I want to ask you guys of Learn Liberty to explain the Japanese economy in detail, including the effectiveness of 'window guidance’

@LearnLiberty

2 жыл бұрын

Added to the list of video ideas!

@jonathanolson772

2 жыл бұрын

Any guidance that a central bank can give is simply dictating how much debt you have access to at any given time thereby affecting the liquidity and money velocity of an economy. Whoever takes the most debt wins as long as they invest in things that will give a return. To those who have more will be given. The rich get richer.

@SpidermanandJeny

2 жыл бұрын

Explaining anything almost in Japan can be boiled down to this what we've done in the past, I don't want to change, don't care to try, we're afraid of technology and groups are better than individuals. Btw, I'm not kidding. That's almost everything in Japan. Why are CD's around $40 in Japan? (An absurd amount) it's because Japan must do everything as a group and so the market is run by a small group of companies that price collude to make sure CD's and even the digital market is the same price. Why is Japanese companies slow to do new things? They have to have many useless meetings about what to do and to get ppl to agree to it and also they have to have multiple ppl check the numbers the computers came up with. (not kidding, there are ppl with real jobs whose only job is checking that the computers and calculators did math correctly) There is one last thing to explaining Japan. They are world class procrastinators. They wait until the last second to do most things and then have issues with supply and or simply finishing things because they started too late. These things explain just about everything going on in Japan.

@stuartporteous7762

2 жыл бұрын

Also why inflation doesn't seem to be a problem even though the BoJ holds nearly half of the 1.4 quadrillion yen.

I think you guys need to make more of these kind of videos debunking leftist misinformation.

@williamavitt8264

2 жыл бұрын

It isn't just "leftist" misinformation. Trump and Bush whore the stimulus checks the same as the left has been

@hloniphizwemthembu8143

2 жыл бұрын

That's true

@4x4cherokee

2 жыл бұрын

They would never run out of lies to debunk.

@jonathanalvarez3875

2 жыл бұрын

Vox is one of the most biased misinforming news outlets out there, and people still treat it as a viable source of info smh

@4x4cherokee

2 жыл бұрын

@Elijah Ellington You couldn't be more wrong. You assume that the incredible wealth that has been created through capitalism will continue to be created if you steal it from the rich. It's mathematically impossible. What you're missing is something called incentive. What has made America the wealth powerhouse that it is is the fact that people knew they would be rewarded abundantly for creating businesses, innovation, solving problems, etc. If you remove the incentive, why do you assume the wealth will continue to be available for you, Bernie, and AOC to steal? C'mon man this is basic logic.

Vox's inflation description sounds like a liquidity trap. They can't even define the right thing they want to talk about.

@LearnLiberty

2 жыл бұрын

It’s like they don’t know econ!

@gloriouscontent3538

2 жыл бұрын

@8Truth Seeking The hell are you talking about dude?

@wesjones6370

2 жыл бұрын

@@LearnLiberty It's not "like" they don't know. ;)

@manofmartin

2 жыл бұрын

@Elijah Ellington no. Inflation is entirely separate from inequality. Inflation's primary cause is an increase in currency while goods and services remain the same. Wealth inequality is just who has the currency or assets and who doesn't.

@HuntingTarg

2 жыл бұрын

@8Truth Seeking TL, DR; Spending, stimulus, inflation, and misinformation are planned and part of a larger agenda; larger than even gov'ts. and political parties. *(HINT: C0VlD-19 **_IS A BOOK._* It's on Goodreads.com , no lie. )

The problem with inflation is that because it erodes savings, there's less of an incentive to save. Then when a recession comes along, people start panic-saving because they haven't saved enough in the first place, which makes the recession much worse.

@witchhatter

2 жыл бұрын

It doesn't just erode savings, it reduces the value of every dollar, even the ones you will earn in the future.

@dirtyblueshirt

2 жыл бұрын

@@witchhatter true, but if inflation is stable you can factor that into the wages you ask for. So if I can be sure that inflation will be 2% over the next year I can make my asking wage today 1% higher than what my real wage is. I'll beat inflation over the first six months but lose the same amount over the last six months. That's why comparisons of the value of today's dollar to 1900's dollar is meaningless. Nobody's buying things with 1900 dollars.

@jonathanolson772

2 жыл бұрын

​@@dirtyblueshirt wages are consistently outpaced by inflation for most working and lower middle class jobs. You shouldn't just accept that we have to account for inflation anyway. We should be able to expect that our money will be worth the same amount in the future that it is now. Just because it is gradual enough that it is almost imperceptible doesn't mean that our standard of living and wages aren't drastically reduced due to bidding wars not occurring amongst employers. 1900 Census Average Salary was $449.80. Dollar gold exchange rate was $20.67 per ounce. That's 21.76 ounces of gold per year. At today''s manipulated prices of $1811/oz those 21.76 oz of gold would be worth $39409 which is 87 times what it was worth then, meaning our money is worth at least 87 times less than at that time. According to the money supply chart we know it has lost more than 99% of its value since then. I know you'll say, "well they should've just invested in the stock market!" since the return since 1900 is 8,627,946.08%, or 9.85% per year but we shouldn't have to rely on stocks as a store of value. Our money should be a store of value and investments really shouldn't be high return. People should have to work to put in value and get money out as a token directly proportional to what they put in. Passive income and passive investing is just parasitism.

@dirtyblueshirt

2 жыл бұрын

@@jonathanolson772 what's the average salary today?

@jonathanolson772

2 жыл бұрын

​@@dirtyblueshirt $51,168 per year. Gold is no longer currency which leads to its price being much less than it would be if it was still our universally accepted store of value, which is why it is striking that it is still so close to the average salary today despite the dollar being decoupled from gold.

Based Lean Liberty as usual.

Inflation is primarily expansion of the money supply. The increase in prices is a consequence of the expansion of the money supply. So printing new money out of thin air doesn't "lead" to inflation: it IS inflation.

@BrentMayberry

2 жыл бұрын

Came to the comments looking for this explanation. Thank you! It's important to define terms accurately.

@LearnLiberty

2 жыл бұрын

Marko, thanks for sharing your view! There is a possibility that the government starts printing money but at this time increases the demand for this currency on the international market, so the value of this money doesn't decrease in such case and it is not inflation. Inflation is when purchasing power of money is directly reduced.

@jamesgregory9227

2 жыл бұрын

Yes the reason it is called inflation is because the money supply is inflated. Prices don’t inflate they rise.

@jonathanolson772

2 жыл бұрын

@@LearnLiberty "your view" ha! your redefinition of a word that originally referred to the INFLATION of the money supply is orwellian

@Nukestarmaster

2 жыл бұрын

@@LearnLiberty Except it isn't his "view", it's the actual definition of inflation. Inflation is the expansion of the money supply, full stop. Keynesians like to mis-define it as the devaluing of money because they think that they can control the value of money while printing arbitrary amounts of it.

"If socialists understood economics, they wouldn't be socialists." -- F.A. von Hayek

@DaveE99

2 жыл бұрын

Except there are economics PhD’s and professsors who are socialist and understand it better than you and I.

@smokedbrisket3033

2 жыл бұрын

@@DaveE99 you are poorly educated, aren't you? Hayek was himself a socialist until he finally learned real economics.

@disalazarg

2 жыл бұрын

@@DaveE99 You, maybe; me, not really. Do look up what happened in France under Hollande, when they decided to follow the instructions of one of the most famous, modern socialist economists: Thomas Piketty. They're deluded idiots with a degree, nothing more.

@derekisthematrix

2 жыл бұрын

Most 'true' socialists are statists/totalitarians. The rest are, as Hayek states, uninformed.

@jonathanalvarez3875

2 жыл бұрын

@Elijah Ellingtonmy dude, Norway and Denmark are capitalist countries with generous social safety nets. Nordic countries have many aspects that in some ways are more capitalistic than the US such as Norway’s pension fund which is invested in the stock market as well as Sweden’s school voucher system where parents are given the option to send their kids to whichever school they want. These two options are strongly opposed by the left in the US. I’m sorry to tell you bud but AOC and Bernie aren’t fighting for us, they’re just giving the illusion that they are but really just want to keep their seats.

Let's not forget the fallacy of the unspent dollar either. Savings is spending because to save money means to lend it to someone else through the banking system. People then borrow that money because they need money to spend they don't already have and so they then spend it quickly. Me saving a dollar in my bank is the same thing as handing it to Joe next door to spend instead of me with the idea that Joe will pay it back with some small amount of interest to make up for the time I wasn't able to spend my money.

@vedinthorn

2 жыл бұрын

You would literally have to stuff printed bills in a mattress or keep them in a safe or something in order to save money in a way that doesn't get it spent immediately after. No one does that in any scale that matters.

@Metal_Auditor

2 жыл бұрын

@@vedinthorn and even if you do stuff cash in the mattress, you are reducing demand, which lowers the prices of goods for others, and so you're still effectively lending the value of those dollars, even if not the dollars themselves.

@AusFirewing

2 жыл бұрын

Scrooge McDuck actually improves everyone else's spending power because he takes $100 mil out of circulation to fill his money pool.

@teslaasmr9375

2 жыл бұрын

@@Metal_Auditor Oh that's interesting, can you develop a bit ?

@jonathanolson772

2 жыл бұрын

​@@teslaasmr9375 ​ If other people are spending money chasing profit incentive while your dollars' value are being burned away by inflation you are losing money while others are earning and growing it, essentially keeping prices lower for them. Additionally the velocity of money is reduced by a miniscule amount leading to a miniscule reduction of prices rising. We live in an insane world where every dollar in existence is constantly loaned and being "put to work" never resting ever growing to the point that there is more debt than dollars in existence. The debts can never go to zero.

There is one point that I disagree is: that inflation is not the rising price of goods and services. Inflation is the expansion of the money supply and the consequences of inflation is rising price.

@LearnLiberty

2 жыл бұрын

But increasing in money supply doesn't mean that there is inflation in the country. Inflation is when money loses purchasing power and this two are different things. That's why Pr. Antony Davies uses this way of explanation in the video.

@Jimraynor45

11 ай бұрын

​@@LearnLiberty Purchasing power isn't soley determined by the value of money, but by various market forces as well. For example, innovation and cost cutting efforts can reduce the cost of goods, but inflation may hide those savings. Lets say the cost of computers went down 5% this year, but the money supply rose 5%, based on your sketchy definition, that would mean there was actually no inflation. Just because prices didn't rise, doesn't mean there isn't inflation. It could be the case, that without inflation, prices would of gone down, but due to the increase in money supply, (which is the true definition of inflation) we didn't see those prices reduce and instead they stayed the same.

Antony Davies has taught me more about economics than any public school

Safe to assume right away that Von is wrong about anything they talk about.

Only have enough in savings to keep yourself afloat for so many months. I have roughly 6 months of savings. Its there to pay for rent, car insurance and smaller things like gas.

@5stardave

2 жыл бұрын

No retirement savings?

@TheFirstTriplefife

2 жыл бұрын

@@5stardave nope. I don't have a high paying job and I don't plan on retiring. I know it may sound grim, but if I get to old to work, I'm feeble and old, then I won't be sticking around to make life harder for others. I don't plan on being a parasite.

@protox4

2 жыл бұрын

@@TheFirstTriplefife Saving what you've earned to use later doesn't make you a parasite. Money really is just an IOU, so spending it later is just collecting on that debt.

@TheFirstTriplefife

2 жыл бұрын

@@protox4 no, I get what your saying. I'm referencing if I get to old and have to collect social security or something similar. I have money in some things like collectables and even some money in gold/silver, but as far as a traditional "retirement savings" I don't really have one anymore. Had one a while ago. Didn't like some things about it. So I got ride of it. We will see if I get one again.

@ChaoticNeutralMatt

2 жыл бұрын

I mean long term goal or investments works. Different way to look at money I suppose

The official government policy is very dovish towards inflation. The debt load is too high for the Fed to increase rates because government can’t service the debt. Nobody wants treasuries so QE (money printing) isn’t stopping either. There’s no political will to stop inflation.

@LearnLiberty

2 жыл бұрын

We need to cut spending, asap

@zachmilton9561

2 жыл бұрын

Only a political will to stop deflation

@johnvalerian8440

2 жыл бұрын

@@LearnLiberty doing what is right, just and fair doesn’t usually align with political realities.

@spacetoast7783

2 жыл бұрын

Inflation was extremely low prior to the pandemic.

@AusFirewing

2 жыл бұрын

Any currency will naturally inflate until it hits the equilibrium of costing a dollar to make a dollar. Same thing happens with any commodity. If it costs $100 to refine a barrel of oil I can only sell at $80, I'm not going to bother. The problem with government-printed money is there's no upper limit to how much they can inflate it, because the government is always the first to use new money before it enters circulation and causes inflation. The only real way to stop rampant spending is to abolish central banks.

Vox's economics expert took 1 economics class in college and got a C. Oh - and he makes sure he's stoned before he writes his material. Sorry - could be a she/they/them/whatever. Don't want to leave anyone out.

@gloriouscontent3538

2 жыл бұрын

He's not saying the dude should be locked up for it. Seems like a bit of weed paranoia got to you in this reply.

@masterbulgokov

2 жыл бұрын

@Nagolbud Whoa there, buddy. I'm with you there. I'm 100% pro-legalize weed. Indeed, my married son uses it to control his anxiety / sleep at night. I'm not criminalizing its use in my comment. I'm saying (and think this is beyond dispute) that clarity of thought is impaired during its use. I'm using satire to criticize the quality of the Vox metaphor by suggesting its author's thought process was chemically impaired.

@masterbulgokov

2 жыл бұрын

@Nagolbud No argument there. It is that bad a metaphor.

@MissourHanzai

2 жыл бұрын

@Nagolbud Weed is obviously the greatest nootropic of all. I also suggest downing a pint of vodka whenever doing any serious mathematical proofs.

Nice rebuttal. But I think it would have been more interesting to talk about how human action in a free market actually helps the economy get out of recession through saving. The video, through no fault of doctor Davies' explanation, made it look like the government increases the Money supply at the wrong time, but it didn't go into why saving and patiently taking taking to create more capital is the correct way to beat the economy into shape.

@MultiKeto

2 жыл бұрын

saving with the spending and printing bulshit of the us goverment! how?

@Danimal.69

2 жыл бұрын

Inflation destroys fixed income and savings. If you don’t put money in investments that inflates as fast or faster than the inflation rate, you are going backwards. The government will pick those winners and losers based on policies they put in place. Hopefully that the investments you do pick does not crash. Wallstreet loves high spending debt creating politics because it sends investors to seek better management of their money. If you are using the island analogy, then the government is making the island bigger by taking sand from the bottom of the ocean. Hopefully everyone can fit on the island because anyone trending water is in deep water.

@solitudeguard1932

2 жыл бұрын

@@MultiKeto I meant saving real money, not counterfeit government money, printed during recession to create money illusion. Real money would be money accurately proportional to the value of goods and services in the economy before monetary stimulus.

@MultiKeto

2 жыл бұрын

@@solitudeguard1932 ok

I've found that analogies to an economy like "priming the pumps" and "jump starting the engine" are inept at describing the inherent and unique complexities of a network of interactions between independently thinking, valuing actors, i.e. an economy. If someone is trying to explain economic concepts using comparisons to non-human systems, be skeptical.

This last recession inspired me to buy a house so that I would have a fixed monthly payment, as opposed to rent which is much less predictable, and to get way more serious about gardening!

There should be more debunking videos, since most people watching you already agree with you. Debunking videos can convince people who don't agree with you a lot better.

I accumulate precious metals all the time, with which I hedge against a decline in fiat purchasing power.

First! Venezuelan here

@LearnLiberty

2 жыл бұрын

Hey Daniel!

@danielmedina4611

2 жыл бұрын

@@LearnLiberty I have years of experience dealing with inflation. It has never been less than 25% in my lifetime and right know is just worthless paper. Best strategy?. Spend/ invest it all as soon as you receive the money. Real state, goods, foreign currency, Bitcoin, even cars are a good choice, anything but the local currency you should hold. But I dont think the US dollar will reach that high levels of inflation, It would mean a real economic global collapse.

@johnvalerian8440

2 жыл бұрын

@@danielmedina4611 I think it’s possible the dollar will be dropped as the global reserve currency. There’s no incentive to hold dollars and people are starting to catch onto the reckless spending and debt in the US.

@trevorreznik3908

2 жыл бұрын

@@johnvalerian8440 everyone except the Fed and the Politicians.

@danielmedina4611

2 жыл бұрын

@@johnvalerian8440 Yes, the USD dollar is losing value, but even then it still the safest fiat currency to hold. Only the Euro can be competition. And why?; because most currencies in the world are losing value at even bigger rates than the US Dollar. Most countries have even bigger budgets and spending problems than the US, and without having any real militar and geopolitical power as the US, which makes it even worse. I am not saying its impossible for the USD to stop being the global reserve currency, but it wont happen that easily, it might take even decades of mismanagement for than to happen. You just have to go outside the US to realize that the purchasing power of your dollars is in most countries way more that inside the US, which tells you that the world is still valuing the dollar.

Inflation is absurdly easy to understand. Someone with 10 bucks can buy some steaks. Inflation happens, and now the 10 bucks doesn't buy those steaks anymore because 10 bucks only has 8 bucks of buying power.

Often it is government's spending that creates the inflation we despise so much.

Monetary stimulus is just an attempt to paper over a real correction that usually needs to happen because of prior artificial credit expansion. Some industries are too big, fuelled by cheap interest rates subsidized by printed money, and need to contract so scarce real capital resources can flow to other more valuable industries. Recessions are not death spirals for this reason and will inevitably find a natural bottom as long as people want things.

My savings strategies revolve around getting buying a modest plot of land in Texas, and homesteading with some crops, 4-5 yearlings on rotation, and minimalist living. Being close to the production of food. Being a part of a small town community. BEFORE things go tits up in this nation. My savings, will go directly towards practical real estate, skills, and resources for the next phase.

@NoFocksGiven_

2 жыл бұрын

Better buy the Home before china does. Heard they are paying people x3 over market values in some places. But that might have been for farms I forget.

@besomewheredosomething

2 жыл бұрын

LOL, you honestly think you are going to BUY land in the U.S. state of Texas, make it valuable for yourself AND then keep it? If things go "tits" up, that land won't be yours one way or another, and you don't have enough ammunition to protect it.

@immaculatesquid

2 жыл бұрын

@@besomewheredosomething those vietnamese stood no chance no matter how much ammunition they had, shouldve just gave up

Love Professor Ant! For a day in high school we did a seminar with him and FEE. It was more valuable than every other school day combined. Is he an Austrian economist? What is Learn Liberty's position on the "need" of a central currency and who manages it?

Huh I didn't see the Vox video as overly problematic. Seems like there's a fine line between the 'money illusion' and being concerned with the amount of total dollars being 'printed' into the system. It also seems reasonable to suggest that the state would like a controlled amount of inflation [isn't that the tricky part? :P ] because it would make the soaring govt debt 'easier' to manage. Inflation is by definition good for debtors and bad for creditors no? Also, the govt increasing spending to fight recession is just basic Keynesian doctrine isn't it? You may or may not agree it's a good idea, but just stating that that is what the govt is attempting to do doesn't seem crazy to me. Pointing out that that govt spending creates inflationary pressures also doesn't seem off base to me. Am I missing something?

@HuntingTarg

2 жыл бұрын

The Keynesian model is inherently broken, but in a very subtle way. Money was conceived and first used as a medium, and was not intended to be itself a commodity. "Unlike consumer or capital goods, we cannot say that the more money in circulation the better. In fact, since money only performs an exchange function, ... it doesn't matter what the money supply may be; every [quantity] will be just as good as any other for performing its ... exchange function." -Murray Rothbart, _The Mystery of Banking_

I’ve never understood how some argue inflationary money is a good thing.

@dirtyblueshirt

2 жыл бұрын

It helps solve the problem of sticky wages. Labor is an economic good just like, say, pork bellies. The price of economic goods depends on both supply and demand and will fluctuate because of the vagaries of life. The difference is that while pigs don't care if the price of pork bellies drops 5%, people tend to get surly if you tell them they're getting a 5% pay cut. Inflation acts as an automatic pay cut that employers can cancel out by giving raises if the price of labor is stable or rising. It also encourages people to keep money in circulation rather than hoard it. Money buried in the back yard will steadily lose value compared to money invested or put in a bank. As long as inflation is stable, so investors can easily determine real rates of return, and low, so that there isn't much change in value of money between when it's earned and when it's spent or invested, then it isn't a terrible thing.

@fatpotatoe6039

2 жыл бұрын

@@dirtyblueshirt This is a good explanation

@cheezoncrack1

2 жыл бұрын

@@dirtyblueshirt thanks

I love prof Davies explanations. 10 years ago while recovering from surgery, I wrote, out of frustration, business does not pay taxes. It is always fun to have someone like prof Davies say in the same words, the same thing. Thank you. JackMagdiel

There are two problems I run into when he talks about "Money Illusion" and equating two locations with differing CoL and an equivalent wage based on that ratio. Yes, the purchasing power for major items that must come from the locality is the same (ie - housing/food/taxes/utilities), but many other purchases are transported from the same source, whether you are in Alabama or NYC. Now, maybe these are dismissed because they are largely discretionary items, or because the represents a smaller cost. But the other item is more significant. I have seen Professor Davies talk elsewhere about the importance of setting aside savings (15% is often noted.) If two hypothetical persons in NYC and Alabama both saved that 15%, the ratio in their savings would be the same, but the compounded interest over a lifetime would benefit the NYC individual. Additionally, that individual would have the ability to take the money earned in a more expensive area and move to a lower CoL area, increasing their purchasing power by 20% right off the bat. Maybe this is digging more into personal choices than the Professor wants to in an explanation for the average person. Or perhaps I am missing something? In general terms, I do agree that the fixation on dollars over purchasing power is a mistake, but elements of portability make this a more complicated issue.

I've enjoyed many of your videos Prof Davies. This one too - for the most part. I will however say that inflation is not the rise in the general price level. Such a rise is merely a symptom of inflation. Inflation itself is an increase of the currency supply. That increase tends to raise the general price level, which is only the gauge reading we observe to monitor the effects of inflation.

I have a question What to do if there is hyperinflation?? How to reduce hyperinflation in economy? Could u please make a video about it

class act, well done!

It's weird how printing money doesn't cause inflation, but also there was massive inflation after we pumped a lot of money into the economy. Weird that every corporation got suddenly greedier at the same time.

Thank you for telling the truth n explaining the facts

The Fed wants at least 2% inflation per year. It doesn't matter if your wages keep up. It doesn't matter if your savings takes a hit.

@bigz5262

2 жыл бұрын

But they only count that 2% on hand picked items. Never mind the fact that other things are going up more

@LearnLiberty

2 жыл бұрын

It is a very difficult country to have a 0% inflation, especially when you are such a developed country like America. I think that 2% inflation is normal and we shouldn't worry about it.

@saricubra2867

2 жыл бұрын

@@LearnLiberty Panama doesn't have a central bank, therefore it's basically 0% of inflation. Sadly, the FED has the monetary monopoly.

@jonathanolson772

2 жыл бұрын

​@@saricubra2867 Learn Liberty is just another think tank designed to always assume that we are dependent on central banks for our economy to function, for America's "developed" (debt ridden) economy to even exist.

@saricubra2867

2 жыл бұрын

@@jonathanolson772 Saying that inflation is ok seems like they love keynessian economics (that never worked and are doing a lot of damage to the world) unlike the austrian economics.

I humbly make some suggestions, as a supporter: 1 - Drop the music or turn it down - it is a distraction from Prof Davies presentation. 2 - The narrator's tone occasionally comes across as condescending. Her tone and script remind me of the elementary school videos kids watch. Maybe this is exactly what you wanted. Just my two cents. Best wishes.

@learnliberty Love LearnLiberty but I think this could have been a much simpler and effective video than it was. Regardless of how you define inflation, explaining the decrease in purchasing power of your US dollar due to an increased money supply should have been more clear.

Very well explained and especially beneficial to people who have not yet grasped the basic concepts of what money is.

I did watch the Vox video because this video mentioned it, clearly they don't understand economics, while Prof Davies does. Great video.

Good video but Your definition is incorrect. Inflation is the oversupply of money that causes prices to rise in general because As Milton Friedman said, "it's too much money chasing too few goods." Inflation devalues the currency meaning you need more of it to buy things. You said 'inflation is a rise in the general price' (no, inflation causes the rise in the general price) and then you followed that with 'inflation devalues the currency,' true but that's a false cause and effect claim because they are in fact really the same thing, not one causing another. You later fix it and say when you have inflation prices start to rise but again you opened with a Mis-definition

For subscribers of channels Do you believe in the supply side Econ then? Becuase that sounds like where he is then leading this conversation to. And if you do then how do you buy stuff with no money to create the demand for business creators? Also why can’t legislators see market failures and put into place policy to correct them (eg. Social security trust)

Good video, that being said, inflation is the expansion if the money supply. Price increase is the effect of expanding the money supply. Inflation is to expand. Money supply expands. Prices don't expand, the go up or down.

Well this is timely

While better than Vox, it is still inaccurate. Inflation is the increase in the money supply, period. Since politicians and banks mostly borrow new money into existence to spend on pet projects, large military, stock market speculation, and other non productive ventures, the increase in money supply is not accompanied by increases in goods and services that the general public needs or wants, hence eventually, it takes more money to buy the same goods/services. Even gold and silver are inflationary, but because it actually cost something to make that money and its inflation rate is very low, it imposes constraints on governments/politicians/banks and thus decreases corruption and deficit spending.

@AntonyDavies

2 жыл бұрын

"Inflation is the increase in the money supply." I've heard non-economists use the term this way. In economics, "inflation" is defined as the growth in the average price of consumer goods.

@jimlovesgina

2 жыл бұрын

I can't think of another mechanism that raises the average price of everything.

@thementat9338

2 жыл бұрын

@@AntonyDavies If you pick up an old dictionary, it may even use this definition. But this has little to do with economists or non economists. For example, Austrian school flavored economist will use this definition. Consumer good prices don't inflate. They rise or fall, depending on supply and demand, cost of production, and unfortunately, most due to devalued currency. And I think this is the most proper definition, as during the late 19th century, even thought there was inflation (more gold and silver above ground and circulation), prices actually dropped due to productivity, etc. If inflation is correctly defined (as I perceive it), it would explain and show how mismanaged the economy is by central banks and governments, that pretty much borrow money into existence to handle every problem that comes their way, many times suggested by central bank economist to "stimulate" the economy. Which is likely the reason why the definition (or what people think inflation is) has changed over time.

@fatpotatoe6039

2 жыл бұрын

@@thementat9338 This is plain wrong. Mises and Rothbard define inflation the same way as Davies.

Didn't realize this was a year old until the end. Pretty much validated.

Cheap credit misallocates resources to undemanded/lesser demanded ventures, increases the present consumption & acquisition of goods, distorts our time preference, creates a dependency on continuous overvaluations, & distorts price signals (because of relative price stickiness, unequal velocity within different sectors, & circular demand within scarce demanded goods [assets]). Speculation increases as lesser educated consumers spend & borrow. They have not went through the thorough process of elimination that normally happens in the free market. When these malinvestments inevitably must end & the spigots of cheap credit are cut, a _'deflationary death spiral'_ must ensue. You *have to* allow resources to be freed up, consumption to be detered, & then properly allocate them to where they're demanded. If not, attempting to correct malinvestments within the system will crash the economy. Market set interest rates & a scarce divisible currency naturally fix this. Banks & borrowers must compete for scarce savings. Through interest rates, these funds are allocated to demanded ventures. In direct proportion to how demanded they are & how much consumption is detered through saving. Since there's no inflationary effects, our time preference of consumption & production is balanced, thereby allowing projects to reach their full potential. Artificially cheap inflationary credit interferes with needed corrections & exacerbates structural issues. We need to raise rates, default, & let the market properly restructure. Building up our productive capacity is the only way to viably get demanded goods & services. There's no shortcut. Let the recession happen.

As always, another great video from Professor Davies.

message: buy assets

Thank youuuuuuuu!

I'm understanding this spending now

Great video 👍

@LearnLiberty

2 жыл бұрын

Glad you enjoyed it!

3:06 Eyyyy, I am in Birmingham. That was a nice coincidence.

This actually explains a lot

Inflation is both increase in the money supply and the increase in prices. The more money increased, the less our dollar can buy. This can be avoided by switching over to a deflationary monetary system like Bitcoin. That means that the value of your money will continue to grow every year.

Good stuff as always from prof Davies

@LearnLiberty

2 жыл бұрын

Justin, much appreciated!

tell me if im wrong (im not that into economics), but the analogy pretty effectively describes keynesian economics. the economy gets taxed during booms, and once the economy starts receding the government gives economic stimulus checks from money they banked up during the booms. I guess vox forgot about saving tax money during booms though, like most governments.

If someone tells you that inflation is good, remember: your retirement funds will be obliterated by inflation.

@dirtyblueshirt

2 жыл бұрын

Not if your retirement funds are invested in something with a positive real return.

@LearnLiberty

2 жыл бұрын

You are right! The higher the inflation the more it hurts us and devalues our savings.

0:55 Inflation is not “rise in price level”, prices don’t inflate, prices rise. Inflation is inflation of the monetary supply, IE printing money.

@theclockworkcadaver7025

2 жыл бұрын

@Seldom Forever The price rise isn't inflation. It's CAUSED by inflation. The actual inflation is the increase of the total money supply, which devalues each individual dollar and thus makes a higher price necessary to receive the same effective value.

@LearnLiberty

2 жыл бұрын

Bradley, glad to see your comment! An increase in money supply and inflation are different things. It's possible that money supply increases, but the purchasing power of money doesn't change. Inflation means when the value of money decreases.

@jonathanolson772

2 жыл бұрын

@@LearnLiberty No, the value of money doesn't "inflate" the money supply inflates

@jonathanolson772

2 жыл бұрын

​@Seldom Forever Google "inflation dictionary 1971" and look at the image results. There should be a dictionary definition from the year the gold standard ended (1971) referring to inflation meaning expansion of the money supply

@jonathanolson772

2 жыл бұрын

​@Seldom Forever What is the ultimate reason prices rise if not inflation of the money supply relative to the population? It is clear that it is not simply a correlative relationship but causative.

ah... independent thinking... subscribed!

I live in Alabama (Huntsville) and I do actually make 80k. I have a house, a nice car, two motorcycles, and two huskies. =)

@LearnLiberty

2 жыл бұрын

That is awesome!

Just a question of semantics: shouldn't the economic definitions of inflation and deflation be swapped? I might be wrong, but isn't inflation in which the value of the dollar is deflated while the in deflation, the value of the dollar is inflated (in both cases to a fault)

@nicholasbaum8776

2 жыл бұрын

You could argue that, but the terms "Inflation" and "deflation" are used to refer to fluctuations in prices, not fluctuations in the value of money. Money is valued insofar as it purchases goods and services each with their own prices, so fluctuations in prices precedes and is at a level of more fundamental importance than the value of money. Of course the value of money may fluctuate, but we only care about that because of what it tells about prices. Prices are what's most important, so we stick with the conventional terminology.

@LearnLiberty

2 жыл бұрын

Stanislaus, thanks for the question! Yes, inflation means loss of money's purchasing power, while deflation means an increase of money's purchasing power. It is inflation when prices go up, and at this moment money loses purchasing power, we can buy less with the same amount of money. It works on the contrary when we talking about deflation, prices go down and we can buy more with the same amount of money. To my mind, both of them are harmful to us in certain cases.

Learn liberty should be on every school around the world!

It would have been nice if the professor offered some solutions to recessions or inflation

#learnliberty please could you make a short video on the “Petro dollar” and what will happen to our economy and how fast, if we lose the petro dollar status

Great vid!

Seems like colleges across the country not teaching young folks this is a problem. Who dropped that one? Parents? Good thing I've been teaching my kids all this. I don't expect our failing education system to do it. Thanks for your videos. I'm sharing these videos with as many people as I possibly can.

I keep 18 months of living expenses saved in equal thirds of physical gold, silver, and cash (cash is split 50/50 USD and Swiss frank). This is overkill for most people but during some years I topped it up 3 months extra a year. This isn't my investments that is a separate fund.

Is it possible if you guys can explain the Lebanese Economy in Beirut Lebanon? It would be great.

mv = pq where m is money supply v is the velocity (turnover) of the money supply p is the price index q is the quantity of goods and services Incidentally, mv = pq also equal C+I+G which is GDP. Solving for the changes in p will tell you what the overall inflation rate is.

@obnazamypolskichguruinwest9066

Жыл бұрын

I really love how beautifully plain this formula is. If you divide the equation by q, you get: p = mv/q But the m*v is an equivalent of the total spending in the economy and q is the total output. p = [total spending]/[total output] Now this makes perfect sense, because goods/services are half of every transaction, money being the other half. If people spent say 1 million dollars on 1000 different products, then the average price of a product was 1000$. This also shows that the only way to have persistent inflation in the long run is to increase the money supply faster than the economy grows.

How do I save during a recession? Easy, you start saving when there isn't one. When you have a surplus of money is the time to save, not when you're running dry or times have become uncertain.

hey Vox.. explain the cause and effect between fish saving money (??) and the level of the water

@dirtyblueshirt

2 жыл бұрын

Because the fish drink the water and turn it into plants. Duh.

Vox is a prime example of Dunning-Kruger syndrome wrongness masked by excellent editing.

I like prof davies very much thanks for all you do

@LearnLiberty

2 жыл бұрын

Robert, glad to hear that!

Didn't watch the video but came here to ask when is Vox ever right? LOL

Sorry for the meta-comment, but I'd like to suggest lowering the volume of the jazzy guitar music in the next video or, better yet, using some less busy background. It was hard to focus on the message.

@LearnLiberty

2 жыл бұрын

We appreciate the feedback!

Learn Liberty 1, Vox 0

Great video. Inflation is not necessarily about the money supply. You can have an increase in the money supply for a whole host of reasons with no increase in inflation. Instead, inflation is a dilution of purchasing power. In essence, the dollar you had in your pocket a year ago buys you much less now.

@LearnLiberty

2 жыл бұрын

Very true, thanks Christopher!

I like how Voxs answer was "the Gov will give us water!"

Best channel on youtube right now

@LearnLiberty

2 жыл бұрын

I wish KZread agreed with you

@HuntingTarg

2 жыл бұрын

Nope; that is probably @PragerU

I liked how this viedo was made in the VOX style. With their trademarked Skype interview.

@LearnLiberty

2 жыл бұрын

It’s a zoom interview though, this isn’t 2010

Lol I first learned about money illusion when I was 12 reading Mark Twain's "A Connecticut Yankee in King Arthur's Court". I didn't know the concept had a name.

@immaculatesquid

2 жыл бұрын

ive never heard it have a name either but it is a phenomena well observed in my own search for a different state to live in

Inflation is the devaluation of currency. That's it. It's that simple. "Coin clipping", printing money, etc devalues currency which makes prices rise. How hard was that?

@Nukestarmaster

2 жыл бұрын

No, inflation is the increase of the money supply, inflation causes prices to rise, but it is not the prices rising.

@rmp5s

2 жыл бұрын

@@Nukestarmaster Using the word to define the word...nice. lol

@Nukestarmaster

2 жыл бұрын

@@rmp5s Point. Inflation is the _increase_ of the money supply.

@rmp5s

2 жыл бұрын

@@Nukestarmaster ...which...devalues...the currency...

In a gold backed currency, finding more gold means more currency?

@LearnLiberty

2 жыл бұрын

The cost of gold is determined by the wealth of the market. If we are mining more gold it doesn't mean that our wealth on the market is also increasing.

Well you don’t save during a recession. You build up a war chest when the economy is growing, and usually go to common hedges that are inflation proof or in normal times have heavy savings.

2022 Checking in. The inflation as well as a myriad of other increases are here.

Government should just stay out of the economy, and let the free market decide.

Inflation is not the rise in the average price level. Inflation is the expansion of the money supply. This often leads to the rise in the average price level -pending market realization and changes in efficiency in the market due to technological advances. The important thing to remember about inflation is that it is theft or counterfeit perpetrated on the holders of a currency by the currency's central bank. The Federal Reserve is actively destroying the purchasing power of the American people by inflating the dollar.

Low inflation is specifically the government and the banking system cashing out industrial and technological advancement that increase productivity instead of passing those savings onto you. High inflation in excess of productivity advancements is a direct tax on saved money and wages. If we didn't have inflation somethings like food would be so cheap compared to wages that it would be impossible to buy say a single loaf of bread because it would cost far less than a penny.

@peterjohn7045

2 жыл бұрын

You need to go back to sxgool

@GeoFry3

2 жыл бұрын

@@peterjohn7045 well done sir, well done!

@peterjohn7045

2 жыл бұрын

@@GeoFry3 If we don’t have inflation prices would be to cheap doesn’t make sense if you understand supply and demand prices are a function of demand if there is more demand there is less supply business will always pick the most profitable price of bread to sell it at where the market will purchase it but still making them a profit business won’t sell bread for a penny since they can charge more. Inflation is more money chasing same goods since supply and demand this causes prices to rise as there is more supply of money.

"Vox is wrong" tell me something, I didn't already know ;D

Love it. We need more of this

@LearnLiberty

2 жыл бұрын

Thank you! We’ll be sure to take note that you guys loved this style

The number of dollars doesn’t matter on a deserted island but it absolutely matters in a national economy. That’s the whole point of inflation. The stimulus checks aren’t given to make people richer. They are given to get people spending, degrade confidence in savings which gets people spending more and the spiral continues. This is purposefully done in a recession because the alternative is for people to keep hunkering down and saving which keeps the recession going. This solution has some flaws including the knowledge problem he mentioned, but they ought to do it justice and explain the reasoning behind it.

The intro, if you stop spending money, the water level drops, I mean, you can look at it this way, if you stop spending money & choose to save it, not spending a single dime! Neglecting your water bill, will result in the water being turned off! I guess the person , that did the research for the vox vid, did exactly that, research!

during recession strategy A: buy crypto strategy B: buy more crypto

@jonathanolson772

2 жыл бұрын

ngmi

They shouldn't say in the video that we can't ask politicians for money, but we shouldn't. Because we can and do that currently.

Why Vox is wrong... How long do you have?

You can still save money over the long term without losing purchasing power, just save it in the form of precious metals such as gold.

Inflation is the increase of money supply. Not increase of prices.

@spacetoast7783

2 жыл бұрын

Thanks for sharing your personal definition that disagrees with, Vox, LL, and virtually every economist.

@thefrenchareharlequins2743

2 жыл бұрын

@@spacetoast7783 every economist, only including Keynesians and Modern Monetary Twats.

@j2kp0t

2 жыл бұрын

@marc safarti -- I came here to say this, too

@JumpingJack6

2 жыл бұрын

Wrong.... Investopedia " Inflation is the decline of purchasing power of a given currency over time. A quantitative estimate of the rate at which the decline in purchasing power occurs can be reflected in the increase of an average price level of a basket of selected goods and services in an economy over some period of time. The rise in the general level of prices, often expressed as a percentage, means that a unit of currency effectively buys less than it did in prior periods." Here is another: from Oxford Dictionary: "a general increase in prices and fall in the purchasing value of money. " The money supply can spur inflation, but simply put inflation is the average price increase of goods and services over time.

Keynesian economics: /ˈkeɪnziən/ KAYN-zee-ən; The economic method by which Cronyism is funded.

Save money during good times. Have cash ready to pick up deals during a downturn.

Many or most people still have an idealist view of government that it will be there to help and care etc. When in reality is the root cause, mostly of all our problems