Original subtitles

becomes very expensive for consumers and everyone in that

that as well because standard of living and everything else

actually no there's no movement in the economy and that's

there any was there any movement in the economy no

steady rate but also see a steady rate of inflation. If

you see no inflation it means the economy is just stand

that's exactly what happened money supply increase but was

domestic country. But anyways guys take care and I hope you

there wasn't so if you want to successfully you know grow your

activity they want more people to have cash in their hands so

they want the economy you know they want more economic

economy but in a stable way you need to increase supply by a

that money supply would grow because banks central banks

obviously a bad sign and if you lot remember back in 2008

we're getting into a recession or something you would expect

still must understand particularly when correlating

more money. Who's got more money supply in their economy

still. If you see too much obviously you need to control

growth as well and it's it's kind of an indication of where

and that's exactly what want but sometimes when that isn't

handled too well inflation doesn't rise meaning there is

and what's what is that doing to them? So the main takeaway

they can invest here they can invest there so the economy is

you are in the business cycle so for example when we're when

from this lesson is understand what M2 money supply is M two

well. However this does not always occur. And that's one

all the countries together. You must understand who's printing

they're not exactly correlated as you may expect. However we

expectations are a lot lower for money supply to increase

thing you need to take into consideration. Sometimes

year. Now what you would expect is that inflation would rise as

That's a 9. 7% growth of money supply in that year. Usually

that much. And of course it grew to 8. 2 trillion that

more stimulated then of course businesses thrive they open up

countries and you know exogenous factors in comparing

expect money supply the more money you've got circulating

at two thousand and eight I'll just highlight it over here.

investments that people have got on at the moment is simply

the economy now just a note about money supply from what we

understand so far about inflation you might expect that

We've got between the years of 2006 all the way to two

thousand and 10. Now clearly you can see when the crisis

always the case as you can see from this data data right here.

just a note before we move on money supply does not does not

just think of it as physical cash that's circulating around

the economy the more inflation there is however that's not

the higher M2 supply especially during an expansion stage of

happened M two money supply grew substantially. If you look

within an economy the higher amount of inflation you can see

economy what it's doing to inflation because as you can

it is simply the supply of cash so it doesn't include any

count investments such as capital into the stock market

okay what impact does money supply have on the current

particularly by economists because they have to understand

looked at piece of data released weekly and monthly by

the Fed. So you can tell this is very closely watched

market shares. Now Mone and M two are the most commonly

Mone what is that? It covers M zero plus demand deposits and

because M 0 is part of Mone plus savings deposits and money

travelers checks. Then M2, which is the main one that we

usually look at. It covers both Mone and of course M zero

on the third section I believe it is So now when it comes to

coins and notes circulating around the economy and also

central banks reserves. Um as you may know central banks they

monetary base. That's simply physical currency which means

with the Fed's fund rate which we're going to be getting into

or capital that they keep live with them. This has a lot to do

have to keep a minimum sort of quota of central bank reserves

circulation within a country. A country's money supply has a

do they all work together? So for money supply. In economics

profile. Particularly in to interest rates, inflation and

you know you hear money supply, inflation, interest rates, how

the business cycle. So all three of these components are

money supply. You've got Mzero which is also known as the

very closely interlinked. Now there are different types of

fundamentals these are the types of things that you hear

Yes guys, welcome to the first video of the second section of

significant effect on a country's macroeconomic

the money supply refers to all the cash and currency in

learn anything from this lesson.

most of you have heard and you know when you're getting into

fundamentals. Um so in this lesson we're going to be

looking at money supply. Now this is a term that probably