We have to realize there are different types of money within different segments. There are three that I often point to:
- central bank money
- commercial bank money
- eurodollar system money
These are three distinct part of the global economy and money is created in ways that most do not realize.
In this video I discuss the issue with people (mostly economists) talking about theories when they do not even understand the basics of money in this era.
▶️ 3Speak
I guess I need to improve my understanding of these things more. I was under the impression that the Fed creating more digital currency ["printing money"] results in more "buying power" being introduced to the markets. They can buy securities and assets with this "printed money". While the act itself of "printing money" doesn't cause inflation, this introduction of buying power, and assets being bought using this "printed money", can cause inflation. Since theoretically, those assets wouldn't have been bought at the time without the newly "printed money".
How is in increasing buying power? What can be bought with what they print?
This is where I was reading before:
https://www.investopedia.com/articles/investing/081415/understanding-how-federal-reserve-creates-money.asp
Fed buys Treasury securities to add funds to bank reserves. With these new reserves, banks are able to lend more to consumers/businesses. These "new money" going out to the public is additional buying power is it not?
Great post! That's financial literacy right there. 👍
Summary:
In this video, Task discusses various forms of money, including central bank money, commercial bank money, and government debt. He criticizes the lack of understanding of money displayed by individuals debating topics like MMT. Task emphasizes the importance of grasping the concept of money before engaging in debates about economic theories. He explains how money is created through lending and economic transactions, and challenges traditional beliefs around the relationship between money supply and inflation. Task concludes by highlighting that in the digital age, the traditional notions of too much money chasing too few goods and services may no longer be applicable due to the limitless nature of digital products and services.
Detailed Analysis:
Taskmaster starts the video by introducing the topic of money, triggered by his frustration with people debating monetary topics without a solid understanding of money itself. He expresses disappointment in economists who claim expertise in money yet lack a fundamental comprehension of it.
He delves into the different types of money, starting with central bank money, which consists of physical currency like banknotes. Task clarifies that when the Fed prints digital dollars, they are actually creating reserves, not legal tender, and hence not part of the broad economy's money supply.
Moving on, Task explains commercial bank money, including digital currency in bank accounts, stressing that this forms part of the money supply. He details how money is created through lending and credits, through which banks create money "out of thin air."
Task then shifts focus to government debt, particularly U.S. treasuries, highlighting how they are used as money within the banking and international financial systems. He explains the concept of debt as an asset and its role in collateral, remittance, and cross-border payments.
Taskmaster challenges traditional economic theories like the quantity theory of money, disputing the notion that an increase in the money supply inevitably leads to inflation. He emphasizes the importance of considering factors like the velocity of money and real-world scenarios to understand inflationary conditions accurately.
In the digital age, Task argues that the traditional idea of too much money chasing too few goods may not apply due to the limitless nature of digital products and services. He uses examples like songs, video games, and streaming subscriptions to illustrate this point.
Overall, Task's video serves as an educational piece that critiques the lack of understanding of money in economic debates and presents a fresh perspective on the relationship between money supply and inflation in the digital era.
Notice: This is an AI-generated summary based on a transcript of the video. The summarization of the videos in this channel was requested/approved by the channel owner.