Recession, Hyperinflation, and Stagflation: Crash Course Economics #13

If you're ever put in charge of a national economy, there are a few things you should try to avoid. Before you laugh, just remember, you COULD be in charge of an economy someday. Someone has to do it, and anyway, if it could happen to Alan Greenspan, it could happen to you, too. The first thing you're going to want to avoid is hyperinflation. Don't print too much money, okay? Actually, it's a little more complicated than that. Jacob and Adriene will explain. You're also going to want to stay away from recessions, and especially depressions. In the world as it exists today, continued growth is the only path to viability. While some argue for sustainability or even controlled recession, you're not going to keep a job as head of central bank thinking like that in this day and age. Also, avoid stagflation, which is a stagnant, no-growth economy combined with inflation. It's just the worst. Don't do it. All this and more on this week's Crash Course Economics.

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[JasonTodd]

I used to watch these for fun as a teen, no idea I'd be watching in 2022 to prepare myself to dive into understanding a current recession 💀

[kawgrath]

Ayyyy who’s watching this during the economic crash 2020

[kffjmcu]

*Main outtakes of this lesson*
1) *Hyperinflation* - when a country experiences a monthly inflation rate of over 50% or around 13, 000% annual inflation.
a. Extreme inflation also forces people to _spend as quickly as possible_ rather than save of lend, so there is no money available to fund new businesses. And all that uncertainty _limits foreign investment and trade_.
b. The more money you print, the more inflation you get.
c. Economists call the number of times a dollar is spent per year a _velocity of money_. When people spend their money as quickly as they get it, that _increases velocity_, which pushes inflation up even faster.
2) *Depression*.
a. After the initial crash in 1929 the federal reserve _dropped interest rates to zero_, output and prices fell, and regular people started to expect further price declines. Unemployment rose to _25%_ and the average family income dropped by around _40%_.
3) *Stagflation* - when output slows down or stops, or stagnates at the same time that prices rise. _Stagnant economy + inflation_ = stagflation.
a. The FED tried to address this by _boosting the money supply_ and _cutting interest rates_, but output couldn't rise much because of low productivity and the oil shortage. So all that extra money _just triggered inflation_.

[SorFig]

As a Zimbabwean myself, this is a pretty good summary of what was going on at the time. We actually sell posters now with laminated prints of all the old denomination notes we used to have. Good times, good times (irl, it was actually pretty sucky).

[ivanclark]

I thought stagflation was when there's too many male deer, thus devaluing the buck.

[mrgallbladder]

Jacob, please squint your eyes a little bit and blink once in a while. I feel like you are staring into my soul.

[Rosey]

"Anytime you have to express your inflation rate using scientific notation, that's a bad thing."

[vaibhavgupta]

I'll buy that zucchini she was selling last time for 100 trillion Zimbabwe Dollars..

[biscoitor]

recession is when your neighbor loses his job, depression is when you lose yours.

[sedthh]

my grandmother used to tell us stories about the hyperinflation in Hungary they mention in the video

she told us that whenever they got any money they had to spend it and buy things becuase it would not worth anything tomorrow

"if you had the money to buy a cow, you should have bought one on the spot because next day all you could buy with that amount of money is a stray cat"

as a kid I couldn't really get my head around this, I was like "how is that bad, who would not want a cat?"

[BryantMitchell]

I just noticed Jacob's belt buckle at the end of this video

[vladabuba]

I lived through hyper inflation in Serbia in 1993. We had paper note in denomination of 500 billion dinars. That is 500.000.000.000 dinars.
From first hand I have to say that I was not happy nor glad that I had to live through it and experience it.

[Warhawk]

my favorite crash course is astronomy. I never thought I'd like economics; I never showed interest in it when I was in school. But this stuff is very informative and I enjoy this crash course a lot!

[DanThePropMan]

Thanks for explaining the impact of expectations of higher prices on (hyper)inflation. I never quite understood how inflation was allowed to happen in Weimar Germany or Zimbabwe, but that's because I had been thinking about it as if it were entirely the result of the government printing far too much money, which seemed easy - and obvious - to avoid.

[daeunpark]

NOTICE THAT JACOB ALMOST NEVER BLINKS HIS EYES WHEN HE'S TALKING

[ayotanmiwaa]

Wow these guys are amazing. I'm in this thing called model UN and i have Venezuela this year (2019) and its very very crazy there now and i was soo confused and i felt like i wasn't going to do a good job. But this video dramatically helped me in understanding what is happening in my country and how i can help it. Thank you Guys soooo much!!!

[trustme]

Who's here cuz of the coronavirus?

I came here in august 2022, trying to understand what’s an stagflation

[otaku-jlpt]

That pokemon reference at 6:43 tho "consumer used bind on central bank, its super effective"

[ceskaKD]

Could u please put the subtitles on all of ur videos? So my students could catch up of what u saying. Cause u speaks soo fast and English isn't our first language. Thank u.