[Script Info]
Title: 
[Events]
Format: Layer, Start, End, Style, Name, MarginL, MarginR, MarginV, Effect, Text
Dialogue: 0,0:00:00.81,0:00:06.35,Default,,0000,0000,0000,,So in a normal economy\Nwe know that employment
Dialogue: 0,0:00:06.35,0:00:09.25,Default,,0000,0000,0000,,will drive overall demand.
Dialogue: 0,0:00:09.25,0:00:12.69,Default,,0000,0000,0000,,If we have high employment\Nor low unemployment,
Dialogue: 0,0:00:12.69,0:00:14.59,Default,,0000,0000,0000,,then people are going\Nto have more jobs,
Dialogue: 0,0:00:14.59,0:00:15.92,Default,,0000,0000,0000,,and they're going to\Nhave higher wages,
Dialogue: 0,0:00:15.92,0:00:16.97,Default,,0000,0000,0000,,and that will have\Nhigher demand.
Dialogue: 0,0:00:16.97,0:00:18.90,Default,,0000,0000,0000,,Or if the other way goes\Naround, if they lose their jobs,
Dialogue: 0,0:00:18.90,0:00:21.43,Default,,0000,0000,0000,,demand is going to go down,\Nwages will start to go down,
Dialogue: 0,0:00:21.43,0:00:24.03,Default,,0000,0000,0000,,and people aren't going to\Nhave money in their pockets.
Dialogue: 0,0:00:24.03,0:00:26.61,Default,,0000,0000,0000,,So employment drives demand.
Dialogue: 0,0:00:26.61,0:00:28.44,Default,,0000,0000,0000,,And we can view the\Ndemand-- and I'm
Dialogue: 0,0:00:28.44,0:00:30.73,Default,,0000,0000,0000,,making a huge\Nsimplification here--
Dialogue: 0,0:00:30.73,0:00:33.67,Default,,0000,0000,0000,,demand will drive production.
Dialogue: 0,0:00:33.67,0:00:36.28,Default,,0000,0000,0000,,Or maybe we could\Nthink of it as supply.
Dialogue: 0,0:00:36.28,0:00:42.56,Default,,0000,0000,0000,,It'll drive supply, and it\Ncan also be a driver of price.
Dialogue: 0,0:00:42.56,0:00:46.13,Default,,0000,0000,0000,,And of course, there is a little\Nbit of a negative feedback
Dialogue: 0,0:00:46.13,0:00:47.80,Default,,0000,0000,0000,,loop for both of these things.
Dialogue: 0,0:00:47.80,0:00:50.84,Default,,0000,0000,0000,,If the demand is high\Nand the price goes high,
Dialogue: 0,0:00:50.84,0:00:53.06,Default,,0000,0000,0000,,that might produce a little\Nbit of negative feedback
Dialogue: 0,0:00:53.06,0:00:54.28,Default,,0000,0000,0000,,on the demand.
Dialogue: 0,0:00:54.28,0:00:57.09,Default,,0000,0000,0000,,Instead of an arrow, this line\Nhere means negative feedback.
Dialogue: 0,0:00:57.09,0:00:58.97,Default,,0000,0000,0000,,I'll put a little\Nnegative sign here.
Dialogue: 0,0:00:58.97,0:01:01.86,Default,,0000,0000,0000,,And let's say the demand is high\Nand then the supply goes high.
Dialogue: 0,0:01:06.05,0:01:07.55,Default,,0000,0000,0000,,Well actually, the\Nsupply going high
Dialogue: 0,0:01:07.55,0:01:10.11,Default,,0000,0000,0000,,would drive the\Nprice going down.
Dialogue: 0,0:01:10.11,0:01:13.13,Default,,0000,0000,0000,,So maybe I should draw a\Nnegative feedback like here.
Dialogue: 0,0:01:13.13,0:01:16.00,Default,,0000,0000,0000,,High supply would\Nmean lower price.
Dialogue: 0,0:01:16.00,0:01:18.36,Default,,0000,0000,0000,,But that's not what I want\Nto focus on in that video.
Dialogue: 0,0:01:18.36,0:01:20.36,Default,,0000,0000,0000,,And we could keep\Nadding more lines here.
Dialogue: 0,0:01:20.36,0:01:22.97,Default,,0000,0000,0000,,But this is roughly\Nsimple take on it.
Dialogue: 0,0:01:22.97,0:01:26.82,Default,,0000,0000,0000,,But the general idea\Nis supply and price
Dialogue: 0,0:01:26.82,0:01:30.80,Default,,0000,0000,0000,,will then drive corporate\Nprofits, or just profits
Dialogue: 0,0:01:30.80,0:01:33.30,Default,,0000,0000,0000,,in general, even for an\Nindividual business owner.
Dialogue: 0,0:01:33.30,0:01:38.85,Default,,0000,0000,0000,,And then profits are\Ngoing to drive employment.
Dialogue: 0,0:01:38.85,0:01:40.39,Default,,0000,0000,0000,,Now, let's imagine a scenario.
Dialogue: 0,0:01:40.39,0:01:44.57,Default,,0000,0000,0000,,We are in a bad economy, maybe\Na depression-like economy.
Dialogue: 0,0:01:44.57,0:01:46.40,Default,,0000,0000,0000,,So in that situation,\Nyou could start really
Dialogue: 0,0:01:46.40,0:01:47.59,Default,,0000,0000,0000,,at any point in this circle.
Dialogue: 0,0:01:47.59,0:01:49.10,Default,,0000,0000,0000,,I'll just start at employment.
Dialogue: 0,0:01:49.10,0:01:51.89,Default,,0000,0000,0000,,So let's say employment\Nis really low.
Dialogue: 0,0:01:51.89,0:01:54.64,Default,,0000,0000,0000,,That's going to make\Ndemand really low.
Dialogue: 0,0:01:54.64,0:01:56.70,Default,,0000,0000,0000,,And if demand is\Nreally low, then supply
Dialogue: 0,0:01:56.70,0:01:59.55,Default,,0000,0000,0000,,is going to go down, and\Nprice is going to go down.
Dialogue: 0,0:01:59.55,0:02:01.52,Default,,0000,0000,0000,,And then that's going\Nto make profits go down.
Dialogue: 0,0:02:01.52,0:02:04.40,Default,,0000,0000,0000,,And that's going to make\Nemployment even lower.
Dialogue: 0,0:02:04.40,0:02:07.52,Default,,0000,0000,0000,,And so what we find ourselves\Nin this kind of recessionary
Dialogue: 0,0:02:07.52,0:02:09.57,Default,,0000,0000,0000,,or depression area\Nenvironment, this
Dialogue: 0,0:02:09.57,0:02:11.52,Default,,0000,0000,0000,,would be called a\Ndeflationary spiral.
Dialogue: 0,0:02:17.38,0:02:19.30,Default,,0000,0000,0000,,And it's a spiral\Nbecause a bad economy
Dialogue: 0,0:02:19.30,0:02:20.86,Default,,0000,0000,0000,,is driving lower\Nprices, which is
Dialogue: 0,0:02:20.86,0:02:23.26,Default,,0000,0000,0000,,in turn driving a bad economy.
Dialogue: 0,0:02:23.26,0:02:25.68,Default,,0000,0000,0000,,And to make matters worse, if\Nthis continues long enough,
Dialogue: 0,0:02:25.68,0:02:28.08,Default,,0000,0000,0000,,or if these price declines\Nare severe enough,
Dialogue: 0,0:02:28.08,0:02:29.69,Default,,0000,0000,0000,,you could imagine\Npeople saying, look,
Dialogue: 0,0:02:29.69,0:02:31.93,Default,,0000,0000,0000,,I have this dollar in my pocket.
Dialogue: 0,0:02:31.93,0:02:34.02,Default,,0000,0000,0000,,I'm not going to spend\Nthis dollar because, one, I
Dialogue: 0,0:02:34.02,0:02:37.57,Default,,0000,0000,0000,,might lose my job\Nat any moment, and I
Dialogue: 0,0:02:37.57,0:02:39.81,Default,,0000,0000,0000,,know that that dollar is\Nbecoming more powerful,
Dialogue: 0,0:02:39.81,0:02:42.81,Default,,0000,0000,0000,,that I can buy more\Nevery minute that I wait.
Dialogue: 0,0:02:42.81,0:02:45.45,Default,,0000,0000,0000,,So as the price goes down,\Nso as all of this scary stuff
Dialogue: 0,0:02:45.45,0:02:47.61,Default,,0000,0000,0000,,happens-- so the\Nemployment is going down,
Dialogue: 0,0:02:47.61,0:02:51.00,Default,,0000,0000,0000,,profits are going down,\Nprices going down-- this
Dialogue: 0,0:02:51.00,0:02:55.15,Default,,0000,0000,0000,,makes people not\Nhoard goods the way
Dialogue: 0,0:02:55.15,0:02:57.42,Default,,0000,0000,0000,,that they would do in\Nan inflationary spiral.
Dialogue: 0,0:02:57.42,0:02:58.67,Default,,0000,0000,0000,,But it makes them hoard money.
Dialogue: 0,0:03:02.38,0:03:04.87,Default,,0000,0000,0000,,And why it's ultra scary\Nfor central bankers
Dialogue: 0,0:03:04.87,0:03:06.58,Default,,0000,0000,0000,,or for governments\Nis they start to not
Dialogue: 0,0:03:06.58,0:03:08.60,Default,,0000,0000,0000,,have as much control\Nover the economy.
Dialogue: 0,0:03:08.60,0:03:10.36,Default,,0000,0000,0000,,They can't just run\Nthe printing press
Dialogue: 0,0:03:10.36,0:03:13.08,Default,,0000,0000,0000,,and try to stimulate the\Neconomy in this situation,
Dialogue: 0,0:03:13.08,0:03:15.80,Default,,0000,0000,0000,,because if they did people are\Nso conservative right now--
Dialogue: 0,0:03:15.80,0:03:17.30,Default,,0000,0000,0000,,You could imagine\Nmaybe a depression
Dialogue: 0,0:03:17.30,0:03:19.37,Default,,0000,0000,0000,,is going on for years\Nand years and years.
Dialogue: 0,0:03:19.37,0:03:21.76,Default,,0000,0000,0000,,And let's say that they take\Nsome type of a helicopter--
Dialogue: 0,0:03:21.76,0:03:24.40,Default,,0000,0000,0000,,And this isn't how you actually\Ndistribute money to the money
Dialogue: 0,0:03:24.40,0:03:27.47,Default,,0000,0000,0000,,supply, but it's just to\Nshow an extreme example.
Dialogue: 0,0:03:27.47,0:03:28.93,Default,,0000,0000,0000,,So they take a\Nhelicopter, and they
Dialogue: 0,0:03:28.93,0:03:30.44,Default,,0000,0000,0000,,start dumping cash on people.
Dialogue: 0,0:03:30.44,0:03:33.03,Default,,0000,0000,0000,,They print cash, and they\Nstart dumping it on people.
Dialogue: 0,0:03:33.03,0:03:37.40,Default,,0000,0000,0000,,So every man, woman, and child\Nin the country gets a $10 bill.
Dialogue: 0,0:03:37.40,0:03:39.78,Default,,0000,0000,0000,,Well, if people are really\Nscared and really afraid,
Dialogue: 0,0:03:39.78,0:03:41.45,Default,,0000,0000,0000,,they're just going\Nto take that $10 bill
Dialogue: 0,0:03:41.45,0:03:42.81,Default,,0000,0000,0000,,and stuff it into\Ntheir mattress,
Dialogue: 0,0:03:42.81,0:03:44.39,Default,,0000,0000,0000,,and it's not going\Nto change anything.
Dialogue: 0,0:03:44.39,0:03:46.20,Default,,0000,0000,0000,,That dollar isn't\Ngoing to actually enter
Dialogue: 0,0:03:46.20,0:03:47.29,Default,,0000,0000,0000,,into the money supply.
Dialogue: 0,0:03:47.29,0:03:50.26,Default,,0000,0000,0000,,The velocity on it will be 0.