hi a few days ago Robert Breedlove posted this these IMF scam artists are lying to you inflation is legal counterfeiting counterfeiting is Criminal inflation now for the purposes of the rest of this video whenever you see or hear IMF I want you to think inflation misinformation Foundation because that's what they are in this video they're the inflation misinformation foundation so here we go hi I'm spendy love from the IM theories I'm going to be answering your question thorny economic issues breaking them


down and giving you straight answers without all that fancy academic speak let's get started so it's all nice and Fluffy at first and they're going to be talking about those thorny economic issues well there's only one economic issue they talk about here and it's inflation so they're not talking about all of the economic issues that are basically thorns in your side there's been a lot of talk about inflation around the world but what is it really and why is it happening


well you know according to Milton Friedman the quantity of currency the the money supply he called it times velocity uh equals prices times GDP if you increase the quantity of currency you're going to increase prices and the only thing that can change that is velocity but we'll get a little bit uh further into that in a moment so inflation inflation is a broad-based increase in the price of things okay did the things change or did the currency change if you double the currency Supply but the number of goods


and services remain the same over the long run the prices are going to double to soak up that doubled currency Supply however in the case of like during the pandemic during the lockdowns you send everybody checks and pay them to stay at home and what happens to those uh those excess dollars they don't cause the prices to go up right away because velocity is not increasing what's happening is it goes into savings and savings acts like a battery so all of those excess units of currency that are


being shoved into the monetary system are going into savings accounts and when it's in a savings account velocity is zero that those dollars do not circulate and remember it's the quantity of currency times the velocity equals prices times the quantity of goods and services first when I say broad-based I really mean that inflation is not about the price of broccoli going up versus spinach because there's been some new diet fad that says that broccoli is better for you okay she says broad-based but she's only


talking about retail goods and services and measuring a very small portion of those she's not talking you know I came up years ago when I was writing my first book back in 2006 I think I was on the uh the bls's website and uh I was looking at all the different ways that inflation is calculated and there are a lot of them and I started laughing at all these stupid Ackerman acronyms that they had and then I went over the Social Security website to see how Social Security is calculated and and your


increases in Social Security benefits you take the Pia and you divide it by the cola get this result and rounded to the lowest uh dollar or whatever and uh it was totally insane and I came up with something I call cup inflation c-u-p-p it's currency units per person you take the currency units per person so it accounts for the expansion of the the population and you have to divide that into the available goods and services that people are going but then there's this variable that uh humans cannot


control no matter how much Central planners like these want to control inflation and your life and you'll see that everything that she says except for one little thing in here has a government answer to it it's going to be government controlled government plan and Central planning is the worst of all possible worlds it just does not allow the price Discovery mechanism to function which is what sets supply and demand in equilibrium and if we allow that to work we have the maximum prosperity in our lives so uh they're


going to measure these uh narrow bands of where currency can go but with cup inflation currency units per person you're it's based on this one simple fact every dollar must go somewhere every unit of currency must go somewhere and if it goes they're not measuring if it goes into the stock market they're not measuring if it goes into retail I mean into uh real estate prices uh they're not measuring if it goes into savings and savings is the battery that velocity can go up and down the number


of times that a transaction is involved that a dollar is involved in a transaction in a year that can go up and it can go down and when it goes down it means that savings is going up and when velocity goes up that's either that they're adding a bunch to the currency Supply or or that uh people feel better but when they feel better they start spending some of that savings it starts to discard charge like a battery into the economy and those dollars are now circulating once again it's about the


prices of vegetables rising in general and about the prices of other things Rising now for consumers like you and me it's about a broad-based increase in the prices of things that we consume okay it's she's talking always about the prices and that's not inflation that's the symptom of inflation inflation is the expansion of the currency Supply so it's expanding the quantity of the currency not expanding the quantity of prices it is an expanding prices prices go up as a result of your currency


losing purchasing power because the currency Supply is being diluted by the government or by the Commercial Banking sector pay for that includes things like groceries gas subway passes for businesses it's about a broad base increase in the prices of things that they pay for okay now here is something that she does not dig deeply enough into for businesses this is about a broad broad-based increase in the prices of things they pay for in other words the business receives currency for its goods


or services that it is selling that's in the bank it loses purchasing power because there's they're diluting the currency Supply and that means that the prices of the things that they're buying goes up because each dollar purchases less and when those prices go up then they have to raise uh their prices at the retail level and you end up paying more but so do all the employees not just of that business that produces the goods she's going to talk about coffee in a moment so if you've got a uh if you're


buying coffee at the store the store sold that coffee to you there's a supplier that sold the coffee to the store and then there is a coffee roaster that is supplying that that is supplying the coffee to the coffee supplier and then there is the coffee grower and beyond that there are fertilizers pesticides herbicides there are all the inputs and then the labor now if the retail price goes up on coffee that means that for all of the workers for the store the supplier The Roaster the grower and the supplier of all of


the things that The Roaster and roast that the grower has to buy uh if if they go up for all of those people that means those people need to get a raise which means that the each step in this chain has to increase their prices again which raises the retail price which means everybody has to get a raise which means that the uh every Pro every supplier every Link in that chain of Supply they all have to raise their price again and it's this vicious spiral that has to complete until the quantity of currency


is all accounted for it won't stop until that is done and you know I don't think we're anywhere near being done yet you're going to see these waves these Ripples and right now we know that uh everybody's on on the average people's standard of living is going down because their wages are not keeping up with inflation right now you've got the United Auto Workers union strike and they're demanding to get paid more which means that either the auto companies don't raise their prices and go out of


business which is probably going to happen or they increase their prices and sell fewer cars either way this whole thing is a disaster and it was set in motion by these people that you're listening to here so basically take everything that they say and sort of turn it around and take a look at the other side so that includes the computers that we work with or the electricity bill for the lights in this cafeteria there's a second related point which is that it's about the representative basket of things that


consumers actually consume no uh they're talking about like the CPI where they pick a very narrow basket of things and they track those prices over a long period of time instead of tracking the quantity of currency the quantity of savings and and the amount of goods and services available GDP much closer to Milton Friedman's famous formula which I'll show you in a few minutes on average across the the entire population so maybe Subway past prices are going up at least she took the population


variable and and put that in there but that's not going to factor into Country-Wide inflation in a major way unless most people in the country actually ride the subway but it is one piece of the puzzle and I don't think they measure Subway prices in the CPI they either need to measure everything in the economy economy which is almost impossible or they need to measure the quantity of currency and the savings and the amount of goods and services which you get from GDP now the reason that we care about


inflation is that it can lower people's living standards and it does and we know it does over the past I I think four years the average income inflation adjusted has gone down by about uh I think for a household it's about four thousand dollars when prices rise faster than wages people are effectively getting poorer yes and eventually everybody asks for a raise which means that the prices have to rise again to cover those raises it's this vicious vicious spiral that the world central banks kicked off with


these ultra low uh interest rates that caused real estate to Boom with uh quantitative easing which caused the stock market to Boom uh and then paying people to stay home during the lockdowns which caused savings to charge up and then once the lockdowns were lifted it didn't matter if they stopped sending people to checks that those savings discharged into the economy and as the savings discharge prices have to rise to account for all that newly circulating currency a dollar that I have today is worth less


than the dollar that I had last year that makes me worse off which is absolutely true whose fault is that that's why we say that inflation is the worst tax on the port well I'm not so sure about that it's it's a bad tax on everybody but the uh you know if if you make a lot you're paying like 50 income stat tax depending on which state that you live in it takes a while for five percent annual inflation to Total 50 percent so which is worse uh you know um well you'll see something about


government spending in a minute so why [Music] why shortage I want you to notice that her two big buckets uh don't include governments and Banks expanding the currency Supply which isn't Supply slowdowns and since we're here in this Cafe let's say that there's a bad Harvest or a drought which reduces the amount of coffee beans however everyone in the world including myself is still going to have the same demand for those coffee beans incorrect in a free market the the price if


there's a shortage in Supply it means that the price will rise because you've still got a lot of people bidding on those coffee beans but as the price goes up some people don't Bid And when I'm talking about bidding I'm talking about standing in line at Starbucks you're bidding on coffee beans when you stand in line at Starbucks or you buy coffee at the grocery store if the price goes up too high some people will switch to T and that reduces the demand so the demand does not stay the same


and that's going to nudge prices up or take covid as an example a lot of people were asked to stay home to avoid spreading the virus in some cases that led to a shutdown in ports or shipping terminals okay this was government mandated they weren't just asked to stay home these reports were closed this was a government created problem but if they allow uh the if if the governments allow the free market to work prices would go up very temporarily and inflation truly would have been transitory


as it causes uh an incentive for more people to show up at the Docks and unload those ships and get stuff back into the price into the supply chain limiting supplies again that nudged up prices the other big bucket is on the demand side so people demanding or wanting more goods and services than there are available sometimes economists call this an economy overheating or so if you want something and you want more of it economists deem that bad and they call it overheating well if you want more stuff and prices are allowed to remain


free and interest rates and so on then what will happen is the price goes up temporarily more people get into that business and the people that are already in the business start producing more which creates more employment which creates a better economy which means there are more people that can afford more stuff and everybody's standard of living keeps on going up but watch the solution that they have for uh people wanting too much stuff we're running hot so what can governments do to ease it


what can governments do to ease it they can stay they can keep their big fat noses out of the situation well first it depends on the source of inflation but the broad idea is that governments want to bring down price increases to a manageable and stable level both for businesses and consumers let's start with the demand side so governments through their central banks can decrease Demand by increasing interest rates so they can decrease your demand for goods and services in other words your total prosperity in your life because


your Prosperity isn't how many units of currency you have it's how you get to live the food that you get to eat the health care that you have access to and the shelter that you have the kind of car that you drive your Prosperity is all of the goods and services the stuff in society not the units of currency so their answer here is if they think an economy is overheating if they think things are getting too good is to take some of your purchasing power Away by raising interest rates now who is charging the interest rate the


counterfeiters either government counterfeiters or commercial banks that counterfeit currency into existence with a loan that you are taking out if the uh the interest on your the real estate loan goes way up you can afford less house so you don't get as much for your currency your your effort that you have put in all those hours that you worked to try and buy a house it now buys less because the counterfeiter is taking a larger cut of your total purchasing power so whether you're buying a house


and taking out a loan to do so or if you're charging things to your credit card higher interest rate rates mean higher borrowing costs it means that the banks get to make more profit uh they get a larger piece of your lifetime basically and so those costs are going to go up and that means less money to spend on other things yes so you get less they get more also incentivizes saving money in the bank those interest payments are also going to go up okay let's check how true this is so here I have


hi I just wanted to take a moment and thank you for subscribing and mention that if you'd like to help our Channel please consider my company goldsilver.com the next time you buy precious metals we're one of the most trusted names in the industry our prices are sharp delivery is fast and we have an insiders program where you find out exactly what I'm doing with my own Investments thanks for making goldsilver.com your dealer and now back to the video we've got several different bank accounts uh one of them is at Bank


of America still and I just clicked on overview and savings and then rates and so here are their rates and it's the same for under twenty five hundred dollars to over twenty five hundred dollars uh it's 0.01 well point that this first digit here this is tenths of a percent the second digit is hundredths of a percent so it's one one hundredth of one percent and this is current as of today okay but if you if you're a platinum honors tier and higher you can get four one hundredths of one percent oh my gosh I


mean this probably has people beating down their doors to get these savings accounts or you can go into money market funds or certificates of deposit and you can get a lot higher rate where you're taking your currency and you're converting that into U.S treasuries basically and you get a lot higher rate but it's not the rate of inflation it's still below inflation so uh what she just said about savings going up I took a snapshot of this when I was writing my book and it's in a chapter


uh five I believe of the book no it's in chapter seven of the book and uh the the differences are just absolutely staggering when I was about 17 I think it was maybe 18. I had a certificate of deposit they paid 16.9 percent interest not one one hundredth of one percent uh so uh the interest rates and of savings did not go up necessarily so she is it is the uh inflation misinformation Foundation giving you these stats five spending or increased taxes and the broad idea is that there's less money


sloshing around to okay so governments can either cut spending or increase taxes I need to ask you a question has in your experience has the government ever cut spending in my experience no have they ever increased taxes yes that happens all of the time uh have they ever increased their amount of deficit spending spending where they don't have the tax revenue to cover it yes all the time that is exactly what is happening right now but there is always a price to be paid in the future spend things on now


let's think about eyesight and so you're going to have less currency she's mistakenly calling it money it has to store if it's money it's got to store a value and she's talking about inflation meaning the purchasing power of the currency is falling it's not storing value it is being stolen by the counterfeiters it's a little bit trickier but governments can still do something in some cases governments might have special reserves to lessen the damage think strategic oil reserves


but not all countries have these or okay I want to point out first that whoever is pouring this oil into this hole has terrible aim but second the Strategic oil reserves are for emergencies such as war or such as uh the OPEC doing another boycott and and freezing us out of all of that extra Supply it's it's to smooth the price in emergencies now they are using it to smooth the price out but because of some policy that they implemented that causes a shortage uh it's it's all government policy and then


trying to paper over it and it's very temporary it only benefits one Administration that will get to uh use up some of that reserves until it gets down to critical levels and then there will be an election and hopefully it's the next guy's problem or they're not large enough to have an impact the second thing governments can do in the longer term is create an environment that incentivizes businesses to produce more yes and all you have to do is get government out of the process the only


role for government here is to have only the absolute minimum regulations possible to keep businesses honest and keep them from committing you know you have to have laws and then businesses that break those laws have to get punished they can't get special treatment like you know when we've seen we've seen banks commit crimes and then they get a fine that is uh one-tenth or one one hundredth the size of the amount of profit that they made committing the crime so what's the best strategy commit


the crime again that there is also all of the currency that goes into lobbying to have the laws tilted in favor of certain businesses and and sectors and so government's responsibility is to create an absolutely Level Playing Field with Fair laws for everybody where nobody gets treated uh in a special way and then to make sure that they're not sticking their nose in where it doesn't belong you have laws that companies pay large fines for that are much larger than than the profits that they made and people go


to jail over if they are polluting or causing cancer or doing something really bad in the environment or cheating competitors or somehow creating a monopoly monopolies are almost always created by the government whenever you've got a monopoly they always try to increase their profits and the increased profits if you have a Level Playing Field other businesses will come in and lower the cost of that product or service that the that that one company had a monopoly on past tense Monopoly over with


so let's think about a competitive environment so you want to avoid situations where you have just one or a few firms setting prices in one industry so for example let's say that we live in a small town and there's just one pizza place that one pizza place could charge us whatever they wanted to to get those pizzas and here this is the only thing that she says during this whole thing that is is fairly correct she'll make another comment in a moment but I hope that that one pizza parlor charges a hundred


dollars per cheese pizza because watch how many businesses spring up right next door that are going to charge fifteen dollars or twenty dollars and either this pizza parlor lowers their price to compete and keep their customer base or they go out of business which they should if they continue charging a hundred dollars for a cheese pizza that firm is probably going to reduce its prices in order to keep its customers now stepping back the one thing that she got right reality sometimes we both have


too much demand and too little Supply too much demand is always solved by prices going up and she would call that inflation except they're going to come back down again because Supply gets increased because of the extra profit to be made in that particular business uh if if they try to solve this through manipulation of interest rates or manipulation of the currency Supply it always ends up in creating disequilibria between supply and demand and you create Bubbles and when those bubbles burst it's just the free market


trying to seek that equilibrium again but it always overshoots to the opposite side because they've caused the bubble to go into such an extreme area that it would not go into if the market was allowed to remain free so it's a balancing act and governments often use a mix of policies to help tame inflation the only policy they need is to keep their nose out of it so with that said I'm going to buy some lunch to tame my appetite please be sure to send all of your questions to ask an economist at


imf.org so send your questions to ask an economist at inflationmisinformation.org and I'm sorry inflation misinformationfoundation.org I want to thank you for watching I hope you found this entertaining thank you