He is amazing, so clear and concise on so many topics.

that's cool

thats cool good luck!greetings from austria :)

this guy must be a genius.

Instablaster...

encodersofia you essentially do that when you purchase a house with a mortgage. Except it is not your account, simply someone else. He removes the consumer transactions for ease of following. Concept holds though.

Also I know people doing that to diversify as you can only get 250k FDIC's insurance when a bank goes bankrupt

@@TheOneAboveAllx Only 100k per account in Canada!

​@@TheOneAboveAllx as they're doing rn

Literally was just thinking this lol. Learned math from this guy years ago, and now that I’m into finance turns out he knows about that too.

@@henry3397 He studied electrical engineering ans has a harvard MBA. I don’t think Sal knows everything, he just loves learning and he loves teaching. The first person he taught was himself, and that’s why he is so knowledgeable. With such a strong math background, he’s just connecting all the dots. If we ask Sal does he know everything-I think he’d tell us the truth...he’s only scratching the surface of something very big!

Did you get a better score?

@@theepicsealshow123 no he failed!

Although the money is on demand, the bank does not keep it all on. The bank basically hopes that there not everyone will want to withdraw all their money at the same time. If too many people want to withdraw their money and the bank has lent too much, it goes bankrupt (this is a bank run).

That's just it: It's created out of thin air. Makes you have solid confidence in the system, doesn't it? Yikes..

The FED is not buying new securities from the government in this example, they would be buying existing government bonds on the open market (or, more likely, directly from banks). Whether they buy the bonds from an individual or the bank doesn't really affect the model because the assumption is that the individual would deposit the proceeds from the sale into a bank, so no matter what the money ends up in bank where it will multiply due to fractional reserve banking.

@@jaytweet9494 thanks! clear!

Most of the money is not available to the market. Politics and government is very poor at actually managing things. So when you see a headline figure as a sort of dumb rule you could almost divide it by 10 in terms of the true market effect. The real danger of QE is not inflation it is the retardation of long term economic growth.

by reserves he means the money banks have to keep in their reserves. which is one dollar per bank here.

No. The number $40 billion is just a headline number and not the real amount of transfer. Most of the US debt is not cash based and is long term debt that is really liabilities. So when they say $40 billion it could be a direct transfer of $2 billion or $20 billion but would never be the full amount. When it comes to interest payments on the QE about that is created they can defer and even roll it back into the original creation amount.

For real

@@Volticymowhere did you think they got the idea, it’s always been this way…

the central bank does, it sells them when it needs money and buys them back when it wants to pump money into the system. I guess, idk.

He's running around the bush

@@qaqambandzuzo289 disagree, he uses generalized terms for clarity, that's about it. ie; the fed doesn't print money, treasury does that vis the US mint

Welcome to the world of government finance. It is a bureaucracy that is slow and not good at getting things done. You will find that the whole system is full of repeats and overlapping just for the sake of it. Now there is value in the different stages of the money cycle and there is lots of baggage as well.

Because we have a fractional reserve system where "money" is multiplied.

yes

Stocks and Bond

Racism IS a Disease exactly... the Treasury has to auction off the securities. Fed credits the private banks to buy these securities, only to buy them back as part of QE. But the money supply keeps growing additionally through interbank lending, charging interest on money the banks don’t have. These notes are out of reach from the Fed. As a private bank, you keep writing checks in perpetuity while keeping the minimum fractional reserve mandated, meaning that money creation unlimited more or less; limited only by the number of financial institutions participating in the system.

the fed stopped recording the m3 in 2006. my guess is they knew about the MBSs/CDOs/CDS subprime scam and prob more that we dont know about(its amazing how many banks do illegal things esp with manipulating markets/prices). they were going to have to inflate the money supply by alot and needed to move things around and not make it public causing panic and realization of inflation and make the dollar worthless. (fractional reserve lending makes no sense you should not be able to lose money when you can create it)with computers the banks must have a much better grip on money supply and the economy in general. But they say otherwise and use the MZM: _On March 23, 2006, the Board of Governors of the Federal Reserve System will cease publication of the M3 monetary aggregate. The Board will also cease publishing the following components: large-denomination time deposits, repurchase agreements (RPs), and Eurodollars. The Board will continue to publish institutional money market mutual funds as a memorandum item in this release. Measures of large-denomination time deposits will continue to be published by the Board in the Flow of Funds Accounts (Z.1 release) on a quarterly basis and in the H.8 release on a weekly basis (for commercial banks). M3 does not appear to convey any additional information about economic activity that is not already embodied in M2 and has not played a role in the monetary policy process for many years. Consequently, the Board judged that the costs of collecting the underlying data and publishing M3 outweigh the benefits._

m3 money, other than m2, includes all the deposits and lets say bills from non-banks institutions, simplified: m2 and all other money no matter where the money is... thats why goverment doesnt wanna deal with it, there could be million types of manipulation with that money, maybe example can be money laundering, idk, i am trying to learn too XD

No, M3 = M2 + Money Market Funds.

You live in a corrupt world my friend.

Fiat currency. We used to be on a gold standard where gold can be exchanged for usd which means if the fed wanted to create more money they had to get equal value in gold. Way better system imo. (applies to USA).

lol

this is USA. we spell it CHECKS

lol...

+ERIKA AHLSTRÖM The paper money in circulation is nominal so it just a raw count. M0 is measured in Real GDP terms so what actual dollar value can buy you when compared to the base year.

ERIKA AHLSTRÖM gjghhgggg

ERIKA AHLSTRÖM jxb how do you make

Stick to Yahoo

+Tanshi kohli its just a candy brand

You've never heard of Pez dispensers? Where are you from?

Haha yes. But scary if u think abt it, most of the money we held are illusions. Iirc 97% of 'money' are in either M1 or 2

You are incorrect and a victim of wanting to sound smart rather than being smart. DIRECTLY FROM THE *FEDERAL RESERVE OF RICHMOND: The smallest and most liquid measure, M0, is strictly currency in circulation and money being kept by banks in reserves; hence, M0 is often referred to as the "monetary base."* M0 is referred to as Monetary Base and vice versa.

@@musak.4068 thanks for the opportunity to clarify on this - I definitely could have laid out my thoughts more carefully. So M0 is useful as a concept because it can be rolled into M1 which can be rolled into M2. If you look at the definition of M1 it doesn’t include central bank reserves. So while as the Richmond Fed notes M0 is “often” referred to as the Monetary Base, this isn’t strictly true and in fact probably shouldn’t be the case if we are thinking of the Monetary Base as the high powered money that creates faster growth in money supply. The reason being that today’s bank reserves pay interest, and thus no longer enters the financial system at the same velocity as it did before this mechanism was put in place over a decade ago. If you look up Khan Academy’s definition of M0 on their site, they actually clarify between M0 and MB as being distinct with M0 being truly liquid cash. Here’s the quote from Khan Academy’s site - just copy and paste into Google to verify: “M0 refers to the most liquid form of money: cash. That includes central bank notes and coins. MB refers to the base money supply from which banks can extend the money supply. In addition to M0, that also includes central bank deposits, which can't be used to pay anyone other than banks.”

@@DW-xt7vz *So while as the Richmond Fed notes M0 is “often” referred to as the Monetary Base, this isn’t strictly true and in fact probably shouldn’t be the case if we are thinking of the Monetary Base as the high powered money that creates faster growth in money supply.* Stopped right there. It's a quote from the Federal Reserves of Richmond because I was debunking your point. It is NOT solely a quote by the federal reserve of richmond. The Federal Reserves is comprised of SEVERAL reserves throughout the United States btw. Richmond being one of em. You are hearing this from the horses mouth and still attempting to be right.

@@musak.4068my initial comment pointed out the error in this video which was subsequently fixed by Khan Academy. If you’ve ever seen an H.6 report from the Federal Reserve you’ll know why it’s not good to take the first thing you see on the internet as the truth even when it’s from the Richmond Fed. You are the embodiment of the Dunning Kruger effect. You think that you are coming up with some big secret that the Federal Reserve is made up of several regional reserve banks? Have you ever been on all of their sites as I have and found lots of white papers that are wild guesses? I’d suggest you try to piece things together to find the inconsistencies rather than memorizing facts. My last comment to you.

A reserve hasn't been required for years now.

Welcome to what those crazy Libertarians were trying to warn of. ...but hey, if you are not too late, you can join us on our private islands, there is still time to get into Cryptocurrency and adapt Mises/Hayek into your life.