We Are Living Through The Scariest Economic Experiment In History Right Now...And No One Knows It

many countries around the world have on paper seemingly recovered from the economic collapse that occurred last year unemployment rates are getting closer to normal the number of business bankruptcies has hit a two-year low and the stock market is at an all-time high on the surface this seems pretty good but in reality we are actually going through the biggest and scariest economic experiment in history an experiment which could help bring us into a golden age of a new kind of economy or it could bring us into a new dark age that the world has never seen before in the 7th century in china copper coins were used as the main currency for chinese merchants but these merchants at the time began running into a problem you see these coins were quite heavy and a lot of them could be used for a single transaction and that could be quite an inconvenience for merchants wanting to carry around these coins around a city so to combat this problem chinese merchants came up with an idea what if they just deposited these heavy coins with a person or business and receive a piece of paper called a promissory note or banknote in return you see this way the merchants would not have to carry around large amounts of heavy coins all day and they could be safely stored at a single location win-win and thus the primitive form of paper money and fiat currency who was born later on this was implemented throughout the entire currency system of china and after a few centuries of using this new type of currency system the chinese government noticed something strange you see a copper shortage caused the government to issue more of these promissory notes and less copper coins during this time the government saw a massive boost to its economy allowing for the government to spend more on things like military and infrastructure and so after noticing this they ran an economic experiment that would become very important to what we are experiencing today you see the chinese government declared that their new form of fiat or paper currency was considered a public monopoly owned solely by the government so this allowed the ancient chinese government to completely control its own currency for the first time and for a couple hundred years the government's ability to print money on command and control inflation worked pretty well but little did they know a global threat was emerging out of central asia that would change the course of history a man named temujin had recently united the mongol tribes in the year 1206 and soon after became known as genghis khan he soon launched the largest military conquest in human history with his successors eventually taking over china and forming the yuan dynasty in 1271 and during the yuan dynasty the newly formed chinese mongol government wanted to keep spending government money to further fund their conquests but instead of limiting their spending or worrying about their government debt they decided to just manufacture more and more paper money in order to fund their military campaigns they figured that because they were the government and had a public monopoly on its currency they could do whatever they wanted with little or no repercussions so they essentially revamped their paper money turned it into officially the world's first fiat currency and started running their empire on a completely new economic theory for a little while it worked but after years of war in japan vietnam burma and java and after years of ignoring debt and inflation the economy of the yuan dynasty began to collapse inflation rose to 80 percent in the early 1300s there was a severe debt crisis the population became impoverished within the span of about five years and the government's theory on how printing money could solve their economic problems came crashing down and it was this economic downfall combined with the government's inability to help its people after several natural disasters that led to the collapse of the yuan dynasty in 1370 and now that brings us to today you see as we all know governments from around the world have compiled record levels of debt in order to keep their economies afloat during this pandemic they've also printed money at not only record levels for modern history but levels that are very comparable to that of what the yuan dynasty did in the early 1300s and the reason why the governments are doing this is very similar there was a big event which caused governments to spend a lot more money than they should and ignore debt and so far this strategy has worked just like it did for the yuan dynasty and we haven't really seen any immediate impacts of having added 40 percent to the world's money supply within the last 13 months and that leads us to what some are calling modern monetary theory i'm going to simplify this a ton but essentially what some economists are saying is that as long as a country owns its currency as a public monopoly which pretty much every country that has its own currency does it can operate like a public monopoly and print as much money as necessary in order to avoid an economic collapse in a sense the government is no longer constrained by tax revenue or deficits as long as it can print the right amount of money it can avoid big economic hiccups now again i should say modern monetary theory is a very complicated topic and i simplified it to a great great extent but regardless we are living through arguably the most dangerous economic experiment in history right now and no one really knows it and there are only two outcomes one of which is that the money supply becomes tightly controlled by the world's governments and the economies around the world adapt to this new monetary theory and this has worked a few times think of japan think of italy countries that have tons of debt yet never went through a true economic collapse but another outcome is that this monetary experiment fails and we enter a global economic collapse where currencies become essentially worthless now here is the big question i mentioned earlier how 40 of the world's money supply was created within the last 13 months yet inflation has only increased from about 0.1 percent to just about 1.8 percent so that brings up the question why hasn't inflation gone through the roof already well there are a few reasons one of which is that inflation peaks during full employment and when businesses are allowed to operate at full capacity and the world is just not at that point yet i mean there are still many places around the world that are still in hard lockdowns but arguably the biggest and scariest reason is this something i talked about last year which i call the economic waterfall in a sense every single economic collapse in history is not an event that occurs within a few weeks or months it is usually a process that takes years and then after several years there is a dramatic and sharp drop-off of the waterfall there are a lot of prolific economists and investors that see our current economic trajectory as being similar to that of germany in the 1920s for example michael bury who has correctly predicted and profited off of the last three economic collapses during the tech bubble in the 90s the financial crisis in 2008 and this pandemic well he has been ringing the warning bell for an inflation crisis since february this year he essentially has been stating that inflation crises are typically preceded by an economic or stock market boom and a spike in overnight fortunes and then eventually it is followed by civil unrest and then an increase in crime a high cost of living and ultimately poverty and after saying that one can't help but draw parallels to what's happening today with what happened to germany in the 1920s you see immediately after world war 1 germany began printing more money to help pay for its government debts after the first year the german merc was relatively healthy in fact many citizens noticed that they had a little extra cash on hand and started investing in the stock market a year later we saw the german mark go through a high level of inflation which caused a lot of economic problems but the currency itself did not collapse and stayed relatively steady for another two years but as debts piled up more deficits were ignored and more a currency was created the system finally began to break in 1922 and eventually caused severe hyperinflation and a complete economic collapse in 1923. now let's think about that for a second it took five years for germany to experience an economic collapse after it started overprinting its currency now i am not saying that we will go through the exact same predicament this time around but we would be foolish to think that something like that is not a possibility at least here is something else to think about there is a very real possibility that our generation may have lived through a golden age since the 1950s an age where we went from having the average person in the world be in severe poverty with no electricity a high disease burden and a multitude of other things to today where we have less than six percent of the world living in severe poverty and the average person in the world has access to adequate electricity hygiene medical care and a bunch of other things i mean we might look back at this year in the next several decades as the year that our golden age of economics ended thanks to the collapse of a currency similar to what happened to the yen dynasty similar to what happened to the roman empire and similar to what happened to germany or we could just enter a new period like japan where we enter a lost decade where the economy doesn't collapse but it still kind of chugs along with a new theory of economics or lastly maybe this is the start of a new golden age where modern monetary theory actually does work and we are able to rewrite the rules of economics but just know that at the end of the day those who do not study history are doomed to repeat it and the last thing that i'd like to say is that i am launching my second youtube channel where i just essentially rant about economics finance investing in business in a much more humorous and fun way than i do here on this channel and so i just have like a couple videos there and i will leave a link down below for that anyways please hit that subscribe button and that notification bell and please click on my next video in this playlist and i will see you guys well in my next video in just a few seconds

Channel: Jack Chapple

Views: 1,907,431

Rating: 4.8267827 out of 5

Keywords: Jack, Chapple, economics, economics 101, economic collapse, canada economy, usa economy, china economy, Yuan Dynasty, Genghis Khan, Currency, hyperinflation, germany, currency inflation, yuan dynasty history, fall of rome, germany 1920s, video essay, documentary, economics documentary, stock market collapse, real estate collapse, stock market bubble, real estate bubble, everything bubble, modern monetary theory, print money, federal reserve, printing money, stimulus, finance, money

Id: ddgxidI-X74

Length: 11min 13sec (673 seconds)

Published: Mon Apr 05 2021

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