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Recession, Hyperinflation, and Stagflation: Crash Course Econ #13

  • 🎬 Video
  • ℹ️ Description
If you're ever put in charge of a national economy, there are a few things you should try to avoid. Before you laugh, just remember, you COULD be in charge of an economy someday. Someone has to do it, and anyway, if it could happen to Alan Greenspan, it could happen to you, too. The first thing you're going to want to avoid is hyperinflation. Don't print too much money, okay? Actually, it's a little more complicated than that. Jacob and Adriene will explain. You're also going to want to stay away from recessions, and especially depressions. In the world as it exists today, continued growth is the only path to viability. While some argue for sustainability or even controlled recession, you're not going to keep a job as head of central bank thinking like that in this day and age. Also, avoid stagflation, which is a stagnant, no-growth economy combined with inflation. It's just the worst. Don't do it. All this and more on this week's Crash Course Economics.


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💬 Comments on the video
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Ayyyy who’s watching this during the economic crash 2020

Author — Kawgrath

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I thought stagflation was when there's too many male deer, thus devaluing the buck.

Author — Ivan Clark

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recession is when your neighbor loses his job, depression is when you lose yours.

Author — biscoito1r

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Jacob, please squint your eyes a little bit and blink once in a while. I feel like you are staring into my soul.

Author — MrGallbladder

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*Main outtakes of this lesson*
1) *Hyperinflation* - when a country experiences a monthly inflation rate of over 50% or around 13, 000% annual inflation.
a. Extreme inflation also forces people to _spend as quickly as possible_ rather than save of lend, so there is no money available to fund new businesses. And all that uncertainty _limits foreign investment and trade_.
b. The more money you print, the more inflation you get.
c. Economists call the number of times a dollar is spent per year a _velocity of money_. When people spend their money as quickly as they get it, that _increases velocity_, which pushes inflation up even faster.
2) *Depression*.
a. After the initial crash in 1929 the federal reserve _dropped interest rates to zero_, output and prices fell, and regular people started to expect further price declines. Unemployment rose to _25%_ and the average family income dropped by around _40%_.
3) *Stagflation* - when output slows down or stops, or stagnates at the same time that prices rise. _Stagnant economy + inflation_ = stagflation.
a. The FED tried to address this by _boosting the money supply_ and _cutting interest rates_, but output couldn't rise much because of low productivity and the oil shortage. So all that extra money _just triggered inflation_.

Author — Сергей Галиуллин

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As a Zimbabwean myself, this is a pretty good summary of what was going on at the time. We actually sell posters now with laminated prints of all the old denomination notes we used to have. Good times, good times (irl, it was actually pretty sucky).

Author — Tatenda Tambo

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I'll buy that zucchini she was selling last time for 100 trillion Zimbabwe Dollars..

Author — Vaibhav Gupta

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"Anytime you have to express your inflation rate using scientific notation, that's a bad thing."

Author — Rosey00713

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Watching this as the US is plummeting into a recession to know what I should do lmao

Author — Nik P

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Could u please put the subtitles on all of ur videos? So my students could catch up of what u saying. Cause u speaks soo fast and English isn't our first language. Thank u.

Author — ceskaKD

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That pokemon reference at 6:43 tho "consumer used bind on central bank, its super effective"

Author — Chadwick Lapis

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"next week we're gonna look at different economic schools of thought"

>austrian school of economics

TOP KEK

Author — Nobody

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I just noticed Jacob's belt buckle at the end of this video

Author — Bryant Mitchell

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my favorite crash course is astronomy. I never thought I'd like economics; I never showed interest in it when I was in school. But this stuff is very informative and I enjoy this crash course a lot!

Author — Warhawk

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Oh wow the US is already there, what a surprise....

Author — 3rd Layer

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Thanks for explaining the impact of expectations of higher prices on (hyper)inflation. I never quite understood how inflation was allowed to happen in Weimar Germany or Zimbabwe, but that's because I had been thinking about it as if it were entirely the result of the government printing far too much money, which seemed easy - and obvious - to avoid.

Author — DanThePropMan

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I'd also like to see the Crash Course version of Austrian Economics. From what I have seen, the Austrian School would place most of the blame for the crises presented here on the government interventions such as the Federal Reserve. For example, no mention of the end of Bretton Woods in 1971 is made, but the cut to the fiscal honesty forced by the quasi-gold standard under Bretton Woods is the most compelling explanation for the inflation thereafter. Note that without a central bank, the markets automatically raise interest rates when the savings rate is low and lower them when the demand for loans is low. It is only when the Federal Reserve tries to twiddle with the interest rates that there are prolonged imbalances. In other words, the Fed impedes the natural market forces of the price mechanism. We should expect larger, more pronounced economic swings as a result.

Author — Brian Surkan

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NOTICE THAT JACOB ALMOST NEVER BLINKS HIS EYES WHEN HE'S TALKING

Author — Chachara ChooChoo

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Jacob's lack of blinking while talking makes my eyes feel dry.

Author — samurai1200

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"In retrospect, it seems that the lesson of the Great Crash is more about the difficulty of identifying speculative bubbles and the risks associated with aggressive actions conditioned on noisy observations. In the critical years 1928 to 1930, the Fed did not stand on the sidelines and allow asset prices to soar unabated. On the contrary, its policy represented a striking example of The Economist’s recommendation: a deliberate, preemptive strike against an (apparent) bubble. The Fed succeeded in putting a halt to the rapid increase in share prices, but in doing so it may have contributed one of the main impulses for the Great Depression"

Author — James Ardito