You deserve more reach .

@ericfilipiachado820

2 жыл бұрын

His channel is growing fast, so KZread agrees

This circular representation is actually a great way to introduce the concepts of money aggregates (M0, M1 and M2). Thanks!

@nat6106

2 жыл бұрын

Btw, if you were trying to convey an explanation slightly different than that of the 3 money aggregates, feel free to jump to rectify my understanding of it :)

@customersupport9055

2 жыл бұрын

So what he explains as the Monetary core is M0, M1 is the periphery, and M2 the crust? What is M3?

@multiicore_

2 жыл бұрын

@@customersupport9055 M money is part of the core. M3 tries but fails to represent the periphery.

@WPaKFamily

2 жыл бұрын

@@customersupport9055 M3 is supercurrency or supermoney (i.e. shares of equity that grows in value) and you can convert some of your shares into fiat currency and move to M2 (savings) and then to M1 (checking) in order to spend your supercurrency.

You're doing what a lot of macro classes can't. Love your work!

This channel's explanation is like a diamond in the sea of glass. It is simple, clear, and refined.

@MoneyMacro

2 жыл бұрын

Very happy to hear that!!!

That intro perfectly encapsulates the kinds of questions I would ponder at 2AM every day for the past 19 years.

Here are some of the sources about the hierarchy of money that I used. It is usually visualized as a pyramid (makes sense for a hierarchy). I chose to do it as a circle instead because that made it possible to animate it in motion. www.levyinstitute.org/publications/the-hierarchy-of-money#:~:text=Minsky's%20insights%20in%20order%20to,acceptability%22%20is%20its%20important%20feature. www.researchgate.net/publication/5208277_The_Role_of_the_State_and_the_Hierarchy_of_Money ieor.columbia.edu/files/seasdepts/industrial-engineering-operations-research/pdf-files/Mehrling_P_FESeminar_Sp12-02.pdf

Just what I need for the economics class, thank you.

This is one of the best explanations I´ve seen around. Every time I think I understand money, then I ask myself a question which I cannot understand and come back to this explanation to hit some base on how to explain something.

You have established a gold standard in monetary sytem visualisations

My god... You're channel is the best find I've foun in youtube. My world has changed now. There's actually one thing that this theory omits though, which is understandable as this is about monetary theory, not economics in general. Where the value of money comes? I'd envision economics layer outside financial layer to finalize this concept; where the actual value of the monetary layers realizes: Even the gold or cash in the centre only has real value it has once it's actually spent in products that lay outside the monetary circles, that the central part of classic economic theory. The value of work and product created by companies and individuals.

Excellent educational factual analysis and discussions. Most appreciated, very helpful.

This is me doing my part to improve your viewer engagement.

@MoneyMacro

2 жыл бұрын

Much appreciated!!

This is such an awesome video. I might have known all of this, but this framework has been explained so easily that I think most people that are interested in the subject can understand it. I wonder how many people would disagree with the content.

This representation is very good! It really made it easier for me to structure my understanding of economics and finance in a much better way. Thank you so much :)

Good video and informative.thanks.your voice are magnetic.👍

@MoneyMacro

3 жыл бұрын

Thanks!!

Very well explained! Thanks man!

Super informative video

Interesting and informative video!

Really intuitive. Thank you! I'd like an explanation of the bond market.

This financial structure is just as cash collage explained as well but he made it as a kingdom reference for investment advice....... great content keep it up 👍😊

Brilliant visualization, doc!

@MoneyMacro

2 жыл бұрын

Thanks!

I doubt that economists at the time wanted gold to be scarce. It's just that a commodity based currency demands more fiscal discipline but then thanks to the magic of exponential growth there simply wasn't enough gold around.

@annoloki

2 жыл бұрын

And letting gold mine owners control the rate the economy can grow is nuts

@danieltemelkovski9828

2 жыл бұрын

@@annoloki That is a severe misunderstanding. The rate of of growth of money supply doesn't "control" the growth rate of the economy. Even the extent to which it influences the growth of output is subject to considerable dispute.

@inferno0020

2 жыл бұрын

Gold-standard cults and keyboard warriors like to imagine that banks under silver and gold standards won't manipulate the currency when the reality is the opposite.

@Koooles

Жыл бұрын

In my completely probably ignorant opinion, I think we still very much have commodity based currency, except that it is not just "gold", but many complex layers, such as workers skills, military might, population, accessable resources. I mean even if we completely wipe all the current financial system the bodies that have overall decent resources, good organization, skilled workers, military will come on top. I guess it's more multiple commodities + social capita + how well you can organize it.

Really helps in understanding!

very interesting video. I've just discovered your channel, so far two thumbs up!

@MoneyMacro

2 жыл бұрын

Thank you very much!

Nice! Thanks a lot. This helps!

I like how simple you explain things. Hopefully soon I'll be supporting you on Patreons (you are under my radar). Btw, can you please make a video and explain your view on The Bitcoin Stabdard book written by Saifedean Ammos? Keen to hear your objective comments.

@MoneyMacro

2 жыл бұрын

Thanks! And interesting... this book is now on my radar. I haven't read it yet. I will do some more crypto as money videos in the near future for sure :) (maybe later also about that book)

Amazing video! Thanks

Great vid and channel TY

@MoneyMacro

2 жыл бұрын

Thanks!!

Thank you very much 🙏

Interesting mental model framework. I love how your videos always make me think deeper about these things! Fascinating. So would you put black and grey money in the crust (because it can only be spend on a more limited amount of things), or in the core (because it was originally printed by a central bank)? And does this mean that in countries where wire transfer / electronic money is preferred over physical cash transactions, physical cash is less deep in the core, and these rings can thus swap places under different conditions and times?

@BigHenFor

Жыл бұрын

No; you can have parallel routes in and out of each layer. During the GFC, the majority of QE was done via the creation of Bank Reserves, a credit in each regulated bank's account at the Central Bank, which could not be lent or traded by the Bank, but could improve their liquidity ratios. The next tranche of QE distributed was cash transfers from the core firstly to workers as lockdown payments to subsidise lost wages and to pay unemployment benefits to those laid off, then secondly to economically sensitive businesses, often as grants or loans, then finally payments to public services to cope with their increased demands. It doesn't matter how the money is delivered, but where the money originates from. When you go to an atm, and withdraw some cash, that money is still core money in the form of cash from a peripheral bank's atm. But say, you use your credit card to buy something. That money is peripheral money going to the retailer. But what about cash advances on your credit card? Well, banks borrow money to lend out to consumers using credit cards. When you borrow that cash, that loan itself becomes an asset to the Bank, which they can hold on until you repay the cash advance, or sell the loan, or lend it out for a fee. That is therefore peripheral money as credit. Grey or black money is still peripheral money. For example, the Eurodollar capital market comprises of private banks outside the USA making loans collaterialised by US denominated assets, that are denominated in USD. These are now USD assets that are destroyed when the loan is repaid, but which sold on too. Moreover the stream of repayments can be invested in other USD markets. VISA is run by the cartel of private banks from a tax Haven outside regulatory control from sovereign central banks. They provide all the money for credit card use, and split the profits with domestic banks who sell their products. All those USD are black or grey to sovereign nations, as when the measure the money supply, they do not count those USD created by offshore banks making USD loans in the periphery. So Eurodollar markets provide black money that everyone with a credit card uses. All within the periphery.

@kevinttk2562

Жыл бұрын

@@BigHenFor Thanks for your reaction & view on this question. I agree with some parts of the answer, but I am not sure if I follow you everywhere in this answer here. As I understand the video, the different parts of the monetary system are different not only in the source of their creation but also in the environment and type of spending that they allow. The core has mainly money created by central banks around a nucleus of gold, and is useful in most situations, but not so much for very large transactions and in establishments afraid of theft. The periphery money is mainly created by banks by the action of creating loans (which become assets on their balance sheets until repayment) and maybe some other vehicles. This money is useful too for many payments but less for e.g. very local shops or sectors critical of digitization or money-tracing (including clandestine ones). The crust contains all kinds of money-like things that also can be created by non-bank entities, and have typically only value/trust in more limited settings or time frames, like e.g. tokens at a festival, supermarket vouchers, cryptocurrencies, money market funds, … My question here is really whether grey zones exist or these are firmly distinct categories, and whether a change of outside conditions can change the allocation of one type of money to a different category, because its usefulness changes. As you point out, black and grey money could belong to any of the different layers, based on their original creation, but maybe never belong to anything else that the crust considering their much more limited possibility for use because of the illegal origin or tax dodging, respectively. Moreover, does cold card physical cash belong in the core in a city where you can e.g. only pay with physical cash in certain neighbourhoods, but not in most establishments or for most transactions? Food for thought, cheers!

i have a topic for you: the development of production- vs sails-price of goods! i think that would hit the core of our problems

On the topic of QE. In the UK QE began in 2008/9 after the crash. I think it had two objectives: 1 to stabilise the financial system and 2. to provide a stimulus to the economy. Given the low growth the UK has experienced since 2008 it's reasonable to assume that objective 2 failed. Unless the massive asset price inflation which has occurred can count as growth which, perhaps it can?

This is quality content

I love this dude!

Thanks a lot!

Fantastic video, if you were to recommend someone books that covers ecoomics and stuff like this what books would you recommend?

This was great

@MoneyMacro

2 жыл бұрын

Thanks!

Need more videos ..in simple form

Very smart to do a bit more clickbaity videos like the reaction to economics explained. Landed here via that video and loving it! I'd say make a few more clickbait videos to lure ppl in, 'cause your content is gold.

Greate video!

@MoneyMacro

2 жыл бұрын

Thank you!!

*Not to scale. The "crust" contains ALL tradable assets in an economy and is therefore unfathomably large in comparison.

In this video and in QE video, you are talking about "Reserves" that only banks can use. I'm confused as what exactly are these "reserves"? In my country, banks have to keep reserves with central bank as certain % of NDTL for liquidity shock situation. Other than this, Banks can also borrow from Central Bank by pledging certain securities (ex. TBILLS) via repo operations on overnight basis for liquidity mgmt. Thanks

How does the stock market or any other financial market (e.g. bonds) affect this model? Also you mentioned you buy stocks through a money market fund, but I always thought you buy stocks with core money (money in a bank account) and a money market fund was composed of short term government debt like treasuries or gilts.

@danieltemelkovski9828

2 жыл бұрын

You are correct. Referring to brokerage accounts as "the money market" was an unfortunate choice of words, since that the term already has an established meaning in finance and economics, which has nothing to do with stocks. (As you say, it refers to debt with a maturity of less than one year, though typically much shorter than this.) That said, "the money market" is a term that in everyday language is also used to refer to financial dealings in general, including stocks and longer term debt, so Joeri wasn't technically "wrong" to use it.

Intro song had me waiting for “let’s give it a go shall we”

Glad to hear even economic students only get sense of this in PhD phase, not in masters level.

Dear Schasfoort! Where does your theory of Hierarchy of Money come from? Do you have the academia source? And, can you use a hierarchical money view to help reconceptualize the causes of financial instability and its connection to economic recessions, and to rethink policy responses?

@MoneyMacro

3 жыл бұрын

Hey Bjørn, here are some of my sources: www.levyinstitute.org/publications/the-hierarchy-of-money#:~:text=Minsky%27s%20insights%20in%20order%20to,acceptability%22%20is%20its%20important%20feature

@MoneyMacro

3 жыл бұрын

www.researchgate.net/publication/5208277_The_Role_of_the_State_and_the_Hierarchy_of_Money

@MoneyMacro

3 жыл бұрын

For the last one see my previous comment. Yes you can use this framework to re-think financial stability. Viewed through this lense most crises can be seen as the point at which a lower layer becomes too big for the upper layer. For example if the upper layer is gold (in a gold standard) and the layer below it is money convertible in gold. The crisis happens when everyone tries to convert that money too gold. Similarly, a financial crash happens when everyone tries to convert financial assets into "safe" bank deposits.

@bjrnfreiesleben8972

3 жыл бұрын

@@MoneyMacro Thank you!

@bjrnfreiesleben8972

3 жыл бұрын

@@MoneyMacro Hello again, Joeri. I have textbooks in macroeconomics, both dedicated to orthodox and heterodox economics. I find it strange that none of my textbooks describes money as a hierarchy - not even in my heterodox textbook. Do you have any thoughts about why this theory isn't a mainstream one?

Thoughts on Perry Mehrling?

Are these bank reserves which are part of the core the digital cash that commercial banks have at the central bank? I.e the liabilities of the central bank? If yes then does this mean that the monetary core does not purely consist of M0 money supply?

QE also works to de-escalate or deleverage what You call monetary crust.

So when I'm buying a stock, X money is transferred from the money periphery into the financial crust. Does that also mean the periphery gets smaller by that X amount and the financial crust grows by that X amount?

if you can explain interest rate swaps, that will be great.. I know how they work, but I do not understand the role they play in the global economy..

Can you try to reach to other youtubers who are in the camp of inflation is the expansion of money and create a video discussing the difference in views I think that will be great content. Like Uneducated Economist and MoneyGPS

Money needs use cases

I don't get how reserves work, like, what do they even do? Are they just a requisit of having a bank for the central government be able to control the banks? I don't really understand

@MoneyMacro

Ай бұрын

Reserves are bank accounts that only banks can hold. Banks can exchange these for cash and pay each other. So, you need reserves in case of a bank run, either SVB style when money is transferred to other banks, or old-school bank run when they need physical cash.

@liquidificadoroficial3975

Ай бұрын

@@MoneyMacro thank you for explaining, but I still don't know one thing, why do you need reserves to transfer money to other bank's bank accounts? Do they have a different kind of digital money or something like that?

@MoneyMacro

Ай бұрын

@@liquidificadoroficial3975 your money is a liability of a bank. But other banks don't want too much of a liability of other banks. They prefer a liability of the central bank. So, while we use bank money to pay each other (for the most part) banks use central bank money to pay each other.

@liquidificadoroficial3975

Ай бұрын

@@MoneyMacro got it, thank you!

I'm a bit confused by your "crust" examples. It doesn't seem like money is being created because there transfer is 100%... No credit or debt, just exchanging tokens which have a fixed value. Stocks, CDOs, ect. create money because they aren't fully collateralized (I think that's the term) and can increase in perceived value.

It's quite cofusing to introduce the concept of a monetary HIERARCHY and then to illustrate it not in a hierarichcal manner, but using a cross-section of a globe, and to keep referring to it as a hierarchy.

It is absolutely necessary to return to a gold standard! But not before I sell everything I own for gold, because when the new gold standard will be established, the value of money will decrease to only 1% of its current value, or, which is the same, the value of money will rise by 9900%. Why, I hear you asking? Well, the value of all available gold amounts to roughly 1% of the value of all existing money (M2, that is). Returning to a gold standard will destroy all savings with the stroke pf a pen. Ah, good times, good times...

So before a banking crisis, withdraw all money from bank for (cold hard) cash/notes/coins? Then before a fiat crisis then change notes/coins for gold/silver+guns/jets/subs?

In spite of the glowing reviews, this video contains some fundamental errors. The top layer does not consist of money. Something cannot act as money and a reserve at the same time, and this applies to currency. Cash in a bank vault (or at the Fed) acts as a reserve; cash in circulation acts as money. The bottom layer also does not act as money. It fails the tests of general acceptance and as a medium of indirect exchange. The presenter has made the concept of money more confusing than it need be.

And then when cash loses it’s value thanks to hyperinflation, people will turn to gold and silver. As it is shown by Chris Duane of silver shield in most of his recent videos

Don't think it's correct to say that bank credit are promises to pay with central bank money. Most people are just happy to leave receive a rate of return on their deposits at banking institutions. That's primarily why people accept it in return for goods and services.

@MoneyMacro

2 жыл бұрын

isn't it is in effect still a promise to pay central bank money even if most people choose not do act on that promise?

@hemiedwards217

2 жыл бұрын

@@MoneyMacro Not really. Is there a legal contract saying that the bank promises to pay the depositor in central bank money? At least here in New Zealand there is no such obligation. "The actual form of payment - whether it is by legal tender or some other method - is determined by the contractual context. A contractual provision may specify the form of payment as something other than legal tender. For example, it may specify that payment be made electronically or by cheque, in which case the debtor has no right to insist on payment in legal tender. With small sums and routine transactions, contracts are frequently silent on this matter and payment in cash is not considered unreasonable. With large sums, where the contract is unspecific as to the form of payment, the courts are likely to conclude that payment by legal tender is, in the words of one author ‘unthinkable and cannot possibly be within the contemplation of the parties’.3 This is because the courts will take into account the commercial context of the transaction and the practical difficulties faced by the creditor who must count out very large sums of cash." tinyurl.com/dccnaark

QUESTION: I thought that I will find a good explanation of the money creation process. Unfortunately, you disappointed me. My question is: why are you calling the receivables and liabilities (the settlements between parties) "money" ? . If A lends 100 to B and B lends 100 to C, then at the end of this process do we have: - 100 - 200 - 300 ? According to the popular myth there are 300, because C has 100, A and B each have 100 in receivables. But this way of thinking is an ABSURD ! . Why are you perpetuating this myth ?

Er gaat niets boven Groningen.

Wat ook nog interessant was eventueel op te nemen, is hoe Starbucks op sommige vlakken een middelgrote bank is door al hun uitstaande waardebonnetjes.

I've been wondering how we can make our financial system more responsive to environmental demands. It seems to me that a lot of "value" (as a social construct) is created with little reference to its material basis. What always scared me about the economy when I encountered in high school is how much of it is 'floating' on collective faith, untethered from the real world. We all understand money is a social construct, but here we are destroying our planet in the search for more wealth/power. Help?

@effexon

2 жыл бұрын

to understand how big part of human life is social, and curb that material side negative effects, while fulfilling people's needs for that social needs and keeping connection with community, friends, family and so on. Xmas cards are good example, it is tradition, helping us to keep connected, coz otherwise it is very hard without "rhythm of life". But this needs to be smartly "regulated" so that businesses cant drive people to send 100 cards instead of 1, coz that would again revert back to infinite growth mindset and cause bubbles in economy. After bare necessities, people like me crave social life, and if feel helpless, we buy things. In urban cities this may be big problem, as it is more synthetic environment without natural communities.

@shane_rm1025

2 жыл бұрын

Carbon taxes are how economists recommend emissions be accounted for. Even if you just return the money collected back to tge people, the cost of the carbon will then be included in prices and thus every decision in the economy will take its carbon (or ghg-equivalent) impact into account. Environmental depletion is an externality which can usually be solved with pigouvian taxes.

@danieltemelkovski9828

2 жыл бұрын

What is this so-called "real world" that economic activity is alleged untethered from? It seems to me that I could just as well describe this imagined "real world" you apparently place such high value on as floating on collective faith (ie on shared imaginings), untethered from economic concerns. In that case, we'd be talking completely past each other, which helps no one, but it does enable me point out you're asking others to privilege your value system over their own (or to speak for myself, over MY own) without any evidently good reason.

Your explanation is faulted from the start. Firstly because all sovereign money in the systems of the world is fiat credit money . Secondly all central banks (reserve banks) do not operate in the way you explained with reserve requirements. In some countries there are NO reserve requirements . Thirdly the central government's bank is the reserve bank and the government has to borrow money by purchasing treasury securities to get new money. That money is created as credit which has to be paid back. Fourthly there is no hierarchy of money because money is of equal value no matter who has it or where it comes from. Thirdly most of the money in the economy is created by private bank lending. In summary your explanation is government and Central bank centric rather like those who ancient people believed the earth was the center of the universe so all other planets revolved around it. The reality is all sovereign money today in any form is equivalent. If it was not then prices would reflect the difference but you don't ever see differing prices for types of money except when people are pressed for cash or don't want cash and want digital money instead.

@MoneyMacro

Жыл бұрын

The idea behind the hierarchy of money is indeed that it only shows itself in times of crisis. That is when the prices of the various types of money might "break parity". So in normal times the hierarchy is invisible. But, that doesn't mean it is not there. It's useful to think about it like this so that you are better prepared for a crisis.

@Rob-fx2dw

Жыл бұрын

@@MoneyMacro i appreciate your reply but lets get down to single specifics. First- what do reserves do in the economies of countries like Canada or Australia which has not had a reserve requirement for 40 years? My understanding is It can't do anything because it does Not exist at all.

@MoneyMacro

Жыл бұрын

@@Rob-fx2dw I agree that reserve requirements are not very relevant. See my video on the money multiplier being a myth. But, that doesn't mean that reserves themselves are not relevant. Especially not in a crisis. Check out some of my other videos on central banking and credit money. The hierarchy of money idea is not at odds with these ideas

@Rob-fx2dw

Жыл бұрын

@@MoneyMacro Thanks for replying but your other video is wrong itself. I have given the explanation of why it is wrong and provided the evidence that proves it is wrong. Your explanation is essentially wrong because I believe you don't seem to understand that all of the sovereign designated money today is fiat credit money no matter what form it is in being digital, paper, coin, or whatever. It is ALL fiat credit money. So the US dollar is fiat credit money and the Euro is fiat credit money no mater who creates it be it a private bank or a reserve bank. Being credit is an essential par of understanding what it is and credit can be created by anyone who has the ability to be risk assessed as credit worthy that satisfies the banks who create new money. That applies to central reserve banks who lend exclusively to government or sometimes to private banks. What essentially restricts lending is the interest rate which forces people or organizations on fixed incomes to assess again whether they can make repayments. .

@pebblepod30

Жыл бұрын

@@MoneyMacro G'day again, You can see Rob on the Deficit Owls Channel. He is well know over many years to never ever change his mind or even understanding something he disagrees with before criticising it. Or being corrected on anything. And then even deleting his comments rather than admit being mistaken about anything, or admit his commitment based on ideology, even when given lots of time & God-like patience by the Channel Creator. Most ppl then soon realize he doesn't ever change his mind and is not worth the time. I also had spoken to him & listened seriously to him at the very start too, before I realized.