[Script Info]
Title: 
[Events]
Format: Layer, Start, End, Style, Name, MarginL, MarginR, MarginV, Effect, Text
Dialogue: 0,0:00:07.05,0:00:08.27,Default,,0000,0000,0000,,If you tried to pay for something
Dialogue: 0,0:00:08.27,0:00:09.44,Default,,0000,0000,0000,,with a piece of paper,
Dialogue: 0,0:00:09.44,0:00:11.37,Default,,0000,0000,0000,,you might run into some trouble.
Dialogue: 0,0:00:11.37,0:00:13.36,Default,,0000,0000,0000,,unless, of course, the piece of paper
Dialogue: 0,0:00:13.36,0:00:15.54,Default,,0000,0000,0000,,was a hundred dollar bill.
Dialogue: 0,0:00:15.54,0:00:17.13,Default,,0000,0000,0000,,But what is it that makes that bill
Dialogue: 0,0:00:17.13,0:00:19.06,Default,,0000,0000,0000,,so much more interesting and valuable
Dialogue: 0,0:00:19.06,0:00:21.06,Default,,0000,0000,0000,,than other pieces of paper?
Dialogue: 0,0:00:21.06,0:00:23.36,Default,,0000,0000,0000,,After all, there's not much you can do with it.
Dialogue: 0,0:00:23.36,0:00:25.08,Default,,0000,0000,0000,,You can't eat it.
Dialogue: 0,0:00:25.08,0:00:26.45,Default,,0000,0000,0000,,You can't build things with it.
Dialogue: 0,0:00:26.45,0:00:29.06,Default,,0000,0000,0000,,And burning it is actually illegal.
Dialogue: 0,0:00:29.06,0:00:31.10,Default,,0000,0000,0000,,So what's the big deal?
Dialogue: 0,0:00:31.10,0:00:33.03,Default,,0000,0000,0000,,Of course, you probably know the answer.
Dialogue: 0,0:00:33.03,0:00:35.07,Default,,0000,0000,0000,,A hundred dollar bill is printed by the government
Dialogue: 0,0:00:35.07,0:00:37.48,Default,,0000,0000,0000,,and designated as official currency,
Dialogue: 0,0:00:37.48,0:00:40.19,Default,,0000,0000,0000,,while other pieces of paper are not.
Dialogue: 0,0:00:40.19,0:00:42.36,Default,,0000,0000,0000,,But that's just what makes them legal.
Dialogue: 0,0:00:42.36,0:00:45.04,Default,,0000,0000,0000,,What makes a hundred dollar bill valuable, on the other hand,
Dialogue: 0,0:00:45.04,0:00:48.04,Default,,0000,0000,0000,,is how many or few of them are around.
Dialogue: 0,0:00:48.04,0:00:50.09,Default,,0000,0000,0000,,Throughout history, most currency,
Dialogue: 0,0:00:50.09,0:00:51.50,Default,,0000,0000,0000,,including the US dollar,
Dialogue: 0,0:00:51.50,0:00:53.52,Default,,0000,0000,0000,,was linked to valuable commodities
Dialogue: 0,0:00:53.52,0:00:55.38,Default,,0000,0000,0000,,and the amount of it in circulation
Dialogue: 0,0:00:55.38,0:00:58.67,Default,,0000,0000,0000,,depended on a government's gold or silver reserves.
Dialogue: 0,0:00:58.67,0:01:01.95,Default,,0000,0000,0000,,But after the US abolished this system in 1971,
Dialogue: 0,0:01:01.95,0:01:05.79,Default,,0000,0000,0000,,the dollar became what is known as fiat money,
Dialogue: 0,0:01:05.79,0:01:08.22,Default,,0000,0000,0000,,meaning not linked to any external resource
Dialogue: 0,0:01:08.22,0:01:11.18,Default,,0000,0000,0000,,but relying instead solely on government policy
Dialogue: 0,0:01:11.18,0:01:13.64,Default,,0000,0000,0000,,to decide how much currency to print.
Dialogue: 0,0:01:13.64,0:01:16.61,Default,,0000,0000,0000,,So which branch of our government sets this policy?
Dialogue: 0,0:01:16.61,0:01:19.60,Default,,0000,0000,0000,,The executive, the legislative, or the judicial?
Dialogue: 0,0:01:19.60,0:01:22.07,Default,,0000,0000,0000,,The surprising answer is, none of the above!
Dialogue: 0,0:01:22.07,0:01:24.62,Default,,0000,0000,0000,,In fact, monetary policy is set
Dialogue: 0,0:01:24.62,0:01:26.82,Default,,0000,0000,0000,,by an indepdent federal reserve system,
Dialogue: 0,0:01:26.82,0:01:28.58,Default,,0000,0000,0000,,or The Fed,
Dialogue: 0,0:01:28.58,0:01:30.70,Default,,0000,0000,0000,,made up of 12 regional banks
Dialogue: 0,0:01:30.70,0:01:32.62,Default,,0000,0000,0000,,in major cities around the country.
Dialogue: 0,0:01:32.62,0:01:33.95,Default,,0000,0000,0000,,Its board of governors,
Dialogue: 0,0:01:33.95,0:01:35.59,Default,,0000,0000,0000,,which is appointed by the President
Dialogue: 0,0:01:35.59,0:01:36.62,Default,,0000,0000,0000,,and confirmed by the Senate,
Dialogue: 0,0:01:36.62,0:01:38.12,Default,,0000,0000,0000,,reports to Congress,
Dialogue: 0,0:01:38.12,0:01:41.62,Default,,0000,0000,0000,,and all the Fed's profit goes into the US treasury.
Dialogue: 0,0:01:41.62,0:01:43.62,Default,,0000,0000,0000,,But to keep the Fed from being influenced
Dialogue: 0,0:01:43.62,0:01:45.79,Default,,0000,0000,0000,,by the day to day vissisitudes of politics,
Dialogue: 0,0:01:45.79,0:01:49.26,Default,,0000,0000,0000,,it is not under the direct control of any branch of government.
Dialogue: 0,0:01:49.26,0:01:50.98,Default,,0000,0000,0000,,So why doesn't the Fed just decide
Dialogue: 0,0:01:50.98,0:01:52.82,Default,,0000,0000,0000,,to print infinite hundred dollar bills
Dialogue: 0,0:01:52.82,0:01:53.62,Default,,0000,0000,0000,,to make everyone happy and rich?
Dialogue: 0,0:01:53.62,0:01:56.90,Default,,0000,0000,0000,,Well, because then the bills wouldn't be worth anything.
Dialogue: 0,0:01:56.90,0:01:59.02,Default,,0000,0000,0000,,Think about the purpose of currency,
Dialogue: 0,0:01:59.02,0:02:01.86,Default,,0000,0000,0000,,which is to be exchanged for goods and services.
Dialogue: 0,0:02:01.86,0:02:04.04,Default,,0000,0000,0000,,If the total amount of currency in circulation
Dialogue: 0,0:02:04.04,0:02:07.58,Default,,0000,0000,0000,,increases faster than the total amount of goods and services
Dialogue: 0,0:02:07.58,0:02:08.82,Default,,0000,0000,0000,,in the economy,
Dialogue: 0,0:02:08.82,0:02:10.58,Default,,0000,0000,0000,,then each individual piece would be able
Dialogue: 0,0:02:10.58,0:02:13.24,Default,,0000,0000,0000,,to buy a smaller portion of those things than before.
Dialogue: 0,0:02:13.24,0:02:15.59,Default,,0000,0000,0000,,This is called inflation.
Dialogue: 0,0:02:15.59,0:02:17.00,Default,,0000,0000,0000,,On the other hand,
Dialogue: 0,0:02:17.00,0:02:18.70,Default,,0000,0000,0000,,if the money supply remains the same,
Dialogue: 0,0:02:18.70,0:02:20.62,Default,,0000,0000,0000,,while more goods and services are produced,
Dialogue: 0,0:02:20.62,0:02:22.59,Default,,0000,0000,0000,,each dollar's value would increase
Dialogue: 0,0:02:22.59,0:02:24.84,Default,,0000,0000,0000,,in a process known as deflation.
Dialogue: 0,0:02:24.84,0:02:26.64,Default,,0000,0000,0000,,So which is worse?
Dialogue: 0,0:02:26.64,0:02:28.09,Default,,0000,0000,0000,,Too much inflation
Dialogue: 0,0:02:28.09,0:02:30.01,Default,,0000,0000,0000,,means that the money in your pocket today
Dialogue: 0,0:02:30.01,0:02:31.62,Default,,0000,0000,0000,,will be worth less tomorrow,
Dialogue: 0,0:02:31.62,0:02:33.22,Default,,0000,0000,0000,,making you want to spend it right away.
Dialogue: 0,0:02:33.22,0:02:35.06,Default,,0000,0000,0000,,So, while this would stimulate business,
Dialogue: 0,0:02:35.06,0:02:37.04,Default,,0000,0000,0000,,it would also encourage overconsumption,
Dialogue: 0,0:02:37.04,0:02:39.90,Default,,0000,0000,0000,,or hoarding commodities, like food and fuel,
Dialogue: 0,0:02:39.90,0:02:41.64,Default,,0000,0000,0000,,raising their prices,
Dialogue: 0,0:02:41.64,0:02:45.70,Default,,0000,0000,0000,,leading to consumer shortages and even more inflation.
Dialogue: 0,0:02:45.70,0:02:47.67,Default,,0000,0000,0000,,But deflation would make people
Dialogue: 0,0:02:47.67,0:02:49.12,Default,,0000,0000,0000,,want to hold onto their money,
Dialogue: 0,0:02:49.12,0:02:51.03,Default,,0000,0000,0000,,and a decrease in consumer spending
Dialogue: 0,0:02:51.03,0:02:52.59,Default,,0000,0000,0000,,would reduce business profits,
Dialogue: 0,0:02:52.59,0:02:54.08,Default,,0000,0000,0000,,leading to more unemployment
Dialogue: 0,0:02:54.08,0:02:55.95,Default,,0000,0000,0000,,and a further decrease in spending,
Dialogue: 0,0:02:55.95,0:02:58.25,Default,,0000,0000,0000,,causing the economy to keep shrinking.
Dialogue: 0,0:02:58.25,0:02:59.87,Default,,0000,0000,0000,,So most economists believe that
Dialogue: 0,0:02:59.87,0:03:01.92,Default,,0000,0000,0000,,while too much of either is dangerous,
Dialogue: 0,0:03:01.92,0:03:04.26,Default,,0000,0000,0000,,a small, consistent amount of inflation
Dialogue: 0,0:03:04.26,0:03:07.79,Default,,0000,0000,0000,,is necessary to encourage economic growth.
Dialogue: 0,0:03:07.79,0:03:10.26,Default,,0000,0000,0000,,The Fed uses vast amount of economic data
Dialogue: 0,0:03:10.26,0:03:13.62,Default,,0000,0000,0000,,to determine how much currency should be in circulation,
Dialogue: 0,0:03:13.62,0:03:15.60,Default,,0000,0000,0000,,including previous rates of inflation,
Dialogue: 0,0:03:15.60,0:03:17.66,Default,,0000,0000,0000,,international trends,
Dialogue: 0,0:03:17.66,0:03:18.96,Default,,0000,0000,0000,,and the unemployment rate.
Dialogue: 0,0:03:18.96,0:03:20.61,Default,,0000,0000,0000,,Like in the story of Goldilocks,
Dialogue: 0,0:03:20.61,0:03:22.23,Default,,0000,0000,0000,,they need to get the numbers just right
Dialogue: 0,0:03:22.23,0:03:24.62,Default,,0000,0000,0000,,in order to stimulate growth and keep people employed,
Dialogue: 0,0:03:24.62,0:03:27.62,Default,,0000,0000,0000,,without letting inflation reach disruptive levels.
Dialogue: 0,0:03:27.62,0:03:29.24,Default,,0000,0000,0000,,The Fed not only determines
Dialogue: 0,0:03:29.24,0:03:31.62,Default,,0000,0000,0000,,how much that paper in your wallet is worth
Dialogue: 0,0:03:31.62,0:03:34.74,Default,,0000,0000,0000,,but also your chances of getting or keeping the job
Dialogue: 0,0:03:34.74,0:03:36.58,Default,,0000,0000,0000,,where you earn it.