What gives a dollar bill its value? - Doug Levinson

The value of money is determined by how much (or how little) of it is in circulation. But who makes that decision, and how does their choice affect the economy at large? Doug Levinson takes a trip into the United States Federal Reserve, examining how the people who work there aim to balance the value of the dollar to prevent inflation or deflation.

Lesson by Doug Levinson, animation by Qa'ed Mai.

[Riggsnic_co]

Our economy struggling with uncertainties, housing issues, foreclosures, global fluctuations, and pandemic aftermath, causing instability. Rising inflation, sluggish growth, and trade disruptions need urgent attention from all sectors to restore stability and stimulate growth.

[sdrtyrtyrtyuty]

LOL they allowed him to finish burning the bill in jail.

[turquoiz_the_potato]

"Hey I just sold my company"
"What did you get out of it?"
"a million pieces of paper!"

[oneiljerry]

Investing early can greatly increase the potential for long-term growth. According to a recent study by Vanguard, if an individual invests just $3, 000 at age 25, they could have over $500, 000 by age 65.

[elvismark]

Even if bond yields are increasing and stock prices are falling, the markets continue to have doubts about the Federal Reserve's commitment to sticking to its strategy to raise interest rates until inflation is under control. What is the best way to profit from the present bear market while I'm still weighing my options on the sale of my $401, 000 worth of stocks?

[johnandan]

Here is an easier example of why currency is the medium for trade:

Person A and Person B produces two types of goods. Person A has cows and regularly milks them so he ends up with a lot of milk. person B on the other hand produces cheese but needs milk in order to produce them. Since he doesn't have any goods yet he tells person A if he could have some milk and in return he will give him a portion of the cheese he's made. Person A sees the merit as producing his milk is a lot easier then producing cheese but he thinks person B will forget or pretend to forget that he owes him cheese so he ask for person B to give him some kind of insurance to pay him back. So person B takes a piece of paper and signs his name on it and says to person A that for every piece of paper I give you, I will give you a wheel of cheese. Months later person A needs a wheel of cheese to make his food a little bit more tasteful so he goes to person B and asks him for a wheel of cheese and since person B was given milk he was able to produce 2 wheels of cheese, so he gladly takes the piece of paper he signed and gave to person A before hand and traded it for a wheel of cheese. Person B who wants to produce more cheese now needed more milk but since he doesn't have another wheel to trade since he needs the cheese he has right now for himself, he gives person A the piece of paper back so he could trade it for cheese at a later date. Person A who just claimed his cheese takes the piece of paper back again since he now knows Person B does not go back on his promise.

Now the piece of paper that is signed now has a value: A wheel of cheese. So as you can see the signed piece of paper represented the dollar bill. Money is rooted from debt owing because all goods and services cannot be produced at the same time, but given value by all the goods it can be traded for.

[BrandonsWisdomResort]

At the end of the day, its all a game. Like literally a game. We just need to know how to play this game. And they don't teach it in school either. Which in turn, makes it a game, inside a game....I hope y'all get it.

[alisonadamsky]

I have learnt so much through the internet than I did in school

[AViONCreativeLab]

Here's how I can explain it in the most simplest form... If money grew on trees, money would be as valuable as LEAVES. Hope that helps. :)

[weme]

It was funny when the man was throwing money like a ninja

[normanoro]

Well put. This is a really nice introduction to the nature of currency. I've never worked at the Federal Reserve Bank, but it has one of the most interesting (and difficult) jobs in the federal government.

[juanjesusmorenoperez]

I think this is a very helpful video for non-economists and specialists.

[Heritagepostfarms]

The only thing that makes money have value, is the fact that everyone BELIEVES that money has value.

[cloroxbleach]

"The government is the biggest counterfeiter of money" - someone in youtube comments who I don't remember

[josejesusvillanunez]

It's an excellent introduction to economic science. There are many people interested in understanding economics, and more economists are necesary to share these topics.

[angiemarrufo]

the FED acts as an arbiter, intervening in any of the foreseen crises

[timothyrosales]

Funny how he talks about how the Federal Reserve controls very "delicately" how much money there is in supply. He conveniently forgot to mention that in 2009 the Federal Reserve printed over $2 trillion and went to foreign banks. And when questioned about it from Congress they basically gave no answer and stated they didn't need to tell Congress. how's that for transparency?

[nodinitiative]

Power resides where one believes it resides, same goes with money. As long as people believe it has value, it has power.

So yeah, just transfer me your useless money to my bank account so I could show you how stupid money actually is, don't worry, not a scam.

[cgme]

It’s kind of sad how many of us didn’t fully understand this already.

[instinctively_awesome]

Inflation begins when dollars are printed. Printed dollars are a data input to the CPI. The CPI print is the feedback loop from printed dollars. Keynesians have been trying for decades to print dollars to create inflation-used as a signal to show the stimulus is working. Then before inflation gets entrenched, deflate by destroying printed dollars. The problem here is the Fed didn’t remove the dollars it printed to stimulate. So the higher prices are here to stay for a while. The dollar strength is transitory. You will see a weak dollar once those bonds the fed has on its balance sheet become difficult to sell as higher yielding assets will be more desirable to investors.