If you could have replaced "project E" with "sub-prime borrowers" it may just bring to light whos fault the property bubble actually was...AKA Greenspan Very important video for understanding the implications of easy money policies. Your videos are great, keep them coming!
As I understand it, this video seeks to convey the intuition that real interest rates are inversely related to planned investments. The explanation, however, seems to rest on the premise that the expected return of investment is independent from the real interest rate (2:30-2:45). But isn't the real interest rate in reality highly dependent on the return that you can expect on an investment? why would there be a high interest rate if not because the people lending out money could otherwise invest it with high returns? I feel like I have reached a blind alley in understanding this intuition ... My intuition would tell me that if interest rates are high, that means that expected returns on investments are high, which would mean that people would invest more of their money. I hope that my confusion makes sense, and that maybe somebody could enlighten me :)
The video talked about Planned Investment, which is a theoretical concept. In the case of Actual Investment, the interest rates always adjust according to the saving and investment patterns (here I'm talking about the real scenario). Therefore, the video's explanation had an aim just to describe the connection between interest rates and PLANNED Investment.
The return on investments would always try to be higher than lending rates or they won't ever get any work done. I know the lending rates would follow that increase too, but I guess that is why government intervention and control is needed. I'm not sure if my answer is satisfying, hopefully someone else clarifies it better.
I'm just here for exams mate. I'd rather have a beer and a joint and lie in the park enjoying life and not trying to understand it. Ignorance is bliss.
how can one man, have all this knowledge.. lool and instead of yeezy taught me, Khann Taught me
Wearing that watch that twister wore in the source?
I watched this and am still happy.
It's a small minority of people who actually take an interest in learning. The vast majority are ignorant and happy...
If you could have replaced "project E" with "sub-prime borrowers" it may just bring to light whos fault the property bubble actually was...AKA Greenspan
Very important video for understanding the implications of easy money policies. Your videos are great, keep them coming!
The Khan Academy never disappoints.
I can't believe it can be this good
Good content 💯
I love you so much, MR KHAN!
As I understand it, this video seeks to convey the intuition that real interest rates are inversely related to planned investments. The explanation, however, seems to rest on the premise that the expected return of investment is independent from the real interest rate (2:30-2:45). But isn't the real interest rate in reality highly dependent on the return that you can expect on an investment? why would there be a high interest rate if not because the people lending out money could otherwise invest it with high returns?
I feel like I have reached a blind alley in understanding this intuition ... My intuition would tell me that if interest rates are high, that means that expected returns on investments are high, which would mean that people would invest more of their money.
I hope that my confusion makes sense, and that maybe somebody could enlighten me :)
The video talked about Planned Investment, which is a theoretical concept. In the case of Actual Investment, the interest rates always adjust according to the saving and investment patterns (here I'm talking about the real scenario). Therefore, the video's explanation had an aim just to describe the connection between interest rates and PLANNED Investment.
The return on investments would always try to be higher than lending rates or they won't ever get any work done. I know the lending rates would follow that increase too, but I guess that is why government intervention and control is needed. I'm not sure if my answer is satisfying, hopefully someone else clarifies it better.
Wow, you made so simple to understand. Thanks 👍
Some segments in the video are stamped not adjacent to each other
I'm just here for exams mate.
I'd rather have a beer and a joint and lie in the park enjoying life and not trying to understand it.
Ignorance is bliss.
same
Thank you!!! You're a good person!
Which interest rates (in EU) should I look to predict investment? Thank you!
thank you very much KING KHAN!!
This is super interesting
Why do you map I in y-axis and r on x-axis, I know it is relative but why not stick to r on y-axis?
first?
but thats to good for khanacademy
hi Khan
i care.
#YouCanLearnAnything except Economics
ambiguous
what about project X ??
Simple, x will solved if you follow this suggestion first.
But again this is all Keynesian stuff if you belive in in the fact that prices are sticky! Are they?
We should not teach this anymore.
second
👏🏽