INFLATION, Explained in 6 Minutes

At 2:00 why do you mean the government money ran out? Money doesn’t just evaporate, when someone spends someone earns, the money is still out there. (Except taxes)

This is not the definition of inflation! Inflation is the expansion of the money supply by the Federal Reserve in order to finance the deficit spending of Congress each year. Lately, our Government has been running, roughly, a $2 Trillion deficit each year. RISING PRICES IS NOT INFLATION! Rising prices are the result of inflation created by our Government! The Federal Government is the biggest counterfeiter in the world or at least one of the biggest.

But we don’t all just have this extra money floating around that the government dropped off, we’re still making what we make. It’s just being devalued.

...What happens if people already having a hard time buying anything? Rising prices despite many more people struggling to afford things just makes me think inflation doesn't truly represent the current economy anymore. Tons of people are losing jobs and having a hard time getting them in the first place, less people being able to afford medical care and food, and yet inflation still happens? Idk, I am not an expert, but stuff like that makes me raise an eyebrow at inflation this day and age.

Pretty optimistic way of choosing to look at human behavior and choices behind inflation. Businesses raise prices because they don’t have enough to sell? Alright

Petition to post this on deviant art

We know what inflation is😂 my question is if it’s an experiment sometimes?

no balance point, just throw the price at people what a joke

This is the American mentality.
But wouldn't it be more wise to build new manufactures and make more goods if merchandise are being sold quickly? And not to raise the prices, and keep the stuff on the shelves.

Billions of tax payers that are scammed on foreign monetary aids, that never get to needy people. Billions are being given to religious organizations for avoiding working. None profit organization scam, - the list is very long.

If all this fraud money were to be put to improve the country, then there won’t be inflation.

How many bicycles do I need- None.
Not every person wants to own everything you see on the store's shelves.
Some people hate shopping and do not like the clutter.

If only they increased the minimum wage to what it should be, and all other jobs well over that too.

Video is very good. I just react to some comments. I do not believe somebody will read it after 3 years. But...
Let us do not mix together and change meaning of rising prices and inflation. Prices are going up and down from many reasons and it may be caused also by inflation. But just rising of prices itself is not inflation. It could be the result of it. But not cause. The word Inflation stems from "influence" or "inflow" of money from central banks. So let us repeat the definition from Milton Friedman´s book: "Inflation is caused by essentially the Federal Reserve and other central banks supplying too much money into the system" and this can only be squashed essentially by restricting the money supply by raising interest rates or by employing other means such as so-called quantitative tightening.
Problem is that these additional money are not evenly distributed and cause the rise of inaquality. The most of them ends in the pockets of the rich, who invest it in the assets like lands, houses, stocks, bonds. Part of money influences also prices of other comodities - food, energy, cloth, meds, school fees etc. When there is more money circulating then each company wants to participate a bit...

Short version-- During the Corrupt Biden year, government printed more dollars backed by nothing... Inflation of money supply to give away, ergo dollars is worth less. Need more dollars to buy something.

Inflation is a ponzi scheme

WAYDE does an excellent analysis of Inflation as INVASION

https://www.youtube.com/watch?v=on4R1SbUVpE

No, inflation is not good and it does not mean the economy is growing. Totally false. Why didnt you explain that the central bank prints money and was the sole creator of the inflation?

This video does a great job showing that inflation isn’t mysterious or evil by default — it’s fundamentally about demand growing faster than supply. The village example makes it clear how extra money, when not matched by production, naturally pushes prices higher.

https://youtube.com/shorts/W_NTwwZbvas?feature=share

​If inflation is driven by a lack of goods and an oversupply of money, why does a country like the Philippines—which is so rich in resources—suffer so much from it?

We have everything the world needs:
​Natural Wealth- Oil, Gold, and Nickel (crucial for the future of EVs and Robotics).
​Agriculture & Sea: Meats, Fish, Rice, Corn, and Pearls.
​Human Capital- A young, tech-savvy population (average age 26) full of degree holders.

​I often wonder if we could thrive by becoming self-reliant, almost like a real-life Wakanda :D. We have the potential to stand on our own without relying on powerful nations like the US or getting involved in their conflicts. While they lead in digital products, we are the ones consuming them—and we are more than capable of building our own. Our best engineers are already all over the world making other nations wealthy; why not do it here?

​It makes me question what our officials are prioritizing. Are they looking at this potential, or are they distracted by other interests? What has been the holdup all this time?


​It feels like there are invisible strings at play—global systems that keep certain countries on top despite having many competitors. I want the audience to consider a different perspective: What if resource-rich countries began to prioritize their own supplies and stopped providing the "cheap" labor and materials that the rest of the world relies on?

Communism is the only solution

Inflation isnt natural. Its stems from greed. It comes from businesses realizing they can make a "killing" off of what should have been a "living". I just wish some economists had the balls to say this.

Really solid breakdown. I like how you explained the ‘why’ and not just the ‘what’. Looking forward to the next upload.

Problem. In the US is that the government likes to subsidize things and now it wants everything to be free. We see what happened when the government decided to guarantee student loans for example. That increases the demand for college degrees because all of a sudden, everyone was able to get a student loan and go to college. As a result colleges started hiring more administrators and expanding and the cost of that was tacked on to the tuition. Plus, colleges could afford to raise costs because, after all, the government was paying for it. Now college is unaffordable and if they make it free, it's going to cost people a lot. Too few people will be paying for too much of it and that will end up sucking money out of the economy. You would think we would have learned something after the housing debacle . But I guess not because the same policies have jacked up the cost of healthcare.. Housing, forget about it! The demand for housing has jacked up the prices substantially.

Nicely explained

thank you so mcuh!love how you explain these concepts!

It's 8:44 min vedio. 😂😂😂

Thank you! Great video.

That was really informative. Thank you so much!

No. This is not how things work.

Recession has nothing to do with deflations, but you seem to confuse the two.
Then you seem to omit that CREDIT creates DEPOSITS, not the other way around, and the fractional reserve model of endogenous money is widely considered to be outdated by most economists. Money creation comes from the market and answer to the logic of supply and demands, just like any other goods. The central bank only has an indirect effect on it by manipulating key rates.

Lets see if i understood… correct me if im wrong lol

This is how i see it…

If I sell apples for 1$ and I have 1000 apples in stock. Why would I raise the price of the apples after I sell the 1000 i have? Im making my profit selling at 1$ as it is. My apple contact is also getting his profit at 1000 apples, and the fields that pick up the apples will make their profit at the same 1000 apple selling rate.

I guess eventually it will get to a point where the demand of the apples is going to get so high that the fields will need to hire more people. They will need to pay for more trucks to deliver the product. Those trucks will pump diesel more often. So the diesel prices will go up, and since diesel prices went up. The shipping prices of the apples will be more expensive.

Since the cost of getting the apples to my store is now higher. I will have to pay more for those 1000 apples, and the way I’ll make my money back is by increasing the price of the apple.

Just like i had to make adjustments to my prices, my apple guy had to make adjustments, the trucking company had to make adjustments, the diesel prices got affected and the apple fields made adjustments as well. The thing now is that all the products/companies that need apples will have to adjust their prices too. Apple vinegar companies, apple juice companies, literally anything needing apples will have to adjust. After that, let’s say a company transporting oranges wants the trucking shipping services as well. But since the apples affected shipping prices. Now the orange fields have to adjust too, and just like a domino effect. Now the whole economy gets affected.

Still cannot understand. The thing here is everything seems good also do bad. When people have money it is a good thing but it also cause the economy to fall down.

Marxists falsely claim that inflation is price rises. It isn’t; it is the expansion of the currency supply relative to the goods and services in society. This means only the government can expand the currency supply. You cannot blame capitalism for government actions. This is why Marxists attempt to shift blame onto capitalism by changing the definition to price rises. Price rises or shortages are symptoms of the core issue: government expansion of the currency supply by printing more money.
getting an economics degree will not make you understand the economy, most economic models are nonsense, if you want to understand the economy read books like

Governments and central banks "stimulate" the economy by manipulating interest rates and by printing currency.
Interest rates represent the return lenders receive for lending money over time; longer loans usually yield higher returns due to increased risk and investment opportunities.

When the government lowers interest rates significantly, it reduces incentives to save or lend for the long term, encouraging immediate spending.


This stimulates consumer spending, which boosts demand for consumer goods, triggering increased production across various sectors, including capital goods industries (steel, oil, mining, agriculture).
To finance expansion in capital goods industries, entrepreneurs rely on bank loans, but since savings are reduced due to low rates, banks depend on central banks injecting new money into the system.


Central banks create new money through quantitative easing (QE) or “printing currency,” effectively increasing the money supply.

This causes inflation, an invisible tax that reduces the purchasing power of existing currency holders without deducting actual money from bank balances.

Inflation redistributes wealth from consumers and businesses to the state, as the government can buy more with the newly created currency.

For example, if currency supply doubles, prices roughly double, meaning your money buys half as much as before.

Consumers may get nominal pay raises, but if inflation is higher, their real income and purchasing power decline.

Businesses also lose purchasing power, leading to losses and job cuts, exacerbating economic difficulties.



Cycle of Boom and Bust

Low interest rates and easy money initially boost consumer spending and capital goods production, creating a temporary economic boom.

However, consumers eventually exhaust savings or accumulate debt, causing consumer demand to decline.

Capital goods industries, having expanded based on artificial demand, face declining sales and struggles to repay debts.

The economy reaches a crossroads: the government can either allow a recession by stopping stimulus or continue printing money and lowering interest rates to maintain the boom.

Governments typically choose to keep inflating and lowering rates, perpetuating an ever-inflating debt bubble.

Over time, consumers lose purchasing power as the capital goods industries produce goods people cannot afford or do not want (e.g., overpriced housing).

This cycle repeats until government tools become ineffective or counterproductive.



Limits of Monetary Policy and Negative Interest Rates

Interest rates theoretically cannot go below zero, as lenders would have to pay borrowers, which is illogical.

Despite this, some countries (Sweden, Denmark, Switzerland, Japan) have implemented negative interest rates.

To enforce this, governments aim to eliminate physical currency to prevent people from withdrawing cash and circumventing negative rates.

A fully digital currency system would trap money in banks, allowing governments to impose negative rates and confiscate wealth more easily.

Eventually, excessive money printing leads to hyperinflation, where prices skyrocket uncontrollably, currency loses value, and the economy collapses into barter systems or alternative currencies like gold and silver.


Hyperinflation and Its Consequences

In hyperinflation, currency becomes worthless and may be used for non-monetary purposes (e.g., wallpaper).

People resort to bartering goods or using physical assets like gold coins.

Historical examples include Germany during hyperinflation, where even eggs and furniture were used as currency substitutes.

Hyperinflation destroys economic confidence, causes bank runs, and collapses the financial system.

At this stage, governments face a dire choice: stop printing money and accept recession or continue printing and accelerate hyperinflation.

Recession Outcomes and Economic Reality

If governments stop printing money and allow interest rates to rise, the credit bubble bursts.

Capital goods industries face bankruptcy, overproduction, and falling prices.

Prices of steel, food, housing, and other goods plunge as supply exceeds demand.

This leads to mass unemployment primarily in capital goods sectors, while consumer goods sectors may remain stable or grow.

The recession is often misunderstood as caused by “underconsumption” or “overproduction,” but this is misleading:

The real issue is misallocation of resources due to distorted signals from manipulated interest rates and inflation.

Capital goods are overproduced, while consumer goods desired by the public are underproduced or too expensive.

Housing market crashes illustrate this: prices are artificially inflated by cheap credit and speculative buying, not by lack of demand.



Employment and Sectoral Effects During Recession

Most unemployment comes from over-expanded capital goods industries and large corporations reliant on easy credit.

Small businesses focused on actual consumer needs tend to survive or even expand, absorbing displaced workers.

For employed consumers, recessions can mean rising real living standards despite nominal wage cuts.

Wage cuts are beneficial since falling prices increase purchasing power; insisting on higher wages during recessions risks job loss.

Lower wages enable businesses to hire more workers, reducing unemployment and workload stress for employees.



Wages, Fairness, and Economic Contribution

Capital goods employees, who enjoyed artificially high wages during booms, face unemployment or wage cuts during busts.

This is a correction toward economic fairness—wages reflect actual societal contribution.

A fair wage is payment proportional to the value of goods or services produced for society.

Work without producing value yields no wage; working just for work’s sake is ineffective.

Individuals seeking employment might improve chances by offering to work for lower wages, reflecting market realities.

Government interventions like minimum wage laws or wage controls during recessions prevent natural wage adjustments and cause prolonged unemployment.





Government Interventions:

Unemployment benefits and other welfare programs that discourage work are detrimental.

Those who do not contribute to society but consume resources reduce living standards for productive workers.

Government policies that artificially prop up wages, prices, or employment during recessions prolong and deepen economic downturns.

The video advocates for encouraging people to work and contribute value rather than relying on government handouts.




Proposed Solutions and Historical Examples

The best prevention of recessions is to avoid currency inflation and interest rate manipulation.

A stable monetary system, such as a fully 100% gold-backed currency, would prevent governments from inflating the money supply.

Governments should ideally leave the economy alone (laissez-faire), allowing interest rates to adjust naturally.


Historical contrast:

The 1921 U.S. Depression lasted only 18 months because the government took minimal interventionist action.


The Great Depression (1929–1945) was prolonged by heavy government intervention including wage and price controls, currency inflation, and other policies.

The prolonged Great Depression ended only after government controls were lifted post-World War II.


Conclusion

The root causes of recessions and depressions are found in government, central banks, fractional reserve banking, and inflation of the currency supply.

Attempts to fix problems created by these interventions often worsen economic conditions.

The speaker notes the video was recorded before the recent recession and offers to discuss current economic events separately.

This is all well and good, but this isn't the case 😂😂😂 how do we explain inflation when noone has any money, and noone can afford nice things?? Noone can afford to rent or buy property other than the mega rich, more food goes to waste then we could ever comprehend, and stores are shutting because they don't get enough business?? I don't believe all this for one second.

Inflation is human greed. There’s no need for it. But one day someone realised oh everyone is buying from me let me increase the prices

You should give a follow up on this same topic but for TODAY

But doesnt the fact that you sell more stuff inherently make you more money ? Scale of production also lowers the costs of goods aswell, rising prices when demand is high seems not like a necessity but like greed

The Federal Reserve is private. Not a government institution, but under the government. And I personlly think that private banks may have more clout than our government! When they need a bail out, they GET it .