All language subtitles for 3_fodase111asdasdsad

going to be getting more in
detail into the bond market

going to be getting into soon
as well but anyways guys take

bit difficult to grasp at
first. Hence why I always

are reserve requirements set by
the Fed. As a result reserve

levels affect the interest rate
banks charge customers which

from the reserve itself so from
the Fed and of course this

actually wants this to happen
because they want more banks to

The rest of the 90% of the
money is traded and loaned to

thing you must understand and
not sure if many of you know

time. So the amount of money
the amount of bank reserves

obviously influencing
inflation. Now this might be a

influences the entire country's
willingliness to spend

this but that banks actually
loan money from themselves to

another bank and of course vice
versa. They usually the Fed

controls how much they have to
keep it in the bank at the

Second way is they set interest
rates and the third way is they

essentially it's just in three
simple ways they buy bonds.

of money actually live with
them and the Fed actually

So that's just you can say the
local you know reserve bank the

district federal reserve banks
to maintain there require there

recommend to do some further
reading on this. But

the bank and everyone at that
day wanted to you know withdraw

course if you went to a bank
and you had a million pounds in

the economy can flow as it
should. But any of these guys

always refer back to this
monetary policies as perhaps

especially the reserve
requirements that we're called

fundamentals that you must
understand so yeah we're

one of the most important
things in in macroeconomic

way in which they transfer
money bank to bank. Um so of

be trading with each other
rather than getting their money

could be 10% and obviously it
fluctuates from time to time.

rate it's called and then other
ones would have higher rates.

keeps economic stimulation
between them all and of course

it's linked to something called
the Fed's fund rate which we're

other banks through the
district federal reserve banks.

all of their money the banks
have to have a certain amount

of money they must have on hand
for customers. For example this

establish reserve requirements
for the banks. Because One

they loan out or borrow from
FRBs which we just said

The third way is through
establishing reserve

affects a short term interest
rates because of the amount

requirements. So basically it's
telling banks what requirement

So this is the second way in
which monetary policies work.

what that is is banks they lend
money to each other overnight

banks with better credit
ratings. A cheaper discount

This has an effect on the
so-called discount rate. Now

because they've got to keep
certain reserves in in their

banks. And certain like the Fed
for example they would give

explain this further as as
banks as the central bank

increase or the Fed increases
or decreases interest rates.

through treasury bonds the
second way is through certain

Banks with worse reputations
borrow at higher rates. So to

that the Fed actually controls
their bond purchases is they go

interest on that so imagine if
you have 100, 000 and the the

to securities dealers they're
called and it's an it's the

interest rates or the discount
rate. Now banks with good

by the Fed purchasing
treasuries from securities

purchases the bonds from them
so that they would repay that

the open market operations. So
that increases money supplied

dealers. So the way that works
is we're going to get into

other investors around the
world and the Fed actually

first one is in buying and and
selling treasury bonds through

bonds very soon as well. But as
a precursor to that the way

credit ratings pay an overnight
loan called the discount rate.

loan in the future and that's
how they increase money supply

higher interest rate interest
rates promote people to keep

market is at the moment this is
probably your best bet hence

paid.

why people usually are
encouraged to keep cash in

expansionary what happens
during contractionary so in

So in what ways are monetary
policies sort of active? So the

attractive as before because
it's too much interest to be

prevents spending on the
economy and loans are not as

open market so it could be you
could be you know loads of

bank is offering you let's just
say 2% on that a year now it

might seem it might seem low
but compared to how risky the

their cash and store it in the
banks because they gain an

there with themselves and of
course money in the banks it

the risk on and risk off
environment what happens during

the time where not many people
are spending not many people

have jobs at the time
contractionary times is usually

before so of course you can
expect less people to actually

are investing and this is where
you've got to start thinking of

increases. Now contractionary
policies this it slows the

activity and of course as a
result of this inflation

growth of the economy and
reduces economic activity. So

there's higher unemployment
businesses aren't as active as

what you you can expect I put
so less yeah so less employment

spending going on, lots of
loans, too much business

supply is very high in the
economy. There's a lot of

there's too much inflation
because money supplies M2 money

post all of the recession and
the slowdown and it's when the

economy is starting to get back
to how it was. There's too

they keep close to zero
percent. Now in terms of

borrowing, obviously investment
and then consumer spending and

the way they do this is mainly
through interest rates which

very low as well. Unemployment
is high. So now increase in

is you know very slow they they
need things to pick up. GDP is

supply, money supplies
increased to boost the

slowdown. Expansionary expands
the economy, increase in

are inputted into the system
during a recession or a

economic activity. So what can
you expect during a recession

and then you've got
contractionary so the first one

or a slowdown as we know from
the economic cycle. Everything

reference to taxes and
obviously that affects the

differentiate before we get in
fiscal policies is mainly in

inside the economy so to truly
break down monetary policies

contractionary it's a time of
very high inflation. So this is

What it is is during
expansionary monetary policies

you've got two types you've got
expansionary monetary policies

borrowing and spending of the
economy and all the consumers

there's going to be a video
next for that but just to

such as their bond system as
well and their asset purchases

the first set of videos. Um
it's essential banks that

but that's all something that
we'll get into soon. Um in

actually drive are the drivers
of the economy and they're

percent. Now it's as we know
from our first introduction in

policies and there's fiscal
policies fiscal policies

decrease interest rates and
that's what you call monetary

policies. There's a few other
parts to it as well such as

terms of policies there's two
main types there's monetary

they're the guys that you know
increase interest rates,

just talked about is to keep a
steady economy with a two%

inflation target and
unemployment below five

supply and achieve
macroeconomic goals that

So everyone, welcome to the
next video. So in this one

undertaken by a nation's
central bank to control money

So what are monetary policies?
They refer to the actions

we're going to be looking at
monetary policies.

promote sustainable economic
growth. So the goal that we've

care and I'll see you in the
next video.