What's all the Yellen About? Monetary Policy and the Federal Reserve: Crash Course Economics #10
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Date: 2022-04-04
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Comments and reviews: 10
Bob
The Fed sets asset prices, not the market. Since 1980s, the Fed has lowered interest rates and since 2008 the Fed has done QE to reward the asset owner class by raising asset prices. -These artificially low interest rates and QE have caused the year/generation you were born in to determine whether you are able to own a home and generate wealth-. The older generations bought homes for 1-2 times median income and bought stocks at 8 times PE ratios in the 1980s because asset prices were low because Volker set interest rates high. Then these people road the Greenspan, Bernanke, Yellen and Powell puts and became rich as their homes and stock portfolios increased +10% a year. -They became rich because they were simply born at the right time-. But the asset non-owner underclass (millenials and poor boomers who didn't accumulate assets in 1980s) deal with housing at 8-10 times median income (because wages didn't increase since 1980s, a bubble stock market that only went up because of QE and low interest rates. It is a shame that 99% of people have no idea that monetary policy and not fiscal policy deserves most of the blame. Eventually the asset non-owner underclass will revolt by electing an MMT president, who will inflate away the asset bubbles and make housing affordable again (and cause a depression in the process. Please spread the word so people can understand this and we can have a change in monetary policy. This is not a left vs. right thing, it affects all of us.
reply
The Fed sets asset prices, not the market. Since 1980s, the Fed has lowered interest rates and since 2008 the Fed has done QE to reward the asset owner class by raising asset prices. -These artificially low interest rates and QE have caused the year/generation you were born in to determine whether you are able to own a home and generate wealth-. The older generations bought homes for 1-2 times median income and bought stocks at 8 times PE ratios in the 1980s because asset prices were low because Volker set interest rates high. Then these people road the Greenspan, Bernanke, Yellen and Powell puts and became rich as their homes and stock portfolios increased +10% a year. -They became rich because they were simply born at the right time-. But the asset non-owner underclass (millenials and poor boomers who didn't accumulate assets in 1980s) deal with housing at 8-10 times median income (because wages didn't increase since 1980s, a bubble stock market that only went up because of QE and low interest rates. It is a shame that 99% of people have no idea that monetary policy and not fiscal policy deserves most of the blame. Eventually the asset non-owner underclass will revolt by electing an MMT president, who will inflate away the asset bubbles and make housing affordable again (and cause a depression in the process. Please spread the word so people can understand this and we can have a change in monetary policy. This is not a left vs. right thing, it affects all of us.
reply
Abed
How does the central bank change the money supply for banks?
1) When we deposit money in the bank, the bank holds a portion (this portion is called the Reserve Requirement) of the deposit and loans the rest. -
So the central bank controls this portion. -
If it's high, the bank can loan more of our money to other people and make profits (high money supply. -
If low, they make less profit (less money supply. -
Note: -
The central bank is the bank of banks (they load from it. -
2) Change the interest rate (discount rate) the central bank charges for loans the banks take. -
Decreasing it, increases the money supply. -
Increasing it, decreases the money supply. -
3) Open market operations: -
This is when the federal reserve buys or sells short term government bonds. -
A government bond is an IOU (I Owe You) issued by the government which says I-ll pay you back later. -
If the central bank buys those bonds from banks, it increases their money supply. -
If the central bank issues more bonds to banks, it decreases their money supply.
reply
How does the central bank change the money supply for banks?
1) When we deposit money in the bank, the bank holds a portion (this portion is called the Reserve Requirement) of the deposit and loans the rest. -
So the central bank controls this portion. -
If it's high, the bank can loan more of our money to other people and make profits (high money supply. -
If low, they make less profit (less money supply. -
Note: -
The central bank is the bank of banks (they load from it. -
2) Change the interest rate (discount rate) the central bank charges for loans the banks take. -
Decreasing it, increases the money supply. -
Increasing it, decreases the money supply. -
3) Open market operations: -
This is when the federal reserve buys or sells short term government bonds. -
A government bond is an IOU (I Owe You) issued by the government which says I-ll pay you back later. -
If the central bank buys those bonds from banks, it increases their money supply. -
If the central bank issues more bonds to banks, it decreases their money supply.
reply
ViriTrilbia
Here come the Keynesians with their religious propaganda and other myths:
-Spending is what drives the Economy-
-Spending makes 70% of GDP-
-Saving is for idiots and greedy people-
Because according to them, wealth is created purely by spending and consumption.
No matter. Their prophet John Maynard Keynes was never an economist, he was mathematician that lost all of his money in the stock market. Then he wrote an incoherent book called -The General Theory. -
reply
Here come the Keynesians with their religious propaganda and other myths:
-Spending is what drives the Economy-
-Spending makes 70% of GDP-
-Saving is for idiots and greedy people-
Because according to them, wealth is created purely by spending and consumption.
No matter. Their prophet John Maynard Keynes was never an economist, he was mathematician that lost all of his money in the stock market. Then he wrote an incoherent book called -The General Theory. -
reply
Flint
I-m 68 years old and reasonably intelligent, but the young man on this video is talking so damn fast I can barely follow it. He barely takes a breath between sentences. The young lady speaks at a more comfortable rate. You guys might consider this in future videos because I know I'm not the only oldster who likes things at a calm, relaxed pace.
reply
I-m 68 years old and reasonably intelligent, but the young man on this video is talking so damn fast I can barely follow it. He barely takes a breath between sentences. The young lady speaks at a more comfortable rate. You guys might consider this in future videos because I know I'm not the only oldster who likes things at a calm, relaxed pace.
reply
Sean
I love these videos. I am currently working on my M. S. in Financial Analysis, and my brain has trouble connecting the equations to their theories. Even simple things I learned for my Bachelor's elude me. Your videos make things straightforward enough for me to understand the theory piece more clearly. I appreciate it.
reply
I love these videos. I am currently working on my M. S. in Financial Analysis, and my brain has trouble connecting the equations to their theories. Even simple things I learned for my Bachelor's elude me. Your videos make things straightforward enough for me to understand the theory piece more clearly. I appreciate it.
reply
Samuel
Kinda late questioning this video, but here it goes:
I understood that FED can't really alter the interest rates that banks charge costumers, but is that possible in Europe with ECB?
Can the ECB alter the interest rates that european banks charge their costumers?
reply
Kinda late questioning this video, but here it goes:
I understood that FED can't really alter the interest rates that banks charge costumers, but is that possible in Europe with ECB?
Can the ECB alter the interest rates that european banks charge their costumers?
reply
The
Fun Fact: Sense the Federal Reserve was created in 1913, the US dollar
has lost 96% of its value, which means a dollar today is 4 cents in
1913, this is caused by inflation which happens when there is more money
printed, when the amount rises the value falls.
reply
Fun Fact: Sense the Federal Reserve was created in 1913, the US dollar
has lost 96% of its value, which means a dollar today is 4 cents in
1913, this is caused by inflation which happens when there is more money
printed, when the amount rises the value falls.
reply
goldassayer93555
Since the Federal Reserve Bank creates currency by typing numbers into their accounting computer no real wealth is transferred from the Fed to the Government when they -loan- currency. So there is no need to pay anything back! quit paying taxes.
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Since the Federal Reserve Bank creates currency by typing numbers into their accounting computer no real wealth is transferred from the Fed to the Government when they -loan- currency. So there is no need to pay anything back! quit paying taxes.
reply
Don
7: 15 The paper -Why are Banks Holding so many Excess Reserves? - explains that, since 2008, the US has been paying interest rates for excess reserves. Because of that, banks are better off holding all that money than lending it
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7: 15 The paper -Why are Banks Holding so many Excess Reserves? - explains that, since 2008, the US has been paying interest rates for excess reserves. Because of that, banks are better off holding all that money than lending it
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-̊
Thanks. Now we have a good rationale for allowing America to siphon off the prosperity of poor countries, and for the 1% to siphon off the prosperity of the working class. The Middle-Class is about to get gutted again.
reply
Thanks. Now we have a good rationale for allowing America to siphon off the prosperity of poor countries, and for the 1% to siphon off the prosperity of the working class. The Middle-Class is about to get gutted again.
reply
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