Why Do We Have Central Banks?
Вставка
- Опубліковано 8 січ 2023
- Now that we have discussed fiscal and monetary policy, we are ready to talk about central banks. What are they and why do they exist? What is the Federal Reserve System and what does it do? Let's get a brief introduction to this topic.
Script by Matt Beat: / iammrbeat
Animation by Ignacio Triana: / unraveled
Watch the whole Economics playlist: bit.ly/ProfDaveEcon
Mathematics Tutorials: bit.ly/ProfDaveMath
American History Tutorials: bit.ly/ProfDaveAmericanHistory
History of Drugs Videos: bit.ly/ProfDaveHistoryDrugs
General Chemistry Tutorials: bit.ly/ProfDaveGenChem
Classical Physics Tutorials: bit.ly/ProfDavePhysics1
EMAIL► ProfessorDaveExplains@gmail.com
PATREON► / professordaveexplains
Check out "Is This Wi-Fi Organic?", my book on disarming pseudoscience!
Amazon: amzn.to/2HtNpVH
Bookshop: bit.ly/39cKADM
Barnes and Noble: bit.ly/3pUjmrn
Book Depository: bit.ly/3aOVDlT
No, it's about fractional reserve. That's the reason why withdrawing money causes a crash. It's because the banks are allowed to lend money they don't actually have.
@@foreverunknown369 Why would withdrawing money cause a problem then? Shouldn't the bank have everyone's money... and a lot more....
yup went from 10% to 0% scam people need to wake up its about making people live in dept
You cant withdraw money that's not there.
@@HakeemCuragteh Tell the Federal Government that. They do it all the time.
It’s called fractional banking
You forgot the most important function of a central bank: monetizing the government's debt.
If only we monetized more debt!
Not really, the debt is largely caused by the repeated spending and borrowing of the endless supply of worthless pieces of paper that has interest attached.
LoL.. the debt they create by lending the $ we then use to subsidize or bail them out with
It is also argued, that the Panic of 1837 was caused indirectly by actions of the Central Bank of England.
1837*
@@LisaAnn777 fixed
Note how they dont say anything about why the Great Depression occurred when we had a central bank.
@@Someguy12121 Are you saying that we should not have central banks?
@@Someguy12121 Having no central bank would've made incessant spending and dodgy investing a gazillion times more hyperinflated
If you’re going to state the pros and also the supposed reasons as to why the fed exist I think you should have also stated the cons and why the fed shouldn’t exist. I wish you’d done that instead of just dismissively calling out conspiracy theorists
I did do that.
He is just a pawn getting paid. Don't expect it
I'd like to notice and appreciate the use of animation and continuous motion in the visuals. It REALLY helps a lot, at least for people like me with pretty bad ADHD. It keeps the visual engaging which helps reinforce the information as you narrate it (more so than unmoving panels).
(Edit:) To be specific, I'm talking about the "idle" animations while nothing is obviously changing in the visual. Those really help the content stick
Dave's films related to economy or politics appear to be quite americanocentric to me:
1. "Unlike a commercial bank, a central bank has a monopoly on how much money can be created and put in circulation" - well, nope. At least not since we have fractional-reserve banking, with a ridiculously low reserve ratio (often somewhere between 2-4%).
2. "...most countries made their [central banks] institutionally independent from political interference" - it would be worth to notice, what threats would pose an opposite decision. For instance in Poland, central bank's president is elected directly by the Parliament, thus being an extension of a rulling parties' political agenda, and adjusting the bank's policy to the current government's needs.
You are a great teacher.
Another great video! I just picked up your book and look forward to reading it!
Kinda funny that maximizing employment is the first objective since Powell said they must raise unemployment to decrease inflation.
Can you point the the speech where he said that?
@@roberthamilton9154 Search Powell: "Fed hikes will likely boost unemployment." That is his plan. More unemployed people means less spending means reduced inflation.
@@infinitemonkey917 yes, raising loan interest rates can reduce employment. This is something we all learned in junior year of highschool. This comment is making a VERY SPECIFIC claim homie
@@roberthamilton9154 He admitted that his plan to reduce inflation will result in more unemployment.
@@roberthamilton9154 ua-cam.com/video/ocroAWe4FUY/v-deo.html
Professor Dave I tell you you can make anyone understand anything thank you for your time!
I didn’t get anything 😭
He's a Groomer.
Check out Dr John Money.
This guy advocates in his defence.
People are controlled by system why?
The Cyclical Consumption is the current economy all over the World. It is making the scarcity problems of the earth finite resources to deteriorate day by day. Current Monetary System is legalised theft. Real money is Gold and Silver. Scarcity gives the money more value. Real money won't lose it's value. When Governments stay away from Gold & Silver then very easy to transfer the wealth / resources to upper class the Rich (Corporatocracy) Elite. When the Governments are printing out more new fiat currency with reserve banks, our old currency is losing its purchasing power everyday. They are printing millions of currency everyday. All governments and laws are existing right now to transfer wealth to upper class the rich elite. The USA Government & other Governments are in many countries, bailed the investment banks & financial institutions in 2008 against the majority of the people. There is no democracy in any countries. Because of the Money System based on profits motive only above all else even humans lives and well-being. So, we do not have freedom to protect our values with the money so on. The violence, bankruptcy & all the negativities are build into the Monetary System of our society. All are owned (including ourselves) by Reserve Bank. Which is private cartel the corporation. So, in legal system, we are legally considered as chattel the properties. They make money in the capital markets with our birth certificates. They do not consider us as Humans. That's the truth. We are at the invisible war with the Elites (Corporatocracies). We have to fight for our Freedom. Resource Based Economy is the Solution. We have to declare the earth resources as the heritage of all the people of this world. So everyone has access to it. Please have your research about zeitgeist movement then you know the truth. Check this account
Professor Dave, I mean it when I say that I genuinely love your content. You diversify into so many (informational) genres that exist on UA-cam in terms of the type of content you produce. I watched you for your Chemistry videos, and ended up staying for you and your plethora of other videos.
@oktextme--1230 BRO shut UP
The Fed is not federal and there are no reserves
Professor Dave, can you explain why some people want to audit the fed, why some politicians don't want this, and what harm or good it could do?
-why people want to audit the fed should be obvious. like any other big institution, mistrust is inevitable.
-most politicians dont want this because it allows other politicians to use the fed as a political tool. this is dangerous because it causes the fed to swayed by partisanship, instead of by analysts/researchers. this now gives all the power to the politicians/auditors. importantly, the research of the fed is transparent, but the payroll of politicians is not.
-the good it could do, in theory, is fix the fed, and in turn fix our economy.
-the harm it could do is provide a possibility for politicians to come into office, influence the fed for monetary gain, and then retire richer, while the ramifications are felt by the general public for years. this is the most likely scenario, as political interference in the form of lobbies exist already, and this just helps the person with the most money to make the rules.
in other words, rich corporations would pay lobbies, which would influence the politicians, who pick the auditor; and they slimy corporations would obviously pick the politician that picks the auditor which benefits them. "political interference" in a nutshell.
@@richielives ur so full of shiite
There is virtually nothing bad for the common man, only bad for the elites
@@richielivesWell most “elected officials” are a part of the central bank system so why would they want people snooping around their power structure?
Also why is the Federal Reserve’s target inflation rate 2% and not 0%. Why would you not want to keep the devaluing of the currency to almost nothing?
He is just a liar and paid shill
Try to shut it down and you'll end up like Abraham Lincoln and JFK...
Namaste my fav UA-cam channel. brother thanks for making videos .
Great content Dave (as always), a big thank you from my small town in England 😊
Based, I love the comptroller of currency now!
Hmm so what do they do when both unemployment and inflation are high?? You cant raise and lower interest at the same time...
And what does private ownership mean? Do they make a profit? And how
Central banks should referee the banking system and the money supply. They overstep their bounds when they become a player and lend money, charge interest, or buy securities. This prevents them from being immune from politics and enables them to enrich themselves. We need central banks, but not in their current corrupted form.
0:25 It's not true that the central bank has a monopoly on money creation/circulation. Due to the fractional reserve system, all banks do that, whenever they lend money.
There use to be a fractional reserve. That is no longer the case. They create it 100% from the loan agreement.
The Federal Reserve announced they were reducing the reserve requirement ratio to zero percent across all deposit tiers as of March 26, 2020.
They are creating deposits.
@@RoadKing05FLHR That just means they've set the fraction at 0 for now. It can, and likely will, go back up again. Likely after the next crash.
@@jursamaj right. It's not like it really matters much. They will be bailed out if they fail from defaults. I have been curious how much digital USD there is. Somewhere in the quadrillions.
@@Anonymous-wp7lm They can't just change it to whatever on a whim. That would be exactly the economic chaos they're supposed to avoid.
Quadtrillzillions over and over repeatedly again is infinity money or they'd not taught the numbers system was taught yrs ago is still being taught today but numbers r endless actually whole numbes r important aswell as regular numbers it's impossible to do math without numbers and layers of math carpenter caint build sturdy structures with out knowledge of numbers of whole cause buildings b unfinished with out finished if numbers ended and whole numbes r very important allways a space b4 the numbers start and numbers go backwards too thats so carpenter can go back fix mistakes to complete a structure more like comon sence but again i probably was taught differently than some were idk every one should b taught values of all angles especially in life tho just saying lol@@RoadKing05FLHR
Thanks
biggest scam money and banks
Okay, so if Central banks solved the problem why have we had a depression and several other recessions since 1913? Why did you not include the graph after 1913? Why do you not talk about how since the formation of the Federal Reserve the dollar has continuously lost value through inflation? Why did you not talk about why the cotton and land suddenly lost value? Why did you not talk about how the real problem with banks is fractional reserve policies?
Poor risk management for bankers should be prosecutable. If your decisions affect the entire population, you deserve to go to prison if you mess up
And in addition can cause other countries to fall
Because of Celsius network and FTX
Thanks Dave! Good explanation. Would be curious to hear your thoughts on the USD not being back by gold. During the pandemic the money printers were working overtime and while it probably prevented a prolonged market crash we are now facing the consequence with the high inflation.
There's a general consensus among economists that the gold standard is unfeasible and not a good idea. This can be seen with a few historical examples:
-"Cross of gold", where the lack of new gold discovery caused deflation
-When the gold bloc (notably France) switched to fiat during the great depression so they could devalue their currencies to increase exports
-"Nixon shocks", when the US switched to fiat because of the inflexibility to control monetary policy (which is useful as expansionary in cases like the 2020 pandemic recession) and the fact there was more money than gold to back it
Gold is not controllable in its supply (you can have massive rushes causing lots of inflation and dry runs causing deflation) and is inflexible. Neither of these problems are present with fiat.
I also think Dave should do a video on this subject :)
@@lincolnsand5127 "Gold is not controllable in its supply" ROTFL. Not the supply is fixed so you can't screw people on pensions and social security recipients by lying about the inflation rate. The rich? They buy the "means of production", as Marx said, with loans that they will pay back with discounted future cash. How do you think the rich got much richer while your family's real wages declined for the last 25 years?
@@excelsior6365 I would recommend reading about "cross of gold" then. Maybe you're also smarter than the vast majority of economists who agree small amounts of inflation (2-3%) is good (and preferable to no inflation at all), but I highly doubt it.
@@lincolnsand5127 Well, I'm smarter than you. A speech from a politician in the 1890's? You go read Milton Friedman. Maybe you will get a clue.
@@excelsior6365 Ah yes, the classic "just read the Chicago school and ignore any Keynesian economists". Also the classic "I'll ignore any evidence contrary to my worldview". I am *extremely* familiar with Milton Friedman and his views. People also frequently misunderstood his points; often because his policy prescriptions and economic work were quite different. For instance: there's the famously attributed quote that "inflation is always a monetary phenomenon"; which people incorrectly interpret as "only increases in money supply can cause inflation"; but we know this misinterpretation to be simply false (see: rises in costs to produce and increase in aggregate demand, neither of which is monetary). I'm also not aware of him ever stating that 0 inflation was a good thing; he was trying to combat high inflation (during a period of stagflation, which classical keynesianism thought was impossible). I can't find anywhere where he disagrees with the consensus that 2-3% inflation is ideal. PS: one of the causes of the 70's stagflation was OPEC oil embargoes, i.e. supply shortages, which is not strictly monetary.
I didn't realize there had been so many Recessions and Depressions in such a relatively short amount of time. I'm now a bit smarter, thanks to you!
Good
I like your voice sir
Nice touch with the Communist Red Star on your shirt.
Did you get that by being considered such a good boy for making Pravda, by your comrades?
Come on and tell us. Don’t be so modest!
It’s just a star, kiddo.
If the main purpose of the central bank is to prevent recessions and maintain low unemployment, they really suck at their job then. Considering we are about to go through a second recession in less than two decades, and unemployment is at an extreme high. That is, when you actually counting unemployed individuals, not what the government likes to consider unemployment. But then again, capitalism does require a reserve army or unemployed workers, so that if anyone complains about a low wage, those capitalists can always just get another worker.
This is all for the US of course, I don't know how other countries are faring and I won't feign any knowledge on that either.
Edit: Autocorrect changed "Suck" to "Such", autocorrect is truly the bane of my existence.
you cut so many corners here i wouldn't know where to begin....
This is a high school level economics tutorial.
got it . sorry
bulllsheeet
I once asked a banker friend of mine: "Where does money come from?" and he just said "me" and it turned out to be true. Banks create money when bankers make loans. It's really that simple. Some types of banks don't even need deposits to loan money. And lately central banks have kind of tossed reserve ratios out the window.
I think your economic explainer series is great but be careful when it touches on the money supply. Sure, the price of all goods and services (G&S) is based on their quantity versus the quantity of money, right? Except how much money is there? What is the right measure of the money we should use to predict the price level?
(Hint: don't kill yourself looking for the answer to that last one)
I mean what is real money? The dollar? Gold? Bitcoin?
Its whatever people believe it is. - thats the answer.
yup i try to tell people this they dont get it they loan you money out of air and want you to pay your hard working money and interests to them lol slave 2.0 they want most people broke and in dept its crazy. insane fixed system that needs to change, people should borrorw money from fed 0 interest and pay back 30% of income and have money to make a real economy thrive its insane about power power is money and they make it up, also why it says dept on paper money
Because we are stupid
Oy Vey!
I think that the governor of the central bank and the bank’s relationship with the king may be about a class society with the lending of the king's money in exchange e.g. bank interest and that this should be investigated by a new state.
"Six wealthy and (mustached) powerful men..."
Great video, I would not be able to leave my own politics out of this. Anyway, can I expect to see videos about sociology some time in the future?
So since it's all about the money..this makes the banks and bankers economic gospel more power than sovereign nations like Australia.
The ratification of the 16th amendment and the creation of the FED is not a coincidence it was planned by the founders of the FED. The adoption of Fiat currency system after WW1 is also not coincidence it was planned..the gold standard ended then; not in the 1970s.
We can think of a Central Bank as a replicator source. They can replicate any fiat currency around the world and in as many units you need.
Really wish I knew where they were for the panic of 2008. God what a blunder..
Nah man. those 6 men met in the island and said this is how we're going to control the world moving forward. They're not alive but their family is.
They decided they'll use politics & all the resources available to keep their system afloat and it's still working till this day and they're still constantly updating the list of resources they use. Same families. Same bloodlines.
New intro hehe
Hey, you didnt show line for panics, depresions and resesions after 1920. Show us proof, that it works, man!
Oh i dont know, America becoming an economic powerhouse in the global stage after WWII.
because they're easier to access than eastern or western banks; they're instead right in the middle
Why does the government, who has the constitutional right to perform all the “important functions “ of the Fed, instead borrow money into existence at interest? Why pay for what you could freely do?
Are going to respond to tour?
Yes
It is incorrect to state that a central bank has a monopoly on how much money can be created or circulated. Money creation is endogenous, not exogenous.
1:45
"They can troll monetary Policy"
Wait, that's not right. Is it?
control
@@sandorski56 by all means
They control
You know exactly what he actually said
@@ScrappyPower that is true.
To print money
Why has the dollar lost most of its purchasing power over the last 50 or so years?
Because the fed artificially lower interest rate, and ditch Gold standard, and effectively give itself right to print money as much as they want without consequences to the government itself. Historically inflation were only between 1-2% at it's worst, exception would be the case of Spain where thanks to their colonizing got overwhelmed by gold.
おはようございます
we dont need central banks we need decentralisation
👏👍
Why does my money rot like a sack of potatoes?
I think the king's relationship with Jesus may be about the people just borrowing the king’s money with the misleading parties.
This will make the trolls howl.
Way back in 2007 I was really into Federal Reserve and Freemason conspiracies. This was also around the time I started reading books by Christopher Hitchens and Sam Harris, two of my favorite authors still. Thankfully I was able to pull my head out of my ass before I got sucked in too deep and it had a lot to do with how my worldview changed after reading books by the 4 horsemen.
The ignorant, naive and gullible never cease to amaze me. I do not understand why a central bank which is the #1Planck of the Communist Manifesto is good for us. Especially when it caused the WORST depression in our history and forced FDR to declare bankruptcy. ---We need to know how the Fed makes monetary policy and what it is doing with foreign banks. Such matters, which would be routine at any other bank, are off-limits to the Fed’s auditors as a matter of law passed in the 1970s.
Wouldn’t a drop in cotton prices just make it easier for consumers to buy cotton? Oh does that contribute to the panic?
It would make cotton companies unprofitable...but hey, didnt they use free emplyoment on the fields?
@PlanetCaravan Housing, guarding, feeding, entertaining, and giving medical care to people does not equal free. In fact, it's easier to pay a minimum wage and just forget about the person after. Why do you think the north got richer. Slavery was just as bad for whites, if not worse. Look at our inner cities now. A high black population is worse than a nuclear weapon going off. Hiroshima vs Detroit. Which one recovered and which one never will?
To transfer wealth from the many to the few.
You should watch the ideas of my Argentinian president Javier Milei that wants to close the central bank in my country, the info here is inaccurate, Inflation is exclusively a monetary phenomenon, thus printing money to "aid" only generates inflation within 18-24 months after printing money. Many love central banks because John Maynard Keynes said so in his books.
End the fed!
What’s the alternative?
@@FitzgeraldMoforA people’s economy. Go back to when after Andrew Jackson dissolved the 2nd central bank the US had and look at how much the nation developed.
I'm glad we're trapped in an infinite dept cycle that will crash everything at some point in time but at least recessions/depressions/etc. are a thing of the past :D
Do you mean debt? Then that's not everybody's problem.
@@Bretaxy the nations dept is everyones problem. For some people it's just offset by the nations wealth which is not in the hand of everyone.
“will crash everything at some point” do you have any evidence for this? any studies? any credible economists who’ve done research? any reason at all to believe this? or is it just your limited knowledge of what debt is that’s informing you
@@ethanslamberry6982 currency is lend from the central banks. The interest is always bigger than the currency in existence and is always growing. That is not sustainable.
Like pumping a gallon of water from a leaking boat while it fills 1.1 gallons at the same time. You don't need studies to realize that the boat will sink eventually.
more dept the gov has the power power. keep paying them loans and credit cards people lol
Uh… the banks made this.
Uh... I am not a bank.
I remember seeing clips of Alex Jones and others going on and on about the Federal Reserve and thinking "Hm they make a few good points."
Looking back on it now, I realize how dumb both myself and the kooks were. I was a dumb kid who didn't understand squat, and the kooks asked a thousand questions and made up their own answers.
Runs occur because the FED allows private banks to engage in fractional reserve lending (legalized fraud/theft). Runs occur because of the Federal Reserve.
Incorrect. Bank runs predate the Federal Reserve.
Plus, the US has the FDIC against bank runs.
i keep hearing this talking point but i never understood how fractional reserve banking is tantamount to fraud/theft.
@@ethanslamberry6982 They think it is because they only need a fraction of their actual money in reserve while the rest is in the economy, so if they make bad investments they would collapse and people wouldn't get their money from banks.
In reality there are many stopgaps to regulate what banks can invest in. There is no fraud though because the money exists, they are just using it to make more money compared to letting it sit and collect dust in a vault.
Its Only Fraud If They Default Without Having Liquidation of Assets at Breakeven
Love the way you portray conspiracy theorists like if they dont have reasons to suspect people with this magnitude of power. Kinda stupid of you dave not to takevthatvinto account
Please actually watch this video.
Professor! We still need you in Chemistry and Biology not here...
I'm still making tutorials in those areas as well!
@@ProfessorDaveExplains Thank you Sir.
@@ProfessorDaveExplains or is this a flyer for the possibility of an online University of Dave?
Yes, he really talks bullshit about economy and finances.
Thieves they are
Sure buddy
So is Celsius network
Most economically literate libertarian
@Bill Gates Reading Mein Kamf Don't expect anyone to take you seriously with a ridiculous name like that. Also, no.
Why do we have flat
Earth?
Nah
We don't.
@@Charlie-fu6ep we do...
@@nirmalmishra6404 I'm sorry if you think that.
@@Charlie-fu6ep Dude dave gets irritated knowing that flat earther won't believe even after the most factual information provided by him. And when he shows his childish behavior by being stubborn in explaining to them though somewhere he knows that they would never believe, I just get a chance of teasing him. Lastly, I respect him a lot and for your kind information, I'm not a flat earther.
Conservative conspiracy ppl on Facebook: REEEEE
@@user-vg9cg3ng5p Did you even read my reply. F*** off, bot.
inb4 all the libertarians start filling this comment section with fearmongering and misinformation
@@fixtheapp418 🤨
PSA: The word libertarian has been coopted by the righ. If you look up the Wikipedia article on it, you will quickly see what it actually means and who originally used it.
@@du42bz Who cares what it used to mean, what matters is what it means now.
@@MrPojopojo When there are conflicting uses, which (apparently) there are, by choosing to use the new/conflicting definition you’re in part culpable for the deception such sleight of hand entails.
@@EarthIsNotFlat Ok? When we talk about libertarian now we often reference the current usage, if you want to use the older definition then specify it.
Hey professor Dave, mind telling us how the fed was started, who owns them/controls them and why it was shutdown before. Thanks!
Edit : is the fed suspicious? Or has it been?
Read a history of central banking and the enslavement of mankind
To steal the wealth of the peasants by directing capital to the upper class through money printing and the issuance of debt.
Succinctly put. That’s all “banking” is
The rampant gambling with crypto lottery tickets, which some want to call "currencies", is a pertinent example of how bad it goes without an institution to regulate and create stability.
He thinks the fed creates stability instead of just profiting from government debt lmao
For account balance…🫠