What is Inflation?

Economists constantly refer to inflation and tend to suggest it is a Very Bad Thing. But why exactly, where does it come from and what could one do to tame it? Please subscribe here: http://tinyurl.com/o28mut7
If you like our films take a look at our shop (we ship worldwide): http://www.theschooloflife.com/shop/all/

Brought to you by http://www.theschooloflife.com

Produced in collaboration with Vale Productions
http://www.valeproductions.co.uk

Music
Lanquidity by http://www.purple-planet.com #TheSchoolOfLife

100+ komento:

Lucy's Corsetry
Lucy's Corsetry:
8 minutes and I'm immediately prompted to invest in property or gold instead of simply holding onto cash.
Jose Díaz
Jose Díaz:
Inflation is treated like a technical term for economics... but it's a naturally occurring event in everything we do.

....Like when a friend asks you a favor and you do it gladly, but then your friend starts assuming you never have anything better to do and asks too many favors, so you have to VALUE your time more, and saying "no" every now and then.
...Or like people that compliment everything too much, even if it's not compliment-worthy, that person's compliments start losing value, aka deflation.

Inflation exist because it's part of nature, not a part of money. Economics are not money concepts, they're life concepts. Money is nothing but a universal intermediary, a tool that unites disciplines.
DeadCanDance
DeadCanDance:
“learning to live with inflation belongs to wisdom” lol say that to venezuelans and their 1.000.000% inflation growth per month
Jack Shephard
Jack Shephard:
"governments track inflation obsessively"
lol governments create inflation obsessively
syluar
syluar:
That feeling when you're not sure if it's School of Life or Kurzgesagt videos you've tuned in to.
Lua Veli
Lua Veli:
I once read a book of Japanese Legends as a kid. There were these words of a Japanese philosopher Muro Kyuso ( 1658- 1734 ,  neo-Confucianist guy ) who was saying that a real Samurai in the good old days was supposed to "avoid"  knowing anything about commerce at all. Even to mention the "price" of something would be a great shame, something dirty. If a Samurai walked through a market place, he would better pass by all that very fast and not buy anything if possible!They were taught that in this game of trade, the one who wins indeed loses and the peace in his soul leaves him too...
Well, back then I liked this very much, I found the idea very noble. Besides we didn't have any money, so it was very convenient to adapt a Samurai attitude:-)  But I realise that probably that's why I have never read a single book about economy in my life! Of course it is a shame, and I will catch up.

But this often happens in life: you close a door for some reason, it can be a very naive, childish reason, or it can be based on a fear or on your pride.   And  years later when you have already forgotten the door and the reason, something reminds you all that again and it makes you think that may be it was not a clever decision to leave it there. Because learning about everything that has an influence on our lives is a wiser approach in the end.

So thanks a lot for this video. I am also glad that even you say that it is complicated. So I don't feel alone:-) I will watch it again.
The Manifold Curiosity
The Manifold Curiosity:
This is helpful, now I would really love a whole series on economics. I can get my head around philosophy and politics with relative ease but most financial ideas elude me. I mean, what even is currency??
(that sounds kind of philosophical now that I think about it)
xplodnow
xplodnow:
Who is here after the Fed announced they gonna be printing 2 trillion dollars for the stimulus package due to Corona?
Youp
Youp:
Because production steadily becomes more efficient, products become cheaper. The undisturbed monetary status is deflation. This is a good thing because we all slowly get richer. There is no need to invest your money in the financial markets (with all the risks involved) in order to protect yourself against inflation or to save for your pension. Inflation is always the consequence of some form of interference, usually by governments; be it by importing huge amounts of gold and silver from South America as the Spanish did, or be it through economic policy as we currently have. 

If the amount of money in circulation is constant then the generic price level can only rise when less goods are around that need to be priced, meaning when the economy falls. When the economy stays flat, some prices can rise (due to shortages) but others must fall. It is not possible to grow an economy by increasing the amount of money in circulation. If that were possible we would all be very rich and poverty would no longer exist. What happens in the mentioned 'window of opportunity' is that new money is spread unevenly through society. Those who receive it first, banks and governments, can profit of the full purchasing power of it. Those who receive it last, people on fixed income like pensioners or welfare receivers, are the losers of this great redistribution scheme. It's an injustice.

And, as already has been stated, most money is created in the form of credit through fractional reserve banking. This is also the cause of the so called boom-bust cycle or credit cycle as all the credit created has to go somewhere, real estate, government bonds or Internet shares. After a while the bubble inevitably has to burst; the loans cannot be paid back, companies go bankrupt, banks get in trouble and the total amount of money and credit in circulation drops. This is what we call an economic crisis. It is man made and the consequence of the effort to manage the economy.
Matt Klaus
Matt Klaus:
So basically it just comes down to greed.
Fishing InTheDeep
Fishing InTheDeep:
Sees inflation master 3000
Immediately thinks of I love you 3000
Anirudh Garg
Anirudh Garg:
I need to buy some gold
E M
E M:
I still don’t get it lol!
ketsan
ketsan:
Do Austrian Economics!
B Sim
B Sim:
4:18

keynes was never an advocate for inflationary policies
The Ulmitter
The Ulmitter:
Soooooooo, if Governments start taxing 90% of our income, then they can reduce inflation. Sounds like a plan.
Márton Tichi
Márton Tichi:
Yay I live in Hungary! Btw there is deflation here at the moment!
Casius CBU
Casius CBU:
inflation are basically:
resource control
also means that influence control
sum:
current system dominance based
workaround:
digital currency backed
thorough report of inflationary movement in real time
simply.s
simply.s:
Love this! If you could do videos on stock markets, how they determine interest rates and currency exchange rates that would be great. I never understand it and most people I ask dont either. Like why can you get a better exchange rate at one place in comparison to going to another. How does the economy even work!? These are things that, if you didnt take economics in school, you may never really know.
Kohoto Takemori
Kohoto Takemori:
6:54 *Communism intensify "you cant lose control over something if you already remove it"
CGB Gaming
CGB Gaming:
A: Where a country collapses and has to pay loads of money for stuff
B: Venezuela
sl1ckspurs
sl1ckspurs:
Right, I am off to buy some Jelly Beans with my savings!

On a serious note: great video author - keep up the good work.
Nicolaas Burgers
Nicolaas Burgers:
I know this is meant to be a quick video, but I would have thought that a mention of fractional reserve banking would be in order here, since it is the basis for how banks create money.  
Linked to this is the concept that essentially all money comes into existence through bank loans, which means someone somewhere has to pay interest on every dollar/pound/euro/etc in circulation.  The only way that is paid is for someone else to take out a bank loan, and so on.  At a national level, this drives an exponentially-increasing money supply.  Isn't this the main cause of inflation?
I'm no economist - happy to be corrected by any economists out there.
Samuel Lowery
Samuel Lowery:
You know how everyone wants Morgan Freeman to narrate their lives? I want this guy.
Hwshiar Jamal
Hwshiar Jamal:
I am in a medic school while listening to this video. All I know is that inflation is the bad boy I hope I am not wrong.
Trusty Steering Wheel Tray
Trusty Steering Wheel Tray:
0:44 "Governments track inflation obsessively, and try to keep it low."

That's actually not true, the central banks, which are *not* a part of the government, control money printing and 'fighting' inflation. Private banks are a private and un-elected entity that ultimately dictates the wellbeing of the world. It's scary because they can't be audited, so everything they do is hidden from the public and the government.

2:40 "Everyone loves tax breaks, because they raise disposable income. But in the longer term, raising demand also causes price rises"

False. Price rises are more often than not caused by heavier money printing, and nothing more. This is Keynesian nonsense to suggest that in a perfect, debt-free economy that tax breaks 'somehow' raise prices. If anything, that would lower prices because that would mean more more productivity, more goods, and therefore lower prices.
Jeremy Benson
Jeremy Benson:
Well in 8 minutes you covered what my high school economics teacher couldn't do in 2 years. He preferred to tell us of how well his investment properties were doing, bless him.
GreenSunshine95
GreenSunshine95:
This was such a pleasure to watch!
Nate Peace
Nate Peace:
So beautiful. Well done. I wanted to learn about inflation and my goodness. I’m wondering what program did you use for animation and editing?
The WhiteTrashPanda
The WhiteTrashPanda:
"Governments try to keep inflation low"...
But do they really?
Максимилиан Шаффер
Максимилиан Шаффер:
Meanwhile in the Federal Reserve
Jonathan Q
Jonathan Q:
Well when you take the dollar off the gold standard, your currency becomes just paper
So of course there is major inflation around the world
All of it is fiat currency just based on faith
Tin Nguyen
Tin Nguyen:
Thank you so much for this useful data! Greatly appreciated.
samslick90
samslick90:
A government mint  prints a stack of cash.
How does this cash reach the public to spend?
Mohammed Asadi
Mohammed Asadi:
Amazing video, I just love school of life !
Cassie Tina
Cassie Tina:
Damn this was an amazing video !!!! I really loved how this was explained and detailed i was glued to the screen. Love it
David Esposito
David Esposito:
I suggest watching Stephanie keltons videos on modern monetary theory, it blows your mind and MMT gets at inflation better than any other actual theory.
Acumens
Acumens:
Inflation = I HAVE ALLOT OF MONEY AND I CANT BUY ENOUGH
Jose Angel
Jose Angel:
Thanks! Now I'm even more scared of the future.
Rohit Kumar
Rohit Kumar:
Fantastic. I am teaching a class on macroeconomics, and this is such a great video to introduce the concept! Thank you :)
Bodi Erdene
Bodi Erdene:
Thank you for the amazing simple lesson!
Gabriele Persello
Gabriele Persello:
but the more money you have available (printing it out).......more goods can be produced.......so theoretically prices won't rise up !! because offer and demand levels won't change!
Coleen Deanne
Coleen Deanne:
I need more videos about economics please!!! I need help!!!
plartoo
plartoo:
I somehow thought I was watching a Ted-Ed video. :) Nicely done, the School of Life!
Saidz
Saidz:
would also love more economics videos, this was great
Le Dju
Le Dju:
This must have been one of the best YouTube videos I’ve ever seen, thanks :)
Victor Asack
Victor Asack:
You forgot the main reason for inflation: GREED
The Truth
The Truth:
Beautifully done, I appreciate and will pass as a subject to my kid. RK
Milkdromeda
Milkdromeda:
Can you do video on self advocacy? I would like to learn how to voice my opinion without negative bias.
uXk08
uXk08:
@***** Hey guys, great video. Informative and watchable as always. I really enjoyed the music, could you send a link to it? Thanks!
TheGadsdenGuru
TheGadsdenGuru:
when the Federal Reserve prints money and steals your savings.


"cutting taxes will help the rich and case inflation"
what socialist drugs are you on?
Ryan Kelly
Ryan Kelly:
This was a great and very informative video, but I could have done without that background track. I felt like I was getting a massage and someone should light a scented candle.
Damaso Rodriguez
Damaso Rodriguez:
Thank you so much for the videos!  I find them very informaticve and have integrated the lessons to my life.  I was wondering, could you please make one about the notion of Truth and why we place such a high emphasis and value on truth/honesty while having to lie on our every day lives to accomplish things, be it for individual reasons or for the greater good?  For instance, in the movie Interstellar, Cooper, the protagonist, is lied to so that he could volunteer for the one-way mission, but is nevertheless doing something for the greater good: saving the human race.  And the other angle to consider is the one about 'being lied to', why do we feel cheated, faulted, etc. when something like this occurs?  Is it the need to control/predict our environment?

Also, a video about Hitler would be interesting.  I'm not a Nazi but I think his ideas keep on resonating so much that it's helpful to study his thoughts.

I would really appreciate anything you have to say, it would be very valuable

Bests!
WiseSilverWolf
WiseSilverWolf:
House prices continue to rise every year as long as interest rates are low.
AMIT ROY
AMIT ROY:
Its amazing how a man made concept called Money got so convoluted that Man himself cannot control it any longer !
voiceofseasons
voiceofseasons:
7:08 this concept reminds me of Amtrak
Muskan Khan
Muskan Khan:
This really helped thank you.
Luis Cosme
Luis Cosme:
3:50 How is Government debt increased? How do banks make bigger loans on the same securities?
M3000A
M3000A:
Hello can anybody help me correcting this plz
"
A lot of countries have tried in search of into the causes of the
phenomenon of inflation and methods of treatment, and that their
ramifications of negative economic and social effects, in light of this
study it was to look at the impact of monetary and fiscal policy on
inflation in Algeria during the period (1990-2015), to begin to build
any empirical model, we studied permanently stationarity of time series
by ADF and PP, we found that all the variables series settle at first
difference I (1), when the joint integration test by ARDL model we found
that there is a Co-Integration between the variables of the study, the
study concluded that the impact of fiscal policy on inflation through
under budget larger than the effectiveness of monetary policy and that
its role was limited to the impact of the real exchange rate in the
short term, and it can be explained by the fact that inflation in
Algeria is not monetary inflation, but because structural and external
reasons. "
Maso Soup
Maso Soup:
Would it be a good idea to invest in property’s and how would you even begin to do that?
Anjunakitchen
Anjunakitchen:
This makes me want to play Sim City again as an early adult and finally understand all the economics. lol Also reminds me of exchange rates going up and down.
The Imaginative Sachin
The Imaginative Sachin:
wow this is so educational i am going to buy some silvers right now because i cant buy gold
Wicker Basket
Wicker Basket:
Wow, this is such a helpful video! I think it's a really great balance between specifics/big picture information. Thank you and I look forward to watching the rest of your channel now...
Alex Kenney
Alex Kenney:
Thank you for this post, very helpful in my procrastinated studies
Zuhail
Zuhail:
First video of your channel I've seen and I'm amazed how in such a short period of time you managed to speak coherently on Inflation and it's causes as well as you got me hooked too.
P.S. Sorry if I made a grammar mistake anywhere!
Kaza Nova
Kaza Nova:
Mr Alain de Botton produces very instructive and entertaining videos, I would like to congratulate you.
Sanjay Khaitan
Sanjay Khaitan:
8 minutes and I am prepared for my exam thank you so much
CANAL IMPACTO NEWS
CANAL IMPACTO NEWS:
In some one countries as Brazil, so that we earn 3 times we have to make work hard.
Jason C
Jason C:
That 'going wrong->growing->falling->failing' animation at 7:00 was beautiful!
Yinmengaifei Y
Yinmengaifei Y:
This is really nicely made mini-lecture. I wonder how can I do something animation like that, anyone can help me?
cenemoh 2002
cenemoh 2002:
It's not just something going wrong in the world, as the video suggest in the end, there is also the rapid growth in population which fuels consumption if goods, which causes, in turn, inflation!
Aditya Dubey
Aditya Dubey:
Only after the video ended I noticed the channel it was from...and throughout the video I wondered how come an economist have such a soothing and peaceful philosopher like voice.
Baldi Roblox
Baldi Roblox:
what you could do with 3.5$ in 1970: you can buy a whole meal and after that you can go to the cinema!
what you can do with 3.5$ now: it's not even enough for a big mac
rextony22
rextony22:
wow interesting stuff. and overwhelming too
Theo Serr
Theo Serr:
i'd like to congratulate you for a great video! you certainly made a brilliant clip on this one. it taught me things i have NEVER ever heard before in my life. all i ever thought before watching this clip is that the higher the purchasing power of the majority, the better the business and the growth of the nation's economy. it never occured to me that if everyone has the purchasing power of the same thing, that thing will increase its value (if the supply could not keep up with the demand) and thus purchasing power of the consumer class would have slightly diminish. that was such a great point! so thank you for that.

however when you enumerate only 3 reasons for inflation, it seems that this clip is much more firstworld-centric in context. can you also give us your say about developing countries that went bankrupt due to say, corrupt dictatorship that resulted in a dramatic increase in inflation? it was a bit frustrating that it was not covered because it is quite a very important point as well. a dictator for example can increase the country's inflation overnight. it will steal a nation's public coffers and the whole nation's gold reserves, ship it out of that country and deposit it to tax havens and banks like those in switzerland, pitcairns, singapore and monaco. (result: countries like the philippines, or indonesia becomes a poor country overnight while singapore and switzerland happily become wealthier for accepting these ill-gotten wealth from the kleptocrats but this is another topic altogether)
Imagination Creates Reality
Imagination Creates Reality:
All the respect for this cool video, #TheSchoolOfLife!
Fiati Yao Confidence
Fiati Yao Confidence:
this is really very interesting and also very educative.in fact, we want more of this.
Angeli Reyes
Angeli Reyes:
this really help for my report tomorrow thank u
George Clarence
George Clarence:
Short answer: inflation erodes the purchasing power of your money.
Short solution: buy real assets that get more scarce over time.
Babylon Central
Babylon Central:
Damn, so well made!!!
akuppa
akuppa:
Can you do more videos on economics please?
sooooooooDark
sooooooooDark:
0:48
no ;)
KL SC
KL SC:
my salary inrease 50 ringgit per year...
Road Hawk
Road Hawk:
Learning to live with inflation belongs to wisdom?
bingoberra18
bingoberra18:
Lovely! Will there also be a video of deflation? Best channel on youtube hands down!
Red _cliff
Red _cliff:
So if Inflation keeps down for a long time means that Im dreaming.
Zach
Zach:
Excellent video as always, and the music is so relaxing! Could I have a link to just the background song itself?
4478nick
4478nick:
No matter how hard The School of Life tries, economics will always be a mystery for me.
Floof
Floof:
Finally. Ive found the correct kind of inflation.
sujith t
sujith t:
That was an awesome presentation, how did u done this ?
Anugerah Erlaut
Anugerah Erlaut:
Can you make more videos on economy? I like the way you explain things :)
Adelie J
Adelie J:
His voice is from heaven
Hayat Muzain
Hayat Muzain:
very neat presentation, thank you!
Jean Rosario
Jean Rosario:
Thank you for making these videos! I learn a lot with them
Aisha
Aisha:
How can a video on Inflation be sooooo soothing??? 🤔😊🤔
Clearly and simply explained- thank you!
Chitranjan Baghi
Chitranjan Baghi:
Make a video on Austrian economics school of thought and their business cycle model.
Jonas Lundholm
Jonas Lundholm:
Do basic income! :)
Oliver Martin
Oliver Martin:
7:12 onwards is a great evaluation point if your answering a longer exam question to do with inflation
gmxgm
gmxgm:
that awkward moment when you wish there was an spanish version of this video to send the link to the goverment of your country so they don't fuck up the economy more than they usually do
Wandern
Wandern:
this is not the kind of inflation I was looking for