can be created. In the real world, there is a reserve ratio (as mentioned by the video) so the ban could only lend out, say, 90% of the money they are lent each time. Also in the real world, a person can take out a loan with a different bank than another saves with. And in the real world, people can't be trusted to pay back their loans 100% of the time. These reasons are why there isn't a money multiplier (how much money is multiplied after the initial creation) of infinity in the real world. For instance, in the video, the multiplier was 9 ($100 was initially created and it was multiplied by 9 after the reserve ratio was accounted for).

[@sabriath]

A check....when you get a loan for an item, you are getting a check asset for the item itself (like a car or house). You then give that check to the seller of the item (dealership or real-estate agency)....which then gets deposited in their bank account. There is no physical money being moved, but there is a negative placed in your name and a positive placed in the seller's name, and the asset is placed on the books as coverage for the negative position. If you don't pay, the bank takes your asset in default....they then sell the asset the best they can and go through the courts to get the money from you through wage garnishment. This money then cancels out the negative on the account. Banks do not create money, they create debt and place the population under responsibility for it. As for the seller's account, they have the option to take all of that money out if they want to, but like this video states, the chances of them doing that are slim. If they do, the bank doesn't have to worry about it because they'll just borrow that money from their reserves, which is other people's money....eventually the seller is going to do SOMETHING with that cash, and at some point it will land back into the bank from SOMEWHERE.....that's the point. If there is a "run on the bank," the Fed will just issue a block of money which is borrowed from other banks. The banks are gambling that not everyone in the USA, at the exact same time, will empty out their accounts.

[@andreasphilippidis345]

Please consider making a video on "MONETARY REFORM - A BETTER MONETARY SYSTEM FOR ICELAND" a paper by FROSTI SIGURJONSSON commissioned by the prime minister of Iceland; possibly as a continuation to this video series?

[@edgeworthyeconomics]

Commercial banks can legally create money out of thin air but they cannot create net financial assets by lending. (No bank has ever said to a customer: We're out of money today, you should've come last week when we had money, try again next Monday) To understand this consider the banks balance sheet. When the bank loans you money, they deposit your account with money. This is done by simply keying in the value in the banks accounts. The bank creates an asset (the loan) and offsets it with a liability (the deposit created) of equal value and therefore the banks balance sheet has the same value in net assets. On your end, the loan is a liability and the deposit is an asset so you have no net financial gain. The only institution that can create net financial assets without an offsetting liability is the central bank. You can learn more by visiting the federal reserve website. - I'm an economics grad student.

[@ymer92]

as always, great video. keep it up. hope there was some waffle/coffee action in the making. el o el

[@The-Rest-of-Us]

+Remy Rojas Not waffle, but lots and lots of coffee!

[@macmaniac77]

Do a video about Ethereum Proof of Work/Stake Network Block Creation and how it can be used for secret word wallets holding various value units created with the virtual computers which run on the internet. Plus whatever else you know about it, please

[@saracenrush2010]

You're almost there. Close, but no cigar.

[@salwinwwy]

your videos are great. can't believe you have only that many views.

[@The-Rest-of-Us]

+salwinwwy Thanks! Yea, maybe I should animate my true fans to share my content a bit more actively.

[@TheAutobotPower]

The source of hapiness.

[@abdullahisambo8889]

0:58 ".........give everyone a coin?"

[@jetison333]

...yes?

[@TechnicalTrack]

Awesome

[@aang7505]

What movie was that in t

[@lashgash2937]

This is the best video the lesson I hate in my economy was taught here I even didn't know I have learnt it. U saved me love u brooohh

[@mundotaku_org]

So, basically, If I deposit 300 bucks, the bank will give me a credit line of 3,000 and 16% apr with my 300 bucks. Genius !!!

[@HenkdeYouTubesteen]

I really like your economics video's😀👌

[@MountainHawkPYL]

I've got wood. Do you have sheep? :)

[@OHYS]

MountainHawkPYL, Yes sir! when shall we meet?

[@MountainHawkPYL]

Meet me out back behind the barn tomorrow night.....and don't forget the peanut butter! :)

[@OHYS]

😂😂😂

[@allwynsamuvel432]

bro, make a video on stock split in startup

[@sujeetverma4259]

Man I gotta buy an economics book

[@felipebrandel5436]

Well shit this would have been nice a few days ago before the AP macro test

[@REDandBLUEandORANGE]

will you do a vied on how after school it is a better idea to get a house than a car

[@dailygkupdate9408]

Which software u use to make these videos ur suscriber

[@xyilxyil]

Endlich ein deutscher CGP Grey 😍😍😍 sehr geil. Wo kommst du her?

[@lordhorck]

Wow, almost at 100k subs

[@oarevalo21]

Thank you providing clarity. In a future video, could you please address where money to pay interest comes from? I understand it's possible to create more value than the principal amount of the loan (hence the economic benefit to take the loan and use the money), but where does the money come from?

[@carrotchaser8511]

The video is wrong, he forgot about interest , remember the loan needs to be paid back with an extra amount added to it (interest) how can this extra value be paid back if it hasn't been created yet? and that's the scam of banks. at a micro economic level it seems we can pay off our debts. But at a MACRO economic level the debt never gets paid, it just grows and grows, (like we can see in the national debt) because of interest, not to mention compounding interest which should have been made illegal a long time ago. Please dont spread misinformation there is no need for a debt based economy, a REAL economy IS possible, just look at nature there is no animal bank were animals ask for loans in order to expand their families or beehives, they expand as the resources become available, just like in strategy games, you can only build structures (pylons lol) when you have enough resources thus never incurring in any debts.

[@samstone5616]

I want to be a central bank I just have to print money and do nothing to earn it.

[@williamboyd1050]

Where in germany are you from for the Q&A ?, and what are you studying in university and where did you learn to speak such excellent english old boy again for the Q&A ? Vielen Dank in advance

[@SuperThakid09]

This one is on the house

[@Dominus_Potatus]

You explain it better than my professor did

[@surangasa]

One of the best videos about money is related to an equal yet bad video about money from a Channel called ColdFusion is linked on the right thanks to the KZbin algorithm. I suppose it makes sense to see both sides of the argument.

[@jernejoblak7633]

That's the best video....srs...it's gr8....

[@asarinbharti7187]

my love

[@foobargorch]

this isn't money, this is fiat money, there are many other kinds

[@SildaekarD]

Question. you say that it is possible to escape from debt but why didn't you take into account interest rates on the debt and depreciation on the property gained through the value? So you take out a loan and build a house. But immediately the house begins losing value and the debt begins to raise (interest and depreciation). Could you please explain again and account for these factors?

[@The-Rest-of-Us]

+SildaekarD I simplified obviously. But what you say can go both ways. The house (more specially the land) could also appreciate in value and the debt could shrink upon inflation. The bank obviously has an interest in your house rising in value (because they are as invested in it as you are), so your interests are aligned. Unfortunately that doesn't always happen. Housing bubbles are system-made, even though nobody wants them (maybe with the exception of smart property developers). If I had accounted for these factors in my video the outcome would have been just the same, only with more complication.

[@SildaekarD]

The Rest Of Us I didn't think about it like that. Thank you for taking the time to explain that makes a little more sense now. At least as far as the housing industry goes.

[@surangasa]

Whenever someone makes a stupid argument about money, I am going to refer them to your video.

[@cyber8863]

Cool video

[@victoriamarshall6602]

This guy is hilarious.

[@Saurabh.Dwivedi]

Can you please make a video about Cyrpto currencies and how do they fit into the M1, M2, M3 channel? I have seen videos on cyrpto-currencies but you have a way of explaining stuff that simplifies everything and makes it much more understandable.

[@matthewhemmings2464]

You are brilliant. Honestly you should think of creating a course and teach it.

[@TheBane-vl7pw]

this is facts

[@ruanfernando]

So would it be correct to say that the money in the world is not limitless thus for a country to be rich (accumulate money) other has to be poor (let go of money)?

[@rohan112345]

At the 5:50 mark, I just realized that I am a conspiracy theorist. I'm 30 years old.

[@FacePalmProduxtnsFPP]

"tillions"

[@valdinoorazhar1571]

"Like a f**king magician." Sums up our economy.

[@weebslayer3411]

trees

[@cedricngoran7045]

Can you explain the petrodollar ?

[@ErikratKhandnalie]

You got a couple parts about banking wrong. Zero money is actually generated in the private sector - what banks actually produce is credit backed by the money stored in the accounts at the federal reserve. All of that money is created, largely, by act of Congress. Fiat currency, kind of by definition, is always generated in the public sector. Everything else in the economy just moves it around. Additionally, the supply and demand portion with relation to the currency supply is only partially accurate - an increase in the money supply can cause inflation, but it is not due to supply and demand, but rather the relationship between the money supply and the real productive output of the economy. Remember, money is not, in itself, a commodity subject to normal laws of supply and demand, but rather the medium by which other commodities express their value. Thus, the limit on the currency supply before inflation takes hold is not simply the demand for currency, but the total commodity value of the goods and services available in the economy. You should look into the recent advances in monetary understanding made by economists using the Modern Monetary Theory model.

[@mikejohnstonbob935]

All praise Monetus and Rngesus for our statistically stable economy

[@MattiasAllring]

I love this video - watched it so many times! You make it clear that money is just a representation of a tangible asset. All that we have should somehow balance all the money there is. But in light of that, how should we understand crypto? It does not emerge in the same process as normal money, so what does it really represent? Im confused!

[@The-Rest-of-Us]

Doesn’t matter how money emerges, its intrinsic value always lies in its ability to represent the value and trade of underlying assets. Rice money was grown, gold coins were minted, fiat money created by banks etc. At the end of the day its just a score keeping system. And crypto is no different. The one difference for crypto is that it’s traded like a speculative asset, while aspiring to be money. We’ll see how that works out in the long run. Personally, I think crypto is here to stay, but I wouldn’t want to put my money on any particular coin over a 10 year period. Or any coin for that matter, since none of them are value producing assets.

[@MattiasAllring]

@@The-Rest-of-Us I dont understand. You can eat rice and make jewlery out of gold, so that intrinsic value is easy to argue. But if I understand crypto mining correct, a crypto coin is just the correct answer to a mathematical riddle -> that value seems to emerge out of thin air. There is no asset put in, as with fractional reserve banking. Just electicity consumed in the effort to discover a digital pattern that has no application outside the pretence of representing value. Isnt this very different from how money is created through fractional reserve banking?

[@The-Rest-of-Us]

@@MattiasAllring Yes the way crypto is created is very different. But I think money can have many different origins, hence my rice and gold examples. My main issue with crypto is that most of its trading volume is for speculation, not transactions. That’s what I meant with traded like a speculative asset.

[@Typhoon792]

I mentioned this in the previous video, so sorry if I'm repeating myself, but are you familiar with a Resource Based Economy? EDIT: Wow.. well since you referenced Zeitgeist as a conspiracy, I'm assuming anything that has its name, whether it relates to the ideas of the original film or not (which it doesn't) you would have disregarded/ignored. I'm not particularly fond of the first film either but again, I really hope you don't think it's representative of anything more. You don't think Alex Jones would've been a more appropriate reference?..

[@dust1077]

i guess you can say money does grow on trees. ahhh ahhh ? PAPER money

[@bagandtag4391]

Is gold money?

[@GymClubHouse]

a house is a liability, stress and worry. it is NOT something of value.

[@joyaditya100]

18th Century Japan*

[@The-Rest-of-Us]

+Aditya Chakraborti You are correct, sir.

[@martinw3621]

The Rest Of Us No, it's actually 17th century. 18th century began 1701

[@ChitranjanBaghiofficial]

yeah so at the end, if the first dollar has interest due, where will the money to pay that will come from? for that the bank has to print more money, that's the reason no fiat currency has ever survived.

[@76Arfa]

"Because banks don't like to be 'GGd" by their clients" Nice :D

[@mujtabawatoo916]

woew a nice video

[@madscientist602]

Hahahaha this is awesome