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Last time I was this early we had a gold standard...

Shout out to economics explained for keeping stock video producers afloat in these dire times.

If the fed were to give me an unlimited line of credit, with a 0% interest rate, I'd be happy to do my part, to stimulate the economy.

I am a Congolese national. You spoke about my country just when I thought you would have! LIKED AN FOLLOWED!!! Our sketchy currency comes as a result of the fact that all of us Congolese always say that our country is mineral rich as if that's all it takes to build economies!!! oh and the taxes paid by the multinationals are sucked out and looted by corrupt officials!!

I was expecting an April fool's joke but rather i got a lecture about modern monetary theory even in today am still confused.

To quote Remmy "They got a monetary plan and it involves a lot of toner"

Just missing two important points about MMT. First, MMT was theorised based on how the world currently works, not as a proposal to change all of international economics. The author noticed that various conventional wisdoms about printing and inflation did not hold up in practice. He generalised his findings when he presented MMT. Second, the indefinite money printing proposed should always target productivity, always stimulate the broader economy and nothing else. If it does that effectively inflation won't enter into a death spiral, or so the theory goes. Now if you ask me, the whole theory is born from primarily US' economic perspective and translates poorly to other nations, who run much higher risks of their currency taking off in the wrong direction. There's also the added danger that politicians around the world use MMT as an excuse to boost popular policies that are not beneficial to the long term productivity of their society.

"maximum prosperity" - economical crisis every 10 years

Printing is effectively a tax though. When you print money, you increase demand for the good you're going to buy with said money, this leads to higher prices, reducing the purchase power of the people who did not get the printed money. So basically, each time the printer goes brr, you're the one paying for it.

MONEY PRINTER GO BRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRR

Also, being a bank sounds like a pretty good gig: you create debt by typing digits in a computer, and you get to pocket the interest for no work at all

something about MMT just feels like its just a massive house of cards that will eventually come crashing down

Monetary theory, the crazy quantum mechanics of economics.

Most of the channels I watch are the likes of Wendover Productions, Real Engineering, Mustard, ReallifeLore, etc. Huge channels with millions of subscribers, I hold Economics Explained in the same regard - so it always surprises me when I look and only see 321k subscribers. Seriously guys get this man more views he deserves it!!!

Nice simplistic overview. To go deeper, we need an explanation of the circumstances under which inflation takes place versus those under which inflation doesn't take place. It's not as straightforward as simply measuring the money supply against the total of goods and services.

The reason printing money didn't cause inflation is because the money printed was used to fill holes for big corporations and financial market. If you think stocks, bonds and houses as every day products, yes, there is inflation.

Hyper inflation and modern monetary theory don't scare me. Paper money will always have intrinsic value. For example, I'm out of toilet paper.

"Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. . . . Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." ... Quote By John Maynard Keynes

Didn't change how I view money, but it just made me more nervous.

A simple cure all to all our economic worries!! How could this go wrong?

April 1st was yesterday.

when you realize the stereotype of "the average economist" is the same as "the classical music enthusiast" you start to understand EE's fixation with Beethoven in his videos

I love how the priciple of typing money into existence and how it effects our economy is so well shown in the GTA Online (Video game) world. Since hackers maxed out a substantial amount of peoples bank accounts, the ingame prices increased so much and almost every dollar you earn in the game is almost worthless, because there is so much existing.

Good video. I think the biggest criticism of MMT was actually left out though. MMT put in to practice essentially removes the independence of the central bank and puts politicians (rather than central bankers) in charge of the money supply. Incentive structures in a democracy are such that politicians will continue to spend in order to get re-elected and therefore can't be trusted. MMT would likely lead to a massive increase in the size of the state with greater and greater spending and higher and higher taxation. For socialists, who trust in governments to make good decisions on behalf of their citizens, this may be an appealing idea.

3:51 *hopefully very secure excel spreadsheet. There are to many companies out there still using some legacy database from the early days of computing with barely a thought about security what so ever.

I'm amazed how much money EE spends on hiring actors and filming these nonvebal sets.

The old laws of monetary theory dating back to Hume still hold. One should be suspicious when a government makes a substantial increase in the money supply.

"Modern Monetary Theory" more like "New Keynesian Theory"...

The whole world: "i can't work as hard as normal when I'm stuck at home" EE : "Hold my RedBull"

who cares about economic theory, the only thing we need is *meme theory*

I love how he explains this concept of money without any grim undertones of other videos. He explains the concept very well and only uses facts , no assumptions or crazy conspiracy theories. Love your videos.

A couple of things you have to ask yourselves is why MMT may not be practical for us, since if no answer can be found, it is a sound path to embark on. MMT's core fundamentals derive in part from Keynes' theories, which many would argue were an ideal set of monetary & fiscal policies that could help revive economies that collapsed due to a decrease in aggregate demand. However, Keynes himself argued that his theories where to be applied only under specific circumstances where AD fell and AS (aggregate supply remained constant) in which case the Government should increase their spending and create a fiscal deficit to consume the extra surplus in supply that would remain available in the economy in order to cut the bottom & later on the top from the business cycle. In order to do this, Keynes argued that governments should run a fiscal surplus during the boom years, reducing the monetary supply in the economy that had been introduced during the bust period. This is of course a huge oversimplification of his theories, however, few economists outside of the classical schools of economic thought found much issue in these recommendations, for which they were implemented by governments all over the world. The issue of course was that economic assumes that people are rational, at least to some extent, and that politicians want the best for their country, but as we all know, it is not from the goodness of the butcher's heart that we get meat to eat for dinner, it is due to their own self-interest. This meant that nations all over the world took Keynes idea's and kept only the part that was politically profitable, at the end of the day, who cared about the business cycle when elections creeped up in the corner, right? This has led nations all over the world to create huge fiscal deficits that they will never pay off. This has created different consequences for different nations since each situation is different. For those that borrowed in other country's currencies, the risk of default grew exponentially, causing many economical collapse along the years. For others, welfare states where implemented with the best of intentions to ensure that the people found themselves better off regardless of their faith, & slowly but surely these nation's cultures and motivations to continue innovating, continue growing (in terms of REAL GDP) and continue prioritizing their liberties over their paper money has subsided. Now, where could MMT fail in the US? Let me start off by being clear, I am not sure whether it would work or not work, I am not sure whether it is desireable or not desireable, frankly, each individual's morality & ideology will lead them to a different conclusion, but I am sure that it is essential to question any theory or economical current that one seeks to adopt BEFORE doing so. Firstly, for MMT to work the Federal Reserve would need to be politically independent in order to act in response to the levels of inflation and not to the demands of a president or congress seeking re-election. We know that on paper they indeed find themselves in this position, however, just a quick look at present times and at what has been historically done to Keynes' ideas can tell you that this is largely an idealistic utopian belief. Secondly, The Federal reserve would need to have real time, exactly precise data on what the current monetary supply IN CIRCULATION is, the actual rate of price inflation in EACH AND EVERY INDUSTRY AND REGION since bubbles can form in all asset classes as well as all cities in the country, and one number reflecting all states and cities would not accurately do justice to the real situation on the ground. It would also have to find a way to inject or retrieve money from certain sectors of the economy and certain regions of the country without necessarily impacting all others, which would prove excruciatingly difficult in this era of special interests. Thirdly, the individuals at the federal reserve would not only have to have even more power than they currently do, they should be expected to exercise this power absolutely perfectly, making all the right decisions at the exact right time with no margin of error whatsoever. Fourthly, the currency value of the currency in foreign exchange markets would be expected to be analysed and controlled heavily to ensure that the country's exports remain competitive in the global outlook to ensure that more productive, supply generating companies and jobs are not lost as a result of government intervention, which would be considerably difficult since our currency follows the laws of supply and demand similarly to all other goods and services. Even more points: Unelected officials will be given the remote control to our economy not only with the ability to create money like they currently do, but with the ability to decide or directly guide the taxation imposed upon the population regardless of the will of the people, since imposing taxes is vital in MMT's regulation of Inflation. - In the event of that a given good's supply is reduced substantially, say Cars, the Fed would have to ensure that none of the money being introduced in the economy be directed towards the purchase of cars, since doing so would inherently become inflationary quite rapidly, for which they would have to greatly reduce the freedom independent adults have on what they want to do with the product of their work, going far beyond what we now consider the role of a government that believes in democracy and the will of the people. - In the event that a mistake is made and inflation arises, taxation will have to be increased to levels much higher than what we currently consider reasonable, which will decrease motivation of production in the private sector thereby reducing aggregate supply of goods and reducing the amounts of goods available in the economy for money to purchase, creating more unemployment and either worsening inflation if people are subsequently employed by the job guarantee that MMT's superstars prescribe only to bid up the prices of these goods which are collapsing in supply, or creating mass suffering amongst people who have no job, have no money, have high demand for money since their tax obligations are high and are forced to see prices rise around them. Many more things can be said about the theory but I've gotten quite tired as is. Again, I do not claim that these points are inherently valid or that MMTers cannot provide me an answer for them, as a matter of fact, that is exactly what I hope will happen as the reason I post this comment is to get some insight as to how you would combat these issues if MMT were to be implemented. Personally I find many elements of MMT really insightful and extremely useful, whereas I struggle to grasp other elements of the theory like any other theory out there. Apart from the Job Guarrantee, I attempted to leave out policy prescriptions since they are for the most part absolutely appalling from my point of view, and it serves no purpose discussing them until we have reached a consensus on how MMT would actually work. Whoever you are, & I plan to comment this on multiple videos to get more insight, I highly encourage to write your thoughts and comments on what I have just laid out, as well as any concern or alternative you have for the theory, please keep comments civil so we can learn and grow together, thank you!

Common people: u can't make money out of nothing. MMT: allow me to introduce myself.

When people make fun of Nigerian politicians for wanting to make everyone rich by printing more money but then you-

@Economics Explained Firstly, there is a great sense of appreciation, joy, comfort, even clarity concerning matters I had less knowledge about, which comes from watching your content. I'd like to think I'm not alone in this, maybe even enough so that others mention it itoo, and it becomes worth it to consider and implement an alternative. I realize I'm a lot more sensitive to my memories and imagination than seems normal, but simply seeing chalk on a chalkboard (apparently just thinking about it, cause it happened again) is enough to send shivers down my spine

You're Australian. You make sense of something really complicated and you actually taught me a lot I didn't know and now I know it, I realise I should've known it sooner. Thank you very much from Northcliffe Western Australia

finally i'm early enough to get a heart from my favorite youtuber.... right?

Modern Monetary Theory: Everything is rosy, except if you're from a poor country.

Being 45, I’m so far behind in my savings and investments. I wish I had this financial knowledge right after college

This blew my mind: the government does not actually need your tax money so it can spend on programs, it only needs only needs them to create demand for money! At some level the two are still pretty much the same thing, but I never thought about the latter characterization.

The most convincing lie is the one that is to complex to question.

2:15 Loaning out money 7:25 What cash does 10:32 Limitations 13:00 Inflation 16:48 Final Thoughts

The big issue I have with MMT is that while it makes technical points that are true and too often missing in the discussion, the actual consequence of those points isn‘t as great as they claim or even as they claim. A key point is on the process of how banks create money. The process of loan creation is as they describe- but it doesn‘t mean what they think it does, which is that all investment is basically money creation by banks and that savings aren’t at least a constraining factor. Banks mostly don‘t go into the business of lending to take on credit risk; most banks aim to make money by selling off the credit risk taken on by issuing a loan and making money on a bid-offer spread, whether that be by taking on deposits or by selling and servicing the loans. As such, banks are financial intermediaries like any other and are mostly not interested in taking on risk that they can‘t sell off to a market of savers. So at minimum we can say that savings is the determining factor of investment- even if underwriting a loan doesn’t require any savings on hand.

It allows "Economic Policy" to develop into full on central planning without any way to determine definitively whether things are going well or not

"...or my favorite, Eve Online." This explains everything

Everyone come back to this video in 12 months.

My problem with MMT is that it is just too convenient. Now that our debts are huge - national, commercial and personal - along comes a theory that lends intellectual cover to just printing money to get out of it.

Wow, I knew parts of it. But you totally flipped it on it's head. Creating demand for currency. Never thought of that

"We'll get everything you think you know about money and get ready to learn it all over again" *has school ptsd*

Money primers be like: "Bbbrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr"

Huh... Very interesting the more I look into MMT I start to understand it. Also love finding videos with a good Aussie accent 😎😎

Hey man. If you ever had a course on economics I swear I would invest in it. I guess I'll check your Patreon for now. Your lessons are truly mind blowing

_we talking about printing more money_ *Zimbabwe and Germany have joined the chat*

Could you do some kind of summary at the end? You give us so much Information spread through the video with examples etc. and at the end of the Video we may already forgot the information from the beginning

Economy collapses from debt and we have equality at last.

Awesome. These explanations are so well done. Thank you.

Playing EVE Online, everyone's favorite space themed spreadsheet simulator. Love that game, and why am I not surprised?

Modern monetary theory- hyperinflation with fancier words to make it seem like insane government spending is a good thing

18:00 *WRONG!* My finite time and energy was used to get that money and it's being taken away from me against my will! That gives me the right to complain all I want!

Great topic and clearly explained. May I suggest that you make a video about helicopter money and how it ties in with the current Covid situation? Thanks

So modern monetary theory is promising the the same thing that the U.S. federal reserve has promised for a hundred years now. I’m not holding my breath.

"...or my favourite, Eve Online" *sigh* of course it is

“Or my favorite eve online.” Somehow not surprised you love your spreadsheet video game.

The analogy at 17:30 into the video using business cards as 'fiat currency' is brilliant.

*["BRRRR"ing intensifies]*

BRRRRRRRRRRRRRRRRRRRRR

"I never wanna hear any of you using that terrible analogy ever again when talking about cash." Don't know why, but this brought too much joy to my heart.

This was fascinating. However I don't understand the difference between what you explained here and today's reality. What are the influences that make it so that governments can't just print whatever they need. Why are we all talking about the state having to get income through taxation? Keep up the great work and thx for opening my eyes to many of these processes!

Will you do a part 2 on MMT discussing the policy implications of MMT and how it relates to Keynesian (post-Keynesian?) thought? :-)

3:30 What a beautiful gold nugget!

Correction: reserve requirements don't constrain lending in the USA as member banks simply borrow in the overnight market or discount window (the Fed books it as an overdraft). Reserve requirements only constrain lending in a fixed exchange rate system where deposits don't create reserves (of the convertible unit) - in a floating exchange rate, loans create deposits AND reserves

I'm not sure about monetary theory but I thought the very basic premise of Monetary theory, in the modern sense as we have now, is: Reserve Banks / Central Banks are the printers of cash, but also the holders of the National 'debt'. If the Reserve is asked for money to start a project (or start-ups) then they give you that money. That adds onto the National debt. That debt builds up, through either successful or failed projects/start-ups, but actually having that debt doesn't have consequences in reality. It's just a figure. An arbitrary number. It's "imaginary debt".

This seems only really feasible if you’re a reserve currency...

I wish more people used symphony 9 in their UKposts videos, it's so powerful as background hype music.

My main problem with MMT is that it's usually promoted by people that want to fund stuff I find destructive.

Love it! That was very informative.

This video coupled with your previous from Mar 26 is an amazing exercise of cognitive dissonance. In the other video all our woes are caused by runaway debt. Yet in this video, Modern Monetary police just has to be managed properly even tho the entire monetary system, the WHOLE thing, is founded on runaway debt because... we borrow money into existence. Why? You did a great job explaining it was not always this way, but you never explained what changed and why. Why do we borrow money into existence? If the banking system didn't create money, who would create it. How was it created in the past. You could even explore the rationale, and after 100 years of the current system, really contrast the two. Because the monetary system we have now was supposed to cure the ills of the previous system. Unfortunately your trashing of the "On a Desert Island with a $1m" story misses the true efficacy of the illustration. It has nothing to do with intrinsic value, because well, nothing has intrinsic value (another discussion). Money is useless (worthless) on a desert island because there is nothing to buy. Money is irrelevant when there is nothing to buy, so what is more important, money or stuff/things? This is not a chicken and the egg question of which came first, money or products. Money never comes first. That fact, illustrated by the desert island story, reveals the true nature of money, the constraints of which are the single biggest hole in the Monetary Theory of money.

14:58 "Almost every country in europe..." Yeah like only two thirds actually Edit: Two thirds of the countries in the EU. In Europe way less than half the countries have the Euro.

Military Defense is the main sector that is funded to keep the printers printing, and for MMT to be fully utilized.

@Economics Explained...12:14: Money Printed by Treasury is backed by DEBT (ie. issuing Treasury Bonds) . *THIS IS THE MOST IMPORTANT FACT OVERLOOKED or MISUNDERSTOOD! I wish you, and other economists, emphasized this more when describing Money Printing, Stimulus, & Inflation.

People: We need to BRRRRR ourselves out of this recession. Weimar Republic: Allow me to introduce myself!

Economics explained "money printer go brrrrrrrr" Noone: Argentina: Brrrrrrrr

I always thought that money could somehow work similar to how energy works with its laws of physics i.e. energy cant be created nor destroyed, therefore having a set value, but it can change forms. but maybe by the sounds of this video my theory isnt exactly correct? Economics is so weird, seems so simple yet its so complex to grasp

every time you print money, you are basically stealing the people's money who uses your currency, because in the end those people pay for it through inflation. Let's say you printed money and bought a bridge. You didn't just print a bridge out of thin air, the users of your currency paid for that bridge through inflation. Some of which may not even be your citizens. That's why a currency that can't just be printed at will is better for the users of that currency. And the public needs to be more aware on that issue.

In the immortal words of buzz lightyear, Inflation #ToInfinityAndBeyond

I strongly suggest you all should read Stephanie Kelton's book: The Deficit Myth for a better understanding if mmt. Months ago, I was very weary of mmt but now I think that there are specific instances where it can be used to great effect.

Great explanation. I am not sure if I still completely understand all the revolving parts but, better than Kelton did.

So what can the ECB and Eurozone do to mitigate this downturn and rising debt? Why is it different from a national currency. Could you do a video on that too?

EE: “ state is not a money consumer, rather money creator, and thus it should not be treated like a normal citizen when it comes to spending” Also EE: “ ...and that’s why Greece has been a naughty frivolous boy and didn’t save enough money for the hard time”

'You probably haven't even seen real gold coins' Indians: Hold my beer.

MMT is terrifying because of how truly unsustainable it is.

Have you tried farming spawn points for gold coins? Maybe you'd even get an SR drop.

Being a “good citizen” means I work tirelessly to expose the lie that fiat currency has intrinsic value. It doesn’t. Only MONEY has intrinsic value and currency (or cash) is NOT the same thing as money! Currency can be “legal tender” but but not “lawful money”. See Article 1, Section 10 of the US Constitution. Currency is to money, as a coat claim ticket is to a coat. Wake up people before we are ruined.

Now you’ve gotta make a video about EVE Online and... flatten the curve. The infamous learning curve, of course.

The Euro still operates in that fashion. What's so different between a confederation of nations and a large federation of states. Local, regional & state governments have debt & taxes too, and local economies have differing demands, whether they speak the same language or not. Heck individuals in them benefit or are harmed differently by changing monitary policies either direction. The Euro is used in a shared single market, and mostly even a continous geographic space, governed by a lot of, but not exclusively the same rules. The financial crisis was mostly a global crisis. It was Europe specific only in so far as the differing demands of different parts of the Eurozone had to be negotiated between, just like any group of multiple people have too.

I never thought economics would turn into comedy. Hell is defined as a place where there is no reason. MMT has taken me to hell.

Alan Greenspan, FOMC Meeting, June 2000 (Transcript): "The problem is that we cannot extract from our statistical database what is true money conceptually, either in the transactions mode or store-of-value mode. One of the reasons, obviously, is that the proliferation of products has been so extraordinary that the true underlying mix of money in our money and near money data is continuously changing. As a consequence, while of necessity it must be the case that at the end of the day that inflation has to be a monetary phenomenon, a decision to base policy on measures of money presupposes that we can locate money. And that has become an increasingly dubious proposition."

An excellent description. Take the time to understand it. It really isn’t that difficult.

MMT looks really good after all of this chaos, love that people diss it without realizing the obviousness that it worked exactly how they described it would.