Original subtitles

actual drivers of the economy. So so far we've looked at

very risky at the time. So guys I hope this clears everything

course. We're going to be looking in more detail of

around the economy so less economic activity businesses

of what we know about the economy. Uh moving on into the

third stage and obviously the fourth stage of the fundamental

interest rates are increasing, therefore your currency also

saving lots of people would rather save in the economy than

can go bankrupt as they can't pay loans back loans and

policies of how they control the economy. So we've pretty

But anyways guys I hope you enjoyed this video and take and

in banks rather than spending it in the stock market which is

our economic train video in one of the introductionary videos.

higher return of investment decrease consumer spending

somewhere where you have the highest rate of return, usually

obviously they default on these and then of course in terms of

is, if your economy is deflationary, that means

just want to clear it up. Now, the reason why the currency

much been at the breaks of the economy. If you refer back to

higher investment into into countries with higher interest

that's done through higher interest rates, now of course

actually increases in value as interest rates increases is

increases in value, bonds start to look attractive due to the

investment you know saving their money keeping it as cash

currency, your capital somewhere, you want to look for

because the investment globally. You start to because

see first of all lower inflation rates as seen through

currency such as if we're looking at the Fed and then the

economy of course be would want that higher return of

spend because the economy is rigid which leads to a rigid

up. This is pretty much a summary of everything up to now

rates. I don't think I've discussed this previously but I

if you've got a pot of money and you want to invest your

that in a high interest rate environment the domestic

high interest rates environments and then where we

that I couldn't find for the low interest rate environment

borrowing means reduced investment, lower economic

growth, higher mortgage interest payments, reduced

start to see deflation occur so things like increased cost of

increase in value but of course you you now understand that

the CPI and PPI data. Then your currency increases in value,

understand how does this affect imports and exports Now just a

it's not always a good thing because you've got to

increase return to saving, hot money flows, you know fallen

brief summary of what actually tends to happen. You start to

but this is a perfect explanation of what we see in

it's safe where it's a hedge against you know a bad economy

housing prices, appreciation in the exchange rate. Remember

the higher return on investment due to higher interest rates of

that means is asset purchases are no longer in no longer in

these mortgages. Next the next step. Asset purchases are

consumption, also defaults on them payments as well. Then

I was doing the research I just found this interesting diagram

and all of their money somewhere where first of all

the USD would be the point in question that would actually

and also where they get the highest rate of return now when

variable interest rates. Usually they have to default on

sense you know how people actually take too many loans

course you got to think about the yields as well you know

they tend to be directly towards a bond market due to

great thing to research as well in your spare time. Search

then as soon as interest rates starts rising because they're

So that means less money supply rates circulating in their

everything about housing bubbles. It'll really make

mortgage defaults. This forms housing bubbles. This is a

where do investors want to sense all of their investments

place like before and of course a lot of tapering has happened.

economy and then in terms of investments around the world

subdued and tapering may have occurred significantly. So what

are taken out. More housing market more housing market

the first stage that we talked about in our fundamental

deflation exports can't be as competitive globally Now high

so they're not going to be able to borrow as much therefore

interest rates increases the cost of borrowing so less loans

their money they're going to have higher rates of interest

Then you've got government has rise in borrowing costs. So if

economy. Therefore employment decreases unemployment rises.

you remember the fact you know with the bond market and

section where where you get higher higher amounts of

less economic activity another thing as well exports cannot be

not many people have the money to actually spend inside the

economy is very slow down. Businesses aren't borrowing as

Unemployment could rise. So how how is that possible? Because

much money. Some businesses having to close down because

as competitive so this is really going back to the first

everywhere that the that the government actually borrows

could rise. Government has rise in borrowing costs and exports

cannot be competitive. So there's three points in there.

lower amounts of inflation and of course deflation. The

where the economy is very slow down. That means unemployment

the thing is you must understand with higher with

So interest rates are going to be high. Now what does that

that we just covered and moving on to high interest rate.

Yes everyone, welcome to the next video. So in this one

mean? That's usually a a state of high amount of deflation

we're moving on from the low interest rate environment video

I'll see you in the third section.