yego.me
💡 Stop wasting time. Read Youtube instead of watch. Download Chrome Extension

Where We Are in the Big Cycle of Money, Credit, Debt, and Economic Activity


2m read
·Nov 8, 2024

There's a cycle. Um, there's a short-term money credit debt market economic cycle we call it the business cycle also.

What happens is, you know, you go from a recession, go to slow inflation. Uh, is low central banks, uh, produce a lot of money and credit. The stimulative, it's like creates that, uh, credit turns into debt. Debt is something that has to be paid back. Credit is something that's stimulative; it gives buying power.

So it starts to create a cycle that goes up. It leads to creating bubbles and reaching a point where there's inflation and so on. Through this process, the three main players or three main types of players are those who are alcohol borrowers, debtors.

Is it economic to borrow and be in debt or lender creditors? Is it economic to be a lender creditor? Of course, there needs to be the same amount of those because one man's lending has to be an immense borrowing.

But you could see how those incentives are changed by the system because what they'll put in at one part of the system to get it going and so on. Real low, uh, real interest rates, lots of liquidity, and so on.

During such times, it pays to be a borrower, you know, a debtor. Then in these cycles, then it goes to the opposite; it pays to be a creditor.

So, for example, now, uh, you have a situation where short-term interest rates are relatively high in relationship to other things. They went from giving money away for negative real interest rates to that they change the incentives.

The action of that move from one to the other in changing interest rates changes the value of asset classes because every asset is a lump sum payment for future cash flow.

So the present value of that with the interest rate has an effect. And there are such things so that you can watch those; they've repeated over and over again for the same reasons.

This cycle looks like just another one of those cycles. Essentially, we know where we are in the cycle roughly.

Um, you know, you're at the point where you're approaching the, uh, late in the tightening, but you haven't yet achieved that particular goal. So, you know what they're going to do. Blah blah blah blah blah.

You know, there's a lot of those things for each investment.

More Articles

View All
Writing functions with exponential decay | Algebra 1 | Khan Academy
We are told a phone sells for six hundred dollars and loses 25% of its value per year. Write a function that gives the phone’s value ( v(t) ) so value is a function of time ( t ) years after it is sold. So pause this video and have a go of that before we …
Human Body 101 | National Geographic
The human body is a complex network of cells, tissues, and organs that together make life possible. Ten major systems are responsible for the body’s functions: skeletal, muscular, cardiovascular, nervous, endocrine, lymphatic, respiratory, digestive, urin…
Homeroom with Sal & Mala Sharma - Wednesday, May 5
Hi everyone! Sal Khan here from Khan Academy. Welcome to the homeroom live stream. A very exciting conversation today! We have Mala Sharma, who is the VP and GM of Creative Cloud at Adobe. But before we jump into that conversation, I will give some of our…
Arian Controversy and the Council of Nicaea | World History | Khan Academy
In previous videos, we have talked about how Christianity evolved and developed under the Roman Empire. In particular, we saw that as we entered into the 4th Century, Christianity continued to be persecuted, in particular by the emperor Diocesan, who had …
'Property is theft' stolen concept fallacy
Property is theft. This is a phrase that unpacks as all property is theft, and it’s something that I’ve seen mentioned a few times on YouTube lately. A comment from one of my subscribers, I think in my previous video, prompted me to address this specifica…
Difference between wealth and income | Macroeconomics | Khan Academy
Before talking more about inequality, I think it’s worth talking about the difference between wealth and income. Wealth and income often get confused in conversations about inequality. As you can imagine, these two things move together. You tend to associ…