Comments by "Wojtek The Bear" (@wojtekthebear4958) on "Extra History" channel.

  1. After the nuclear war, duh.
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  2. I kind of wish they had more time to talk about these events as they glossed over many of them, like the Great Depression. There were problems with the gold standard not mentioned in the video that many economists today say was the cause for said depression. Basically economists think the gold standard caused the depression.
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  3. No it doesn't. 87% of all foreign exchange trades are done in dollars with or without oil. Also, Saudi Arabia doesn't care about what's going on in Syria. They're more focused on fighting Iran in Yemen right now.
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  4. I'm nearly positive he meant small amount of predictable inflation like the Fed's target of 2% a year, not something as high as 10%.
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  5. OmegaFoxxtrot It should be pointed out that nearly every country left the gold standard for purely economic reasons, though some of them reasons may have their roots from World War 1.  With the Great Depression causing a lot of economic strife, countries were just beginning to start using Keynesian economic thinking. This thinking didn't go well with the gold standard though, and, because of this and other problems relating to said standard, it was eventually dropped to allow central banks to take a more active role in the economic recovery. Basically, the gold standard was dropped due to the Great Depression, but some of the roots of the Great Depression were in WW1 (and the gold standard itself).
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  6. OmegaFoxxtrot Not really, the gold standard has serious problems with it besides the fact that it stops countries from going to war. For one, it is very unstable, forcing countries to go through intense periods of inflation and deflation. Deflation, as you may know, is terrible for an economy, and almost always involves in contracting. This is widely blamed for causing the Great Depression, as most of the European countries entered this deflationary environment at the same time, severely hampering the exporting industry of the United States. Sources: http://isites.harvard.edu/fs/docs/icb.topic467999.files/October%2022%20and%2027%20-%20Trade%20Money%20and%20Finance/Eichengreen.pdf and http://www.nber.org/papers/w16350  Also, as the latter shows, it isn't hard for one entity to control most of the world's gold stock. The United States did so after both World War 1 and World War 2 after all.
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  7. Joe Vasicek Haven't I seen you before? Heck, I'm pretty sure I've debated you on this before. I am talking about short term inflation and deflation; you are talking about long term. As Keynes said: In the long term, we are all dead (something like that anyway). The average inflation rate under fiat currency has been 2%, which is very good and stable in the short term. In fact, it benefits the economy, not hampers it, as it encourages consumer spending and offers a buffer against deflation. Let's compare the Great Depression and the Great Recession, shall we? Until the repeal of the gold standard in 1933, the US economy experienced deflation of about 1.5% a year. (http://www.doctorhousingbubble.com/wp-content/uploads/2008/06/greatdepression-deflation.jpg) During the Great Recession under fiat currency and greater monetary control, the US (and EU) were largely able to escape entering deflation (http://www.gallatinrivercapital.com/wp-content/uploads/2014/09/Inflation-Rate-Chart-e1410975437193.jpg) To know more about why deflation is bad besides the link I provided previously, look here (http://www.economist.com/blogs/economist-explains/2015/01/economist-explains-4) and here (http://krugman.blogs.nytimes.com/2010/08/02/why-is-deflation-bad/?_r=0). To see why low amounts of predictable inflation is good, look here (https://www.federalreserve.gov/faqs/economy_14400.htm) and here (http://www.investopedia.com/ask/answers/111414/how-can-inflation-be-good-economy.asp) Finally, I do want to point out that fiat currency does not necessarily mean inflation. The Fed could target an inflation rate of zero and not really create currency (unless the velocity of money falls), but they instead find the 2% rate to be beneficial as one of the links I provided shows.
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  8. And you got those numbers how?
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  9. Do you completely ignore the part about Lend-Lease? Apparently you did.
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  10. Yes, because your explanation is stupid. The only thing you HAVE to pay with USD is government taxes. Anything else you buy can be bought with any other currency. There's no law demanding grocery stores sell their products for USD, and there's no 'men with guns' demanding it either. The store choses to sell their products for USD as they are a stable, easily available currency valued by market forces.
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  11. Joe Vasicek Oh, you had more to your argument. Sorry, I'll address those too. 1. Deflation equals market correction. No, no it doesn't. The economy didn't fully recover until 1941-1942, when the United States entered World War 2. As you can see from this chart though (http://3.bp.blogspot.com/-ULZmy2UuiOU/UTecwCW40-I/AAAAAAAAC-w/yCgkboCwmUA/s1600/great+depression.jpg), there was no deflationary pressure "correcting" the market at the time. You're treating deflation as a medicine for the economy, when in reality its a symptom of the problem. 2. Something Something Labor Force Participation Rate The downward effects on the LFPR have little to do with discouraged workers from the economy. Don't believe? Type in "On the Causes of Declines in the Labor Force Participation Rate" into Google and you'll get a pdf from the Philadelphia Federal Reserve. I'd love to link it directly to you, but as a pdf I can't directly link it to you. Anyway, they cite three main reasons for the LFPR to have been declining. a. Disability payments have been rising since 2000, resulting in more people leaving the labor force. b. The baby boomers, the generation making up the largest segment of the population, are finally reaching the age of retirement, also lowering labor force participation rate. c. The younger generations require more years of education/training to acquire there specialized job (think college) so they aren't able to enter the workforce as quickly. Of these, the baby boomers make the greatest impact, but all three put together make up the fast majority of the downward pressure on the LFPR, not discouraged workers. 3. Are you blaming all that on fiat money? I can tell you the gold standard isn't going to stop the business cycle if that is your argument.  
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  12. Joe Vasicek Our monetary policy isn't Keynesian. Mainstream economics doesn't follow the Keynesian or Neo-Keynesian schools of economics. Instead it's a mesh of different monetary ideas. Actually, besides the economic recession, which is a statistical outlier, we are in a great place! Here's the growth of one of our stock market indexes since the 1970's (http://www.bankonyourself.com/wp-content/uploads/Dow-Growth-0173-to-08111.jpg). It grew exponentially Here's our GDP per capita (http://www.tradingeconomics.com/united-states/gdp-per-capita). Also grew by a large margin. Here's our GDP since 1900-ish (http://users.econ.umn.edu/~tkehoe/U.S.GDP.gif). I'm not saying this proves me right, but its interesting to note that the GDP growth actually looks a little steeper after the Great Depression than before. And here is the US inflation rate since 1916 (http://www.aboutinflation.com/_/rsrc/1369736776695/inflation-rate-historical/us-inflation-rate-historical-chart/US_Inflation_Rate_Historical_1916_2012.png). It has stabilized a lot. It also shows you how unstable our monetary system was under the gold standard, though we were more stable under Bretton Woods. What else is there? Unemployment? (http://2.bp.blogspot.com/-mnJY5hilQEM/UJBQMUrjDNI/AAAAAAAABGY/6t4th1t6WRw/s1600/US+Unemployment.bmp) Still nothing seems to have changed. So, I fail to see how this has been a detriment to our economy. Inflation does not hurt the poor more, far from it. Inflation hurts savers more as the money they save loses value. As the poor usually spend their money instead of saving it, it doesn't affect them as much. Example 1: If both me and a saver both earn $100 and I decide to spend it immediately while the saver saves it, who is most effected? Well I get the full value of the $100 and buy it on whatever. The saver deposits it in his bank and waits, I don't know, five years to spend it. Average inflation is 2% a year, so the value of his deposited money is $90. Well actually it's a little more as the 2% isn't always coming off of the full $100, but I'm not doing that much math and the result is still the same. The saver has just lost money. Here's another reason your argument doesn't work. No matter how many assets I own, inflation is still going to eat the same percentage of it, so inflation isn't eating any more of the assets of the poor as a percentage as the rich. Example 2: Inflation rate of 2%. I, a poor person, have $100 to my name. Mr. Schmoe, a rich person, has a $100,000. At the end of the year, how much does inflation eat up? Well 98% of $100 is $98, and 98% of $100,000 is $98,000. Which one of us was effected more? Well as a nominal value the rich person actually, but as a percentage of our assets it's the same. Also do you have a source for your Romance example? It's not that I doubt you; I'd just love to read about the topic myself as it's a question I never really considered. Actually the USD is an excellent store of value as it's so stable. Don't believe? Why do you think countries like Guatemala have adopted it as their official currency? Or why doing you thin 85% of FX trades are done in it? (http://www.bis.org/publ/rpfx13fx.pdf). This is also shown in our low interest rates on government bonds. If the currency was more unstable, the investors wouldn't buy the bonds unless they were sold at a higher rate. Ironically many economists would probably argue the exact opposite of your conclusion. You're conclusion seems to be Keynesian economics fails and we should let the free market reign supreme (which it mostly already does) as then the rich won't be so powerful. While European countries, which follow a more socialist route, don't have the issue of the rich and the poor as incomes are much more evenly distributed, the US, which is much more free in its markets, has a more unequal system. Therefore, some would say, the US should move closer to their economic systems. Note: I do not subscribe to socialism or communism as I don't find the inequality to be much of an issue.
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  13. Joe Vasicek Uh yeah, just about everyone knows about the business cycle. I'm glad you know too? Uh, no, WW2 definitely ended the Depression and I find it strange that you would say otherwise. I mean just think of all the war materials as ordinary goods and the US government as a business. The draft and enlisting into the army decreased the unemployment rate as men found jobs in the army. Goods were being churned out of factories to fuel the war effort, going to China, Britain, Russia, Norway, etc. This improved the profits of these factories, who paid their workers, who then used the money to buy crap, like food and war bonds. Here's the unemployment rate dropping from 10% to 2%, which is considered well within full employment (http://betweenthenumbers.net/wp-content/uploads/2011/10/unemployment4.jpg). Note, full employment does not mean 0% unemployment as there will always be frictional unemployment. In 1941 and 1942 the economy grew by 18% and 16% respectively (http://economics-charts.com/images/gdp-1929-2004-semilog.png). Heck, we head so many things being produced that we needed people in the workforce, which is why women began working in factories during WW2. So yes, the war definitely was a boost to the American economy and ended the Great Depression. Sure, the economy needed to transition from a war economy to a consumer focused economy after 1945, but that was a different issue, namely a new depression in 1946 (http://cepr.net/blogs/cepr-blog/clearing-up-some-facts-about-the-depression-of-1946), not a continuation of the Great Depression. I do agree that on the net wars destroy wealth, not create it, but the wealth was destroyed in Europe, not the United States. Instead, the United States economy (not the government) was able to profit off of the war by selling war supplies, which did generate wealth.
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  14. Joe Vasicek I'm not here to argue the morality of such decisions, only the economic effects they caused. In other words, it's irrelevant to the topic of conversation. Actually GDP probably wouldn't go up to much of a degree if people got cancer. After all, where's the money to pay for it coming from? If people are paying for medical treatment, they have less money for other activities. It's not like an individual has an unlimited quantity of resources that they can just spend on whatever they need/want. Similarly, the job to dig holes and fill them up would only boost GDP if the money wasn't being used previously as otherwise the same money would be spent on something else, like cancer research for the giant cancer epidemic that has effected everyone. Long term GDP is only effected by the supply curve in the long term as the supply curve is completely inelastic. It doesn't matter how much demand there is for goods in the long term, the economy can only produce so much, giving us said inelasticity. This means that to reach a short term goal, like getting out of an economic depression, they might try to bolster aggregate demand, to reach a long term goal they wouldn't. As already shown with two different academic sources on the topic, the depression was caused by a contraction in the economies of the European nations due to deflationary pressure as they didn't control enough gold stock. This hurt the exporting industry of the United States, which hurt other industries in the United States, which brought on Black Tuesday, the worst day of the American stock markets in history. Black Tuesday was therefore caused by the hysteria over the decreased expectations of the stock market, leading to a decrease in consumer spending and the velocity of money, bringing along with it deflation, banking panics, etc. Do you know what a business cycle is? The repeated boom and busts brought on by the increasing and decreasing expectations of the economy, and the hysteria that can happen when these expectation fall (http://www.investopedia.com/terms/e/economic-cycle.asp?lgl=bt1tn-baseline-below-textnote). Let's go over some busts in history shall we? Panic of 1837- caused by a closing of the National Bank of the United States and leading to a deregulation of the Banking industry. This brought on deflation, huge unemployment (possibly worse than Great Depression), and the bankruptcy of almost half the banks in the United States (https://en.wikipedia.org/wiki/Panic_of_1837) Long Depression- caused by the United States leaving the silver standard as a huge portion of the money supply vanished, causing inflation. This lead to the largest economic contraction in history, bankruptcies of even more banks, 18,000 businesses, and a decline in manufacturing by about 10% (https://en.wikipedia.org/wiki/Long_Depression). Panic of 1907- Caused by a reduction in the availability of money due to banks overleveraging themselves, and a loss of confidence in their depositors. This lead to a near collapse of the stock market, many trusts going belly up, and J.P. Morgan (and others), stepping in to personally insure the deposits at banks (https://en.wikipedia.org/wiki/Panic_of_1907). These are just a few of the major economic downturns in American history. None of these were caused by economic regulation by the government, in fact the Panic of 1837 was caused by deregulation. So, as the economic consensus goes, no one entity causes the business cycle, it has existed since forever. We can even go all the way back to the Tulip bubble, one of the first in history, to see that. What causes the booms and busts in the change in expectations of the economy, which can turn into hysteria is expectations change to rapidly. I decided to ignore your comments on FDR because I'm 90% positive I already talked to you about him before and this would just be going in circles then.
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  15. ***** The video mentioned that the countries still on the gold standard (which was almost all of them) were hamstrung during the recovery, but it didn't say that the standard was the cause of the depression itself.
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  16. The economy always has its ups and downs; that's just the nature of the business cycle. There's no avoiding it. the one time we thought we beat it led to the Financial Crisis of 2008.
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  17. savvageorge You do know how the government calculates inflation, right? They literally just take a basket of goods and compares their prices over the years. There's no better way of doing it. So while the Big Mac might cost more, grocery store foods have actually dropped in price (http://www.usatoday.com/story/money/nation-now/2016/09/12/stock-up-grocery-prices-have-fallen-eight-straight-months/90265872/).
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  18. It's valued through supply and demand like ever other good on the market.
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  19. Between the asset swap and the loans, the government made a pretty sizable profit (https://projects.propublica.org/bailout/). Yes, some of that was from interest on loans given to banks.
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  20. They did, they just didn't use the phrase. Whenever someone mentions how the bankers got off scot free for their role in the Financial Crisis or how they're only going to do it again, they're basically referring to the moral hazard problem.
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  21. Backing up an assertion with another assertion does not somehow support the original assertion. Also your supporter is an Austrian economist, one of the most heterodox schools of economics that is in no way supported by economic theory. I mean he's calling the gold standard sound money when, in fact, it's been proven several times over by economists like Milton Friedman, Irwin, and Eichengreen that the gold standard lead to the Great Depression. Sources include Friedman's Free to Choose documentary (https://www.youtube.com/watch?v=MvBCDS-y8vc), Eichengreen's paper on the matter (http://isites.harvard.edu/fs/docs/icb.topic467999.files/October%2022%20and%2027%20-%20Trade%20Money%20and%20Finance/Eichengreen.pdf), Irwin's paper on a subject relating to the Great Depression (http://www.nber.org/papers/w16350), Bernanke's paper on the matter (https://www.federalreserve.gov/boarddocs/speeches/2004/200403022/default.htm), and the freaking GDP per capita data collected during the Depression (https://upload.wikimedia.org/wikipedia/commons/b/b5/Graph_charting_income_per_capita_throughout_the_Great_Depression.svg). Hell, of the 50 or so economists polled here (http://www.igmchicago.org/surveys/gold-standard), 100% of them said that our currency would be no more stable nor our employment better, if we switched over to a gold standard. FYI: This is a beautiful quote from an economics professor at MIT after answering he survey, "All insights from the past and current crises go against a gold standard.". But no, a gold standard would TOTALLY work. What do economists know, right? They've only been studying this, eh, most of their life?
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  22. As long as you took out an affordable loan that you shouldn't have much trouble with, it's perfectly fine, even beneficial. If you default on it though, it's horrible. It's not a one size fits all kind of deal.
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  23. No, most countries were hamstrung. As this graph shoes (https://upload.wikimedia.org/wikipedia/commons/b/b5/Graph_charting_income_per_capita_throughout_the_Great_Depression.svg) nearly every country noticed an improvement during the Great Depression once they dropped the gold standard.
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  24. Joe Vasicek Huh, true, I did (stupidly) misinterpret that chart, but the one above it does have the appropriate axes and does show what I was getting at indirectly. The proportions on the bar they compare the middle class too has a higher proportion of upper class people than it did in 1971. Then if you scroll halfway down the page you'll find another graph labelled "Share of Adults Living in Middle-Income Households Falling". Now unlike what I said before, it does show that the poorer households have increased as a percentage of the population from 1970, but it shows that the upper class households have grown by an even greater percentage. Together the poor households grew by about 4% while the upper class grew by 7%, not something that should easily be dismissed. So it is fair to assume that more middle class families have moved into upper class households than lower class, but about 2/1 in fact, so our modern monetary system has been a net benefit. We just have to focus it better and work out the kinks. I do apologize about the graph though. I should've be more careful in interpreting it. 
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  25. Joe Vasicek I wouldn't say the bubble in the stock market is caused by the Fed, nor would I say that the system is seizing up right now, but I can tell you with 90% certainty that we have not addressed the heart of the problem of the Financial Crisis. Basically the only thing the government did was pass Dodd-Frank. I heard that sometime after the bailout Congress said that they wouldn't bailout the banks ever again, but I have no definitive proof on that. It should be noted that the government actually made money on the original bailout (https://projects.propublica.org/bailout/) though, but as the video said, just the implications of such a bailout leads to moral hazard. Granted, the banks have been doing a pretty good job since the crisis of being more cautious with their loans and increasing the amount of reserves they have on hand so they don't have to go to the Fed in case of an influx of withdrawals, but who knows if that will last or not.
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  26. Joe Vasicek Ha, I'd love to do that, but that required using a special statistics program I normally don't have access to. Then I'd have to find an accurate source that gives me monthly data going back to 1971. It was hard enough finding the data I did without paying for it. I'm guessing there would be some significance of the relationship between oil and the USD during the OPEC embargo due to how big of a shock it was, but after that they wouldn't be so correlated.
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  27. +Nanofuture87 Jeez, I've been seeing you all over these comment sections. Whatever, I'm happy that I'm not the one that has to explain stuff about the Fed for once. It gets tedious after the fifteenth or so explanation.
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  28. No, the $1,000 is the limit the $100 can make as the $100 dollars keeps getting 10% of it taken as reserves every time it's deposited. Technically it won't even reach $1,000 but a number extremely close to $1,000. Once it does though, there no way to deposit more money to increase the $1,000 even more from the initial deposit.
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  29. deathschool91 Those are the fault of business cycles and the over-speculation, not fiat money itself.
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  30. deathschool91 That's completely false. Me overvaluing certain stock and not adequately weighing the risk of my investments has nothing to do if my money is paper, digital, or commodity based. This is evident in the tulip bubble (https://en.wikipedia.org/wiki/Tulip_mania), Black Tuesday (https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929), the Mississippi Bubble (https://www.britannica.com/event/Mississippi-Bubble), etc. All bubbles and crashes that happened with commodity based currency. If you want something more related to the Financial Crisis, we have the Panic of 1837 (https://en.wikipedia.org/wiki/Panic_of_1837) and the Long Depression (https://en.wikipedia.org/wiki/Long_Depression). Like I said, the currency we use has nothing to do with business cycles or stock market bubbles. 
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  31. Antilli Does the Treasury participate in fractional reserve banking? No. Isn't money lent out with interest and has to be paid back? Yes, but that has little to do with anything. Money doesn't just disappear when it's used up. My dollar isn't burned by the government when I pay taxes or buy something from the store. Instead it is then used by the store owner/government and may eventually end up back in my hands. This means that it is possible to pay back all of the debt owed to banks as the circulation of money will eventually bring it back to you. Think about it this way. there are currently 1.2 trillion US dollars circulating, and yet the US GDP is approaching $18 trillion. How can the US sell so much worth of goods with such little currency? Because the currency continues to flow after a single transaction and isn't just burned up. Moving on to inflation. Inflation is the increase in prices due to the increased liquidity of currency. Basically, as money is used more, demand for products rises, meaning that firms raise prices to keep their goods at their equilibrium point. This increase in price is called inflation. Inflation isn't only caused by an increase in the money supply though, but also the velocity of money, or how quickly it circulates throughout an economy. It is talked more in depth relative to inflation here (http://www.investopedia.com/terms/v/velocity.asp?lgl=no-infinite). As another example, why did we experience very little inflation even after the quantitative easing imposed? The Fed injected the economy with over a trillion dollar worth of debt forgiveness and bond purchases (http://www.heritage.org/research/reports/2014/08/quantitative-easing-the-feds-balance-sheet-and-central-bank-insolvency), and yet inflation barely rose above 2%, the target rate. It's because after the initial injection, banks did very little with the money, and consumer spending already fell, so the speed and which the dollar was circulating fell drastically. This lead to the liquidity injection bringing very little inflation along with it. Taxation is definitely a service you can cancel. Just leave. Otherwise, the government performs several key functions to the people  that require money to maintain. If you don't like it, show that through your vote. Ironically as we live in a democracy, it is literally something you agreed to. It's even written into the US constitution that Congress will control all taxing and spending. Last I checked it was ratified by every single state.
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  32. Your rant fails at the second arrow point. The new money isn't net debt. It is impossible to create debt without creating the same amount of assets. Any accounting class will teach you this. You can also see this in a bank pretty easily. If a bank gets a $100 deposit, puts 10% as the required reserve by the Federal Reserve, and loans out $90, then that $90 is a debt they hold to the depositor and an asset they hold to the person taking out a loan. This gives you a net debt of zero.
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  33. Public debt being treasonous....and you think that why?
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  34. Fractional reserve banking has nothing to do with a credit card company collecting 240% of a loan. That only happens if the person isn't paying the minimum amount like they were supposed to under contract. The rest of what you said is bullcrap and not supported by economics at all.
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  35. When the US abandoned the gold standard, the USD was still the most reliable and abundant currency out there, so most countries still use it to this day in foreign exchange trades. I think it's about 87% of all foreign exchange trades involve the dollar.
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  36. We don't do that. Its against the Federal Reserve's policy to do that.
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  37. Actually people not understanding it and treating it as some big conspiracy are the real scourge.
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  38. Yep, look at our rampant inflation right now! What are we at, like .5%? Scary!
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  39. waldosan Yeah, that's because low amounts of predicted inflation are good for the economy as they encourage consumption. Deflation on the other hand is bad for economic growth. In fact the Great Depression is commonly thought to have been caused by many European countries deflating their economies at once (http://www.nber.org/papers/w16350). Yes, in the long run our currency will lose its value, but one: in the long run we are all dead (attributed to Keynes), and two, we can always replace the currency with one more valuable when that happens. Sure during hyperinflation that's bad, but not with inflation such as ours. 
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  40. waldosan You have some fundamental misunderstandings of our financial system here. First, your savings account interest rate is almost never supposed to be over inflation. Banks wouldn't make money that way. You have to remember that the same inflation that eats into your interest also eats into the bank's interest on a loan. The interest in your savings account is just an incentive for you to store your money there, not a way to make money. Anyway, our inflation rate is not nearly as large as you think it is. As +mkvenner2 said, it's targeted at 2% a year, and over the past couple of years has been less. In 2015 it was .12% (http://inflationdata.com/inflation/inflation_rate/currentinflation.asp). Yes, it didn't even reach 1%, much less 2. Even if it was 2% inflation though, it would take 50 years for the value of the dollar to be halved, which is still within reasonable grounds for it's use. Sure, we might get rid of the penny, but considering we still use that and other such coins, the dollar has a long ways to go before it's value deteriorates too much.
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  41. In terms of the net change, fractional reserve banking doesn't mess anything up. You have to remember the large scale this is being done at. Due to the Law of Large Numbers, fractional reserve banking becomes a lot safer at such a large scale. That's because there's (normally) not huge fluctuations in things like deposits or withdrawals, so banks know how much money to keep on hand to meet the withdrawal requirements for their depositors while still having money to lend out at a profit. If this was a smaller scale, the fluctuations would be much larger, making the banks have a hard time meeting the withdrawal requirements safely. I hope that made sense. If you have any question about this, I'll try to explain it better. You are right that this system does break down, but it is rare to happen and there are safeguards put in place by the central banks. First instance, the FDIC here in the USA personally guarantees up to $250,000 of any deposit at a bank. So if the bank isn't able to pay it back and goes bankrupt, the FDIC will pay it in their stead. Similarly if a bank has loaned out too much money and doesn't have enough to meet the daily withdrawal requirements of their depositors, then they can use the Federal Reserve, our central banking institution, as a lender of last resort, and ask for a loan from them. These loans have a smaller interest attached to them than a normal commercial bank gives, and they allow the bank to meet the daily withdrawals in case of an emergency. So in rare instances the system can take a beating, like the 2008 Financial Crash we were in, but normally the government has some way of alleviating the problem.
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  42. It was dangerous for pilgrims to carry their entire wealth on their pilgrimage to Jerusalem, so instead the Knights Templar created these institutions where you could deposit your money in one location (like France), they give you some way of identifying your deposit (like a check), which you could then use to withdraw the money from their institution in Jerusalem.
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  43. That's a VERY debatable point. 87% of all foreign exchange trades are done in the USD (http://www.bis.org/publ/rpfx13fx.pdf), is it really surprising OPEC wanted to use it to?
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  44. Hans Smirnov My point is that oil is just one of the items that the dollar is constantly traded for. Think about it, when you by something from a foreign country, there's an 87% chance that the dollar will be used somewhere in that transaction. This means that the demand for the dollar, where it gets its value on the FX market, is caused by a lot more factors than just oil.
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  45. Do they need to make a lies episode for their lies episode?
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  46.  @TeachersDaily  The US has been the richest country ever since WW1, so before WW2 the US was still the richest country.
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  47. Except it still 100% is. First, fractional reserve banking is the only reasons banks are profitable in the first place. If a bank was required to hold 100% of someone's reserve and couldn't reinvest it, they'd make no profit, meaning they have no purpose for even existing (businesses need to at least break even, which a bank can't do without profit). Furthermore, it would heavily restrict our monetary supply as money would effectively disappear from the economy. Sure, eventually the central bank might be able to bring the amount of currency around to a similar level of before, but that instability would have a long term impact on the economy as people would no longer trust the value of the dollar as they had previously. If the price of milk suddenly skyrocketed to $50, even if only for a day, you'd be a little wary of it's price in the resulting weeks. Finally, the underlying problem you laid out of fractional reserve banking, that being a bank run, has mostly been solved. Thanks to the FDIC and similar institutions in other countries, people aren't worried about banks not having enough money to cover their withdrawals as they are insured up to $150,000 (or whatever the amount it) anyway. As people aren't worried, bank runs don't happen. This is evident in the Financial Crisis when, even though there was huge instability in the economy, and especially the banking sector, there was no news of an actual bank run in the United States.
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  48. That video is so factually inaccurate that it's not even funny.
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  49. The supply of it in circulation and how quickly it changes hands. Basically money becomes more easily usable the more it's printed, so for a business to stay in equilibrium on the supply and demand graph, they have to raise prices to match the increased demand. This rise in prices (and wages) is what's known as inflation, which determines the value of the dollar domestically.
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  50. KamuiFTW It's supply and demand, the same thing that governs basically every single market ever. 
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