How the Federal Reserve Works: After the Great Recession

  Рет қаралды 138,619

Marginal Revolution University

Marginal Revolution University

Күн бұрын

In response to the Great Recession, the Federal Reserve has implemented some new instruments and policies - including quantitative easing, paying interest on reserves, and conducting repurchase (and reverse repurchase) agreements. In this video we cover how these tools work, and why they matter.
------------------------------------------------------------
Subscribe for new videos: bit.ly/1Rib5V8
Macroeconomics Course: bit.ly/2q6G4ym
Additional practice questions: bit.ly/2q1zOYI
Help translate this video: bit.ly/2Iq17n9

Пікірлер: 62
@HPBfifa
@HPBfifa 5 жыл бұрын
Wow. What a great video! Thank you so much. Very clear, simple explanation, of something i previously found extremely difficult.
@MrRombooth
@MrRombooth Жыл бұрын
What a cool video series, thank you. What would be great is to have a video that reflects the monetary environment we are in after rising interest rates!
@TheGerogero
@TheGerogero 6 жыл бұрын
Increasingly, economics seems quite tragic to me. We deal with issues as they present themselves, develop specific instruments for specific problems, while not fully understanding the origin of these problems nor the exact effect of our instruments-let alone institutions. Problems are transformed and passed along in silence until the dam no longer holds and we have a crisis on our hands. And yet there is nothing to do but what we do.
@GustavoRivasMendez
@GustavoRivasMendez 6 жыл бұрын
I think its also poetic. If it were to always be an easy road, it would mean we were not striving to contend with worthy challenges. I think its great when we see humanity surpassing its downfalls time and time again, while learning and improving itself in the process.
@acctsys
@acctsys 5 жыл бұрын
Or not learn from it, decrease financial regulation, and repeat history.
@bbeaum1
@bbeaum1 4 жыл бұрын
Keynes made economics about treating market-failure symptoms instead of shoring up healthy foundations to avoid market-failures. He gave politicians and officials the excuse they wanted to reach deep down into the mysterious bowels of markets and make well-intentioned but tragically experimental tweaks. Now we just go about treating the symptoms of our government's economic hubris and call it "essential regulation."
@qiujiesongzhong7056
@qiujiesongzhong7056 6 жыл бұрын
very clear and helpful !!!
@claritagp
@claritagp 3 жыл бұрын
Thank you! Great videos!
@meaghangallagher6020
@meaghangallagher6020 6 жыл бұрын
This video makes so much sense
@alokebachhar7419
@alokebachhar7419 6 жыл бұрын
Thank you,sir.
@detectiveofmoneypolitics
@detectiveofmoneypolitics 5 ай бұрын
Economic investigator Frank G Melbourne Australia is following this informative content cheers Frank 😊
@tradershads
@tradershads 4 жыл бұрын
Would be good to have a video on the current fed action
@pelumiobasa3104
@pelumiobasa3104 6 жыл бұрын
Can you guys do a video on the permanent income model
@mecheatgood
@mecheatgood 6 жыл бұрын
Nice video.
@NIsForNoobCakes
@NIsForNoobCakes 6 жыл бұрын
It seems that the Fed has made a hash out of the age old "fractional" vs "full" reserve banking dichotomy--in a fractional system the banks themselves have decided to hold reserves capable of backing their liabilities in full.
@DistributistHound
@DistributistHound 8 ай бұрын
Too much money injected
@dwightsandersus60-150417000099
@dwightsandersus60-150417000099 3 жыл бұрын
This is nice
@sananosser1868
@sananosser1868 4 жыл бұрын
Great video! You are laying the foundation for tommorow's hedge fund billionaires
@Mujangga
@Mujangga 6 жыл бұрын
Aren't OMOs conducted to control the money supply? Why would they be used for other purposes? If banks now get interest on their reserves, where does that money come from? Does the Fed just create it? Does that cause inflation? It seems modern day money creation is based on debt; would it be possible to create money without debt?
@JK20239
@JK20239 6 жыл бұрын
Mujangga you watched the zietgeist video...nice!
@Mujangga
@Mujangga 6 жыл бұрын
Actually, I haven't.
@ayami123
@ayami123 6 жыл бұрын
Creating Money Out of Thin Air will Cause Inflation to Skyrocket. it has to be back with something, before it's gold now it's by Debt until you find a better money backer. I believe it will stay that way
@Mujangga
@Mujangga 6 жыл бұрын
Who's talking about creating money out of thin air? Money can't be "backed" by anything: it merely represents value.
@ayami123
@ayami123 6 жыл бұрын
yes, it represents the value of goods, well should have been the value of goods, Unless you want to trade fiat money to Apples and Oranges, it just represent how many your Limited Supplies are. you can manipulate the value, but time will soon catches it but. as reality can't be manipulated instantly
@aakashojha816
@aakashojha816 4 жыл бұрын
I am trying to learn but find it quite complex and confusing. Can anyone guide me what are the prerequisites of the video?
@joecurran2811
@joecurran2811 2 жыл бұрын
I know I'm late but what's the difference between demand deposits and excess reserves.
@kha_2428
@kha_2428 Жыл бұрын
Demand deposits represent the money Bank customers deposit into their accounts held by the banks. Excess reserve represents the amount of excess money held in reserve that is higher than the 'Required Reserve Ratio' which is mandated in law by the Fed. So the RRR is the amount of reserve capital e.g 10% of all deposits that must be held as backup which they cannot lend to third parties.
@jayf8871
@jayf8871 2 жыл бұрын
How are lower interest rates not the result of QE?
@PANDEYJITOURsVLOG
@PANDEYJITOURsVLOG 4 жыл бұрын
Videos are good sir.. please go slow on explaining
@cjlewis6859
@cjlewis6859 4 жыл бұрын
What I don't get is why we would ever need to decrease the economy. I thought the goal was always to expand so why is there reverse repurchase agreements?
@fadibaza458
@fadibaza458 4 жыл бұрын
Cj Lewis whenever the economy grows too fast with low interest rates people have too much debt and it causes a big bubble. They havent tried to slow down the economy that much this past bull market
@todoldtrafford
@todoldtrafford 3 жыл бұрын
A lot of that excess money is malinvestment like the housing loans that took us down in 08
@otto_von
@otto_von 2 жыл бұрын
inflation
@seanbrown3000
@seanbrown3000 Жыл бұрын
This is pretty horrifying to be honest. It seems like a vast amount of centralized power continually tinkering with an auto regulated system of billions of people and slapping more complex bandaids on increasingly complex wounds.
@appiecoolop7201
@appiecoolop7201 4 жыл бұрын
How does this work in europe ?
@jon-unicorn-doxxer
@jon-unicorn-doxxer 4 жыл бұрын
none...Its mostly US central bank
@appiecoolop7201
@appiecoolop7201 4 жыл бұрын
Jon N but europe they would have got his own thing just want to know what tbat s
@jon-unicorn-doxxer
@jon-unicorn-doxxer 4 жыл бұрын
@@appiecoolop7201 - ahh... Its European Central Bank or ECB..they hold the Euros/Euro
@torpedospurs
@torpedospurs 4 жыл бұрын
"Low interest rates lead to low mortgage interest rates?". Calling QE a swap? Calling a Fed repo a swap? Explaining just one half of a repo and not the 'repurchase' part? This is a pretty bad video by MRU standards.
@jzk2020
@jzk2020 6 жыл бұрын
I like avocados.
@lokehagberg6077
@lokehagberg6077 6 жыл бұрын
C. Lincoln Why?
@jzk2020
@jzk2020 6 жыл бұрын
Tastes goods. Have you not tried it? I suggest you have some with fresh, fine cut tomatoes mixed with some lemon juice & salt+pepper. Eat that with your main dish.
@GustavoRivasMendez
@GustavoRivasMendez 6 жыл бұрын
And some fine cut onions and cilantro!
@aomanchutube
@aomanchutube 5 жыл бұрын
Those are turtles!
@MrLazyleader
@MrLazyleader 3 жыл бұрын
This video doesn't explain anything. How does buying mortgage bonds reduce interest rates?
@LR.1995
@LR.1995 3 жыл бұрын
That's how bonds operate. If there is less demand for bonds, interest rates are forced up until demand returns and settle on a rate people are willing to accept for the purchase of said debt. So the federal reserve is acting as that demand, purchasing mortgage-backed securities which in turn forces down interest rates. Basically, there's not enough demand for debt anymore at low rates on the open market, so the federal reserve has to act as that demand to keep rates low.
@frankgarcia1
@frankgarcia1 6 жыл бұрын
This video told nothing but the truth but the info is completely slanted to suggest that everything done was a good thing instead of delaying a much bigger crash.
@jaysekhon8014
@jaysekhon8014 6 жыл бұрын
Think of it like this ... what the FED did was trying to keep someone falling off a cliff long enough for a safety net to be put under them.
@GYisrael
@GYisrael Жыл бұрын
@@jaysekhon8014 are you from leaked reality?
@eagleartillery1361
@eagleartillery1361 5 жыл бұрын
By the way problem is deeper than FED itself. Consumerism can't continue for ever.
@markziggas228
@markziggas228 3 жыл бұрын
Please share this cow, for no particular reason.
@xijinpooh7226
@xijinpooh7226 4 жыл бұрын
AHAHAHAHAHAH money printer go BRRRRRRR
@bobsmith2886
@bobsmith2886 4 жыл бұрын
The Fed sets asset prices, not the market. Since 1980s, the Fed has lowered interest rates and since 2008 the Fed has done QE to reward the asset owner class by raising asset prices. *These artificially low interest rates and QE have caused the year/generation you were born in to determine whether you are able to own a home and generate wealth* . The older generations bought homes for 1-2 times median income and bought stocks at 8 times PE ratios in the 1980s because asset prices were low because Volker set interest rates high. Then these people road the Greenspan, Bernanke, Yellen and Powell puts and became rich as their homes and stock portfolios increased +10% a year. *They became rich because they were simply born at the right time* . But the asset non-owner underclass (millenials and poor boomers who didn't accumulate assets in 1980s) deal with housing at 8-10 times median income (because wages didn't increase since 1980s), a bubble stock market that only went up because of QE and low interest rates. It is a shame that 99% of people have no idea that monetary policy and not fiscal policy deserves most of the blame. Eventually the asset non-owner underclass will revolt by electing an MMT president, who will inflate away the asset bubbles and make housing affordable again (and cause a depression in the process). Please spread the word so people can understand this and we can have a change in monetary policy. This is not a left vs. right thing, it affects all of us.
@walkertan2843
@walkertan2843 2 жыл бұрын
I am not American, but thank you for the $$$. Whopee
@stacydalebarendse3978
@stacydalebarendse3978 5 жыл бұрын
Bitcoin!
@FermiGBM1
@FermiGBM1 5 жыл бұрын
Bitcoin
@carefulconsumer8682
@carefulconsumer8682 4 ай бұрын
No wonder inflation is so high now.
@alauraroarialis8815
@alauraroarialis8815 4 жыл бұрын
the federal reserve caused the great depression.
@brentshibla8099
@brentshibla8099 4 жыл бұрын
Among many other factors as well, like the Smoot-Hawley Tariff
@FermiGBM1
@FermiGBM1 5 жыл бұрын
They'll be adding cryptocurrencies to their balance sheets next lol
@anthonyenos2835
@anthonyenos2835 Жыл бұрын
ABOLISH THE FEDERAL RESERVE revoke their central banking charter.Quanative EASING doesn't help the consumer.Return us to the Gold Standard.All cash needs redeemable for actual gold .Their needs to be a letter to the American people of Actually owns federal reserve all family and addresses and phone published........
The Fed as Lender of Last Resort
9:37
Marginal Revolution University
Рет қаралды 74 М.
The Great Recession
12:53
Marginal Revolution University
Рет қаралды 205 М.
Khóa ly biệt
01:00
Đào Nguyễn Ánh - Hữu Hưng
Рет қаралды 4,4 МЛН
В ДЕТСТВЕ СТРОИШЬ ДОМ ПОД СТОЛОМ
00:17
SIDELNIKOVVV
Рет қаралды 3,9 МЛН
Just try to use a cool gadget 😍
00:33
123 GO! SHORTS
Рет қаралды 56 МЛН
What is Quantitative Easing?
11:45
The Plain Bagel
Рет қаралды 595 М.
How is Money Created? - Everything You Need to Know
29:56
ColdFusion
Рет қаралды 5 МЛН
The Power of the Fed (full documentary) | FRONTLINE
53:18
FRONTLINE PBS | Official
Рет қаралды 2,7 МЛН
INFLATION, Explained in 6 Minutes
10:07
Johnny Harris
Рет қаралды 2 МЛН
Quantitative Easing | Marketplace Whiteboard
7:37
Marketplace APM
Рет қаралды 502 М.
Why the Federal Reserve Controls So Much of the Economy | WSJ
9:31
The Wall Street Journal
Рет қаралды 372 М.
Nominal vs. Real GDP
7:41
Marginal Revolution University
Рет қаралды 1,1 МЛН
How does raising interest rates control inflation?
8:14
The Economist
Рет қаралды 2,7 МЛН