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How To Fix an Economic Crisis financial crisis 2008 explained

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Let’s say you find yourself as the Head of State of some country during an impending economic crash.

Your country’s stock market is imploding, businesses are closing, unemployment is rising, and everyone is looking to you to provide economic guidance on how to weather this turmoil.

Here’s how you can weather the storm and come out on top!

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📚 Want to learn more about economic crises? Check out “A History of the United States in Five Crashes: Stock Market Meltdowns That Defined a Nation”, by Scott Nations
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#MarketCrash #Economics #Policy

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Sources & Citations –

Kopits, M.G., and Symansky, M.S.A., 1998. Fiscal policy rules (No. 162). International Monetary Fund.

Easterly, W., and Rebelo, S., 1993. Fiscal policy and economic growth. Journal of Monetary Economics.

Blinder, A.S., and Solow, R.M., 1972. Does fiscal policy matter? (Vol. 144). Econometric Research Program, Princeton University.

McCallum, B.T., 1987. The case for rules in the conduct of monetary policy: a concrete example. Review of World Economics.

Friedman, M., 1995. The role of monetary policy. Essential Readings in Economics.

Bernanke, B.S., and Mihov, I., 1998. Measuring monetary policy. The Quarterly Journal of Economics.

Ball, L., 1999. Efficient rules for monetary policy. International Finance.

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Intractable by Kevin MacLeod is licensed under a Creative Commons Attribution license (creativecommons.org/licenses/by/4.0)

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Artist: incompetech.com

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42 comments

Economics Explained 27/09/2021 - 8:17 Chiều

Thanks for watching EE nation! ❤️ If you enjoyed, please consider supporting the show on Patreon! 😎
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Reply
Tom McMorrow 27/09/2021 - 8:17 Chiều

Your analysis of big banks behavior is perfectly expanded upon in a book I just finished, The Banker's New Clothes.

Reply
TMCD677 27/09/2021 - 8:17 Chiều

This video does a good job of describing post Brexit, post COVID Britain. Empty Supermarket shelves is becoming normal.

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TacoLePaco 27/09/2021 - 8:17 Chiều

Yeah just studying so one day i can fix a countries issue, thinking of making Puerto Rico independent and fixings is issues, since it seems all the governors don't know how to do their jobs.

Reply
Sharika 27/09/2021 - 8:17 Chiều

covid be like: im gonna make it worse heehe

Reply
Whallin Brot 27/09/2021 - 8:17 Chiều

Man I heard of an Austrian guy back in the great depression that fixed the economy by abolishing the central bank. I wonder why we don't do that today.

Reply
durwin pocha 27/09/2021 - 8:17 Chiều

How to refinance a country or location. Enter a new monetary standard, any ideas would be helpful ?

Reply
Gastón Linares 27/09/2021 - 8:17 Chiều

Ah, yes… Keynes at its finest…

Reply
Tony bruh 27/09/2021 - 8:17 Chiều

Anybody else watch these tutorials without actually doing them?

Reply
Jeremy Keller 27/09/2021 - 8:17 Chiều

The US stock markets collapsed today to an all time high.

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11tokarski 27/09/2021 - 8:17 Chiều

2021:
theory goes reality.

Reply
David Warford 27/09/2021 - 8:17 Chiều

hay EE. what would your opinion be on aiming for 0% inflation/deflation and encourage spending by having very high income taxes but allow people to write off almost anything from their personal taxes. essentially encouraging spending by forcing people to either spend their money or give it to the government, I'm sure most people would take the former.

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Blind River Bill 27/09/2021 - 8:17 Chiều

How about the government not messing with the economy in first place, just provide a stable playing field by enforcing the rule of law and protecting the boarders.

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DelayedHapiness 27/09/2021 - 8:17 Chiều

What if, hypothetically, I wanted to save venezuela and make it a international super power

Reply
Jake Zimmerman 27/09/2021 - 8:17 Chiều

I love these videos

Reply
Dan McNerney 27/09/2021 - 8:17 Chiều

"What you earn. You keep." Calvin Coolidge and what you earn more. They roared 1924 more. What other solutions is there all of you out there?

Reply
Edward Dodson 27/09/2021 - 8:17 Chiều

There is a good deal to be learned by studying how depression triggers aligned in the past. So, to understand why the "Great Depression" occurred in the 1930s, one must look at what occurred during the years building up to the crash.

A significant amount of the credit made available during the 1920s went into land speculation. A good primer on what occurred is found in the book "Only Yesterday" by historian Frederick Lewis Allen. Not only did investors become captured by the frenzy of the Florida land boom, this same frenzy occurred in many cities in response to population increases that triggered a significant increase in the demand for both commercial and residential land. An agricultural land boom also occurred during the First World War, during which time farmers borrowed heavily to expand their land holdings and production. A few years was required after the war ended for European farmers to recover, but by the mid-1920s global production exceeded demand, prices fell, farmers defaulted on loans when government guarantees were removed, and rural banks failed by the hundreds.

As the land boom crashed, investors shifted heavily into the stock market, driving up prices well beyond what any fundamentals supported. Thus, by the end of 1929 the U.S. economy was stressed across almost all areas of production as well in the financial markets. To be sure, imprudent bank lending deepened the crash and lengthened its duration, but it was a crash in the making because of the failure to utilize tax policy to tame the credit-fueled, speculation-driven land markets. A few economists (e.g., Harry Gunnison Brown, Scott Nearing and John R. Commons) had argued the case made in the late 19th century by Henry George, who showed that cyclical booms and busts would be tamed only if the full or nearly-full public capture of the potential annual rental value of land and of rents from other sources (e.g., the broadcast spectrum) became public policy.

Harry Gunnison Brown was joined over the succeeding decades by a small group of economics professors who continued to make Henry George's case. One could argue that recessions that began again following the end of the Second World War would have been even worse if local governments did not capture some land rent via the taxation of real estate. However, as land prices climbed property assessments rarely kept pace. This made speculation in land an even more profitable investment.

Relying on out-of-date assessed valuations rather than current market values created a serious analytical problem for government statisticians. They simply did not understand that any increase in the price of land is inflationary and did not include such increases in their calculation of inflation. Another failure has been to accurately calculate the annual aggregate rent that is privately captured as unearned income (whether imputed or actual). Since the administration of Ronald Reagan, the federal government has not monitored land prices. The figures utilized in the econometric models relied upon by the Congressional Budget Office and the Federal Reserve are around 5 percent of the actual potential rent in the economy (see Joseph Stiglitz or Mason Gaffney on this particular problem).

I offer here a very rough estimate of the rent attached to just one part of the economy, the residential property market. At mid-2020, the median price of a single-family property was around $295,000. There are about 140 million existing housing units in the United States. If we assume a fairly conservative median land-to-total value ratio of 35%, this means that the aggregate residential land value in the U.S. is $103,250 per property, multiplied by 140 million = $14,455,000,000,000 ($14.455 trillion). Economic theory tells us that this aggregate land price occurs because of the capitalization of the net amount of rent that remains in private hands after taxation. If most or all of the rent were captured via taxation there would be nothing to be capitalized and land prices would fall to very close to zero. What the rent fund might be depends on the discount rate. If we assume that investors will invest in land if they can obtain an annual increase of 5%, the the rent fund would be calculated as follows: 5% of $14.455 trillion = $722.75 billion of rent JUST for the land under existing residential buildings. Add in the number of vacant residential lots around the U.S. and this figure will increase considerably.

Tragically, the public capture of land rent never became public policy, allowing the land market cycle to operate from boom to bust. It is on schedule to crash again in 2026. I have prepared a relatively short video in support of this forecast for anyone who reads this and has an interest in more details:

https://www.youtube.com/watch?v=fmA6ZPs-wus

Reply
Garrett Shaw 27/09/2021 - 8:17 Chiều

If you reward bad behavior don’t be surprised when it happens again. On the other hand, having read a comment by you guys below, the S&P500 is almost at 4,000.

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Burner Andy 27/09/2021 - 8:17 Chiều

The President doesn't make these choices. The people votes these fucks in and they pretend to fix things and never fix them because doing ANYTHING would be POLARIZING. People want to be in a state of "almost there…"

Reply
Arif Mark 27/09/2021 - 8:17 Chiều

Invest as much money as possible. Nobody knows the future and right now it does not look bright.

Reply
Sandesh Poudel 27/09/2021 - 8:17 Chiều

Joe Biden has entered the chat

Reply
Felipe Tellez 27/09/2021 - 8:17 Chiều

Your content is really insightful. I have to say though that the B-Roll Stock Footage gets a bit old after some time, almost making me feel like a podcast would be a better format. You often supply graphics….more of that instead of so many skylines would be cool =) ….my unrequested 2c's

Reply
Ian Board 27/09/2021 - 8:17 Chiều

I've reached the point where I have ZERO confidence in economists and politicians (both parties).

Reply
Sie P 27/09/2021 - 8:17 Chiều

I was there for The 2008 Australian Fiscal Stimulus, and it's true: we PAYE folk did get A$900. what is even MORE impressive is that everyone on Gvmt benefits/welfare/pensions got A$600. Practically every adult got some cash: a wonderful demonstration of Adam Smith's ENLIGHTENED SELF-INTEREST as THE economic driver.
The UK gave £700 billion to its banks, and got … not much. Each and every British man, woman and child would have gotten £13,000 under Aussie rules.

Reply
Clinton Lunn 27/09/2021 - 8:17 Chiều

The good old USA uses economic downturns as an excuse to give billionaires tax breaks.

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Raymond Nicola Jr. 27/09/2021 - 8:17 Chiều

No! This is what the globalist cabal wants. Total dependence on the government. When you think about it, the tax payer are to become dependent on the taxpayers, what! How stupid is that. Don't be fooled. Well' maybe the majority will be fooled. Dependency on anyone for your lively hood is foolish.

Reply
Jason Good 27/09/2021 - 8:17 Chiều

Solution is to cut all public spending to the percentage received in payroll taxes and then you have balance the budget

Reply
Rodolfo Vitangcol 27/09/2021 - 8:17 Chiều

Million Dollar Potential in Ruvol

I have invented a Board Game [still unpublished and not yet out in the market] that is guaranteed to be far more challenging and exciting than CHESS. I called it “RUVOL.”

Over time, Ruvol will surpass chess as the “Number One Board Game in the World.”

Why am I so sure about this? Because I am an avid chess player myself.

The weakness of chess is it always starts in fixed positions that the opening moves become “memorizable.” In fact, not a few have so mastered the moves that they can play against their opponents “blindfolded.” It is for this very reason that the great Bobby Fischer introduced his so-called “Fischer Random Chess,” where the starting position of the pieces is “randomized” to make the memorization of openings impracticable. Fortunately, it is also for this reason that I invented Ruvol where “every game” has been calculated to be a challenging one to play.

HOW IS RUVOL PLAYED?

Ruvol is played somewhat like chess. It is played by two players. It uses a board that is rectangular in shape but containing more number of squares than chess. It has equal number of pieces on each side of the board, where each type of piece moves in distinct ways. However, if the way to win chess is to checkmate the opponent’s king, the way to win Ruvol is to be able to cross a designated line.

But there’s one big advantage Ruvol has over chess: The Ruvol pieces are randomly placed at the start of “every game” which makes it impossible for any clever player to memorize the moves. It is the players themselves who separately dictate the starting positions of their pieces on their respective sides of the board, depending on the strategies they’ve planned before the start of each game.

Ruvol was intended to give chess a direct “apple-to-apple” competition. At present, there is no other board game in the world within the same category of chess “where chess players can switch to.” Chess is totally a monopoly in its class. Chess players can now have an alternative in Ruvol.

A MILLION DOLLAR POTENTIAL IN RUVOL!

The people who play chess will be the same people who will play Ruvol. In my Google search, I learned there are around 800 million chess players in the world. These 800 million players comprise the “Total Potential Buyers” of Ruvol across the globe. At an average profit of just US$3 per set, the “Global Income Potential” of Ruvol then is US$2.4 billion. Assuming only 1% of it will buy each year, the annual global potential sale of Ruvol is US$24M.

I AM LOOKING FOR AN INVESTOR!

For the reason that I don’t have the resources to publish Ruvol on a global scale, you might be interested to “FINANCE THE PUBLISHING” of my Ruvol on a profit-sharing arrangement. Or better yet, just “BUY MY COPYRIGHT” and Ruvol is entirely yours. If interested, email me at: rodolfovitangcol@gmail.com.

Thanks and God bless!

RODOLFO MARTIN VITANGCOL
The Ruvol Inventor

Reply
Kinshuhh Khari 27/09/2021 - 8:17 Chiều

joe biden should watch this

Reply
Paul McDonagh 27/09/2021 - 8:17 Chiều

Not to be flippant, but surely one of the solutions to the problem of moral hazard would be to adapt for the digital age the old medieval thing of putting someone in the stocks so the public could throw rotten eggs etc at them. I mean, perhaps the sort of social unrest you see in countries like the US, which gave rise to President Donald Trump, might have been stopped if people were allowed to do something like dunk the CEOs of big banks in a water tank and for each successful dunk being allocated an amount that the government would donate to a citizen's chosen charity or good cause. Of course, the CEOs could refuse to be publically humiliated but then they would have to accept a life sentence with no chance of parole but the opportunity to share a prison cell with an ex- bodybuilder that would love to use their face as a punchbag. This might sound ridiculous but given how we've used social shaming in the past to keep morally dubious individuals in line perhaps frogmarching the CEOs of the most indebted businesses and banks on to national TV and humiliating them would be cathartic and even lead to increased optimism that would pull us out of a recession quick. It's certainly a lot better than having another four years of someone like Donald Trump in the future with the negative impact folk like him have in the world. I mean, at the very least, those that take our money and claim to govern us owe us an apology, don't you think?

Reply
janno288 27/09/2021 - 8:17 Chiều

Let me send this video to the greek goverment

Reply
LOLS 27/09/2021 - 8:17 Chiều

time to fix my minecraft's server economy lol

Reply
Eddie Roa 27/09/2021 - 8:17 Chiều

This video was sponsored by the big government gang

Reply
Mister Lime 2.0 27/09/2021 - 8:17 Chiều

Lucky for you mr hypothetical president.

Reply
Jawzr 27/09/2021 - 8:17 Chiều

I like to think that all world leaders watch these kind of videos.

Reply
elmika 27/09/2021 - 8:17 Chiều

Why is it bad to essential business to fail? I mean they wouldn't be gone some bigger business would buy them for very cheap. That is how it should go.

Reply
Moose Bme 27/09/2021 - 8:17 Chiều

Corpocracy: noun, plural cor·poc·ra·cies.

A government run like a corporate bureaucracy. a society in which corporations have much economic and political power.

They OWN the lobbyists, that wright the laws, that are "too big to fail," first in line for tax exemptions and bailouts…

Reply
Truth be Told 27/09/2021 - 8:17 Chiều

Buddy you need to fix your country first!

Reply
World Mapping 27/09/2021 - 8:17 Chiều

or just hire advisors to do the work and take their advice

Reply
penumbra01 27/09/2021 - 8:17 Chiều

Short answer:
No. It couldn't.

Reply
Medial canthus 27/09/2021 - 8:17 Chiều

1. Who's making money in good times
2. Who's hoarding money and not spending?

Reply
Donx 27/09/2021 - 8:17 Chiều

EE Drinking game: "At the end of the day…"

Reply

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