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Finance: What is Inflation: Adjusted, Hyper, Currency, Commodity? 20 Views
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Description:
What is inflation, and if we poke it with a pin, will it pop?
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Transcript
- 00:00
finance a la shmoop what is inflation-adjusted hyper currency and
- 00:07
commodity no no no no no I said frozen concentrated orange juice right there
- 00:16
that's better commodities that's what this is frozen [milk shake]
- 00:20
concentrated orange juice yeah it's the same whether you buy it here at Uncle [canned orange juice]
- 00:25
cheapies fruit barn or from Amazon or from Safeway it's a total commodity and [barn, Amazon website, Safeway building]
Full Transcript
- 00:30
when inflation hits the fan yeah like that then commodity prices are usually [inflation hits ceiling fan]
- 00:36
the first to react commodities you know things like oil and electricity and [oil ships, light bulbs]
- 00:40
roundup weed killer and the price of generic picture frames on Amazon you [weed killer, picture frames on Amazon]
- 00:45
know those things all right well why does commodity pricing even matter well
- 00:49
let's talk about inflation for a sec inflation measures the rate at which
- 00:52
prices of goods and services are rising and they generally rise over time the
- 00:58
greater the level of inflation the lower the purchasing power of your currency
- 01:03
well in a world of inflation taking off going up up up and the Fed raising rates [house floating up with balloons]
- 01:08
hoping to tamp it down down down well equities or stocks and debt or bonds [house floating down]
- 01:14
will get crushed while commodities should just keep going on up up up in [air balloons rising]
- 01:18
lockstep with inflation rates because they're basically a store of cash and
- 01:22
you can turn them into cash so quickly and they don't really change that way in
- 01:25
essence commodities are a good balance to an investment portfolio highly
- 01:29
exposed to oh say the stock market well what else acts this way real estate yeah
- 01:34
it's kind of a commodity or at least it behaves like one in the grips of [air balloons rising]
- 01:37
inflation oil yep gold yep what about currencies commodity well yes and no [oil rig, gold ingots, paper money]
- 01:43
currencies react to other currencies generally on a relative basis but they
- 01:48
behave very much like commodities so then if you turbocharged inflation well [different world currencies]
- 01:53
yes you get then hyperinflation in most times the US dollar has been considered [house rocketing out of orbit]
- 01:58
a relatively stable bet like think Latin American debt in a historical frame that
- 02:03
is the countries were swimming in debt payable in their own currency in the [world map]
- 02:08
1980s and much to the chagrin of the Western countries who loaned them [bags of money in western countries]
- 02:12
billions and billions of dollars those latin-american countries decided to run
- 02:16
the Xerox machine all through the night and weekend printing more and more money [money being printed]
- 02:20
so hyperinflation would be created and the 18 kajillion dollars owed by
- 02:25
Venezuela would feel instead like only a few million bucks to that country and
- 02:29
while the West learned a big lesson about loaning people
- 02:33
irresponsible with her own currency oh and there was that other little one
- 02:37
lesson that the West learned about punitive war reparation rules check out [world map]
- 02:42
1930s vimar germany's hyperinflation currency issues this wheelbarrow full of [wheelbarrow full of money]
- 02:47
german marks yeah at the time this picture was taken it bought a loaf of
- 02:51
bread and only like two glasses of juice juice juice [two orange jews turn into orange juice]
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