YT YouTube2Text

YouTube2Text → Transcripts → Comparative Advantage

Comparative Advantage — Transcript

by Andrew Johnson · 7,183 words · 1,067 segments · language en · Watch on YouTube

Open in transcriber Summarize with AI Download SRT/VTT

Full transcript

0:10well welcome
0:14back
0:16so we said something that goes crazy on
0:19it just doesn't make sense does it we
0:22say that the
0:24GDP of China will surpass the GDP of the
0:28United States gonna
0:32happen and people say oh that's terrible
0:35we don't want China's
0:37GDP but Andy and most people who study
0:41the topic say it's a good thing because
0:43we don't care about GDP we care about
0:45gni gross national income and as we
0:49found out according to the
0:51IMF as the gni of China goes up the gni
0:57of the United States goes up
1:01uh you say but they're taking all of our
1:03jobs they're taking well then why are we
1:06getting
1:09richer well the only way to get rich is
1:11to take money from other
1:13people no it's not that's what yeah sure
1:17you can get rich if you go out and take
1:18money from everybody you can get rich
1:20sure sure sure but that's not what's
1:23Happening Here is it actually we're
1:25getting them richer and we're getting
1:28richer h
1:31doesn't make sense it's what's called
1:33counterintuitive counterintuitive means
1:36you would think the opposite but it
1:37isn't and here's the reason
1:41why you have something called
1:43comparative
1:45advantage comparative advantage the idea
1:48there is that I do some things better
1:50than you do and you do some things
1:53better than I do and I focus what I'm
1:56good at and you focus on what you're
1:58good at and it's a win-win situation
2:01right we both
2:02win okay so think of it this way let's
2:07say you go out to your garden and you
2:08find this Golden Nugget right you find
2:11this thing of gold right there right
2:14what just happened to your gni your
2:17gross national income your gross income
2:20what happened to your income it just
2:22went up didn't it now you just got this
2:25big hunk of gold now and you're like
2:27going did anybody lose any
2:30money is your neighbor less rich now
2:33because you've got a big hunk of
2:35gold no they're not they're the same
2:38aren't they but you got richer didn't
2:41you wow so nobody lost money wealth was
2:47created W comparative
2:50advantage comparative advantage says I
2:52have strength and you have strengths you
2:55focus on your strengths I'll focus on my
2:58strengths so
3:01my wife is Chinese right I um don't
3:05speak Chinese I
3:07tried it just doesn't work I can't hear
3:09the tones right can't hear the tones
3:12right um what if Belia College said hey
3:16Andy you've traveled all through China
3:18haven't you yes I have I've been to way
3:20more places in China than most people
3:22have been in where from China my wife
3:25hasn't been anywhere near as many places
3:26as I've been in China so Andy since you
3:29spend so much spend so much time in
3:31China why don't you teach Chinese
3:34classes well wait why don't you hire my
3:36wife to teach Chinese
3:38classes yeah hire her who would be
3:41better at teaching Chinese language
3:44classes me or
3:46her her or me whatever you want to say
3:49but she would be better at it no matter
3:52what now could I teach Chinese
3:55language sure I could get a computer
3:59program
4:00and play some
4:02videos and it would be the most Dreadful
4:04class you've probably ever taken right
4:07so yes I could it's better for her to do
4:10that now she doesn't have that much of a
4:11business background could she teach
4:14business classes well yeah she's got a
4:18degree in accounting she could teach
4:19business classes but there's a lot more
4:21to business than just accounting so she
4:24could but she'd be better at teaching
4:26Chinese so comparative advantage says
4:28I'll make I'll teach business she can
4:32teach Chinese or accounting or something
4:35like that win-win
4:37situation so United States we don't make
4:40television sets you can't really buy a
4:43TV set that's made in the United States
4:46and you'll hear people say oh we need to
4:48bring back those those manufacturing
4:50jobs we don't want those manufacturing
4:56jobs you say yeah we do no no
5:00no we don't here's why so we don't make
5:02television s we
5:04could but Japan makes television sets
5:08they're really really good they're
5:11amazing the highest quality TV sets
5:13usually come from
5:14Japan okay so we're good at making food
5:19remember my dad the farmer we're good at
5:22making food we're really efficient right
5:24we don't work very hard but we're very
5:26efficient in fact did you know that the
5:28American Farm farmer produces enough
5:31food to feed the
5:33world if everybody else outside of the
5:35United States decided to stay home and
5:39watch uh The Simpsons and that's all
5:42they did all day long and watch The
5:44Simpsons the United States makes enough
5:46food to feed the
5:48world wow pretty crazy stuff say well
5:51then where are they starving
5:53people everywhere I bet you we just want
5:56the money from them right actually no if
5:58you if your country starving we will
6:00give you free food we will but United
6:03States has always had that policy we
6:05give free food all over the world all
6:06the time right but here's the big butt
6:11you have to transport
6:13it so with North Korea had a big famine
6:18a number of years ago it was bad right
6:20and so we actually transported some food
6:24over to
6:26them but they couldn't get it out and
6:29distri uted before it all went
6:32bad that's North Korea not that far away
6:36or hard to get to how about in some
6:38other countries where it's really hard
6:39there there aren't any roads there is
6:42that's why they're starving people
6:44everywhere well they they want their
6:46people to starve nobody wants their
6:47people to starve no no no because when
6:49you get hungry you get angry it's called
6:55hangry if you're a leader of a country
6:58it doesn't matter if you're a good one
6:59or bad one if you're a leader do you
7:00want hry people working around you no
7:03because they hry people do bad things
7:06right
7:08so say United States we make food in
7:12Japan they make television sets right
7:15and if you've ever been to Japan it's a
7:18beautiful beautiful country here's Japan
7:20right beautiful country it's just it's
7:23really
7:25stunning
7:26but there is a problem with this
7:30can the Japanese ever compete with my
7:34dad from Nebraska look at that look how
7:36flat that is right on food
7:41production can they ever compete no no
7:44no no they make tasty food I'm not
7:45saying that their food is bad but can
7:47they grow the large crops what what are
7:49they going to do here well they could
7:50put Terraces on the sides of their
7:52Mountain okay you can do that very
7:54inefficient but you can do it or you can
7:56blast the top of the mountain off well
8:00yeah but are they ever going to compete
8:02with my dad on food produ on corn
8:05production
8:07soybeans nothing right so they're smart
8:10the
8:11Japanese they're smart so they said
8:14let's not even try let's build TV set
8:16factor and the beautiful thing about TV
8:18set Factor you can put one on top of
8:20another you can put them on top of the
8:21mountains you can put them in the
8:22valleys you can put them all over the
8:24place and so Japan produces
8:27TVs and they trade their TVs for our
8:31food who wins in that
8:34situation we do they do it's called a
8:39win-win situation right we are both
8:42taking advantage now could we produce
8:44television sets in the United States if
8:45we wanted to and compete with Japan we
8:48could so we could go to this farm and
8:52put television take off all the corn and
8:55build a bunch of television set
8:58factories do we want to do that no it's
9:03a bad idea why because we're making
9:06money on food we make so much money on
9:08food did you know that food is the
9:09number one export of the United
9:12States we sell food all over the world
9:15and we are making a lot of money we
9:18import television sets but people say
9:20but if you're importing and they're not
9:22buying our stuff then you're then
9:24they're going to get rich and you're
9:25going to get poor countries are going to
9:27take over no it's not fair so let's look
9:33here here's a farm in
9:37Japan here's a farm in
9:40Nebraska yeah look at
9:43that is that scary or I mean that is
9:45just laser flat laser flat I don't think
9:49this tractor could even get onto one of
9:52these or if it did it cause it probably
9:54to collapse I don't know I don't know
9:56how they could do that so how do you do
9:58do this tiny little tractors they have
10:01got tiny little tractors and you can buy
10:02those tiny little tractors um or they're
10:06using their hands or they're using rotor
10:09tellers it's not can they compete with
10:11my dad no they don't want to they're
10:14smart we're smart we don't want to
10:16compete with Japanese on television
10:20sets so when we trade food for Japanese
10:23TV says who wins why do we buy Chinese
10:27products
10:30okay so let's say you want to go buy a
10:32toaster yeah could we make toasters here
10:36in the United
10:37States we
10:40could we
10:42[Music]
10:43could on a price point can we ever
10:46compete with the Chinese on toasters
10:49remember I told you I got a bow suit for
10:52almost free in China versus cost $15
10:56here can we ever compete with the ch
10:59on toaster production no they do it
11:02cheaper than we could ever hope to do
11:05it so we buy their toasters now sure we
11:09could build toasters here in Bell
11:12Washington wait could you live on the
11:16income generated from making toasters
11:19could you live in bellev
11:22Washington yeah you got five people per
11:25room and you walk everywhere and take
11:28the bus
11:31and no we buy Chinese toasters because
11:36they make it better we make food we make
11:39jumbo Jets we make computers we make
11:43biotechnology we do all these other
11:45stuff that make a lot more money doing
11:47it so when we lose our jobs making
11:50toasters and television sets then those
11:53people can now make airplanes and jumbo
11:56Jets and medicine and service
11:59and we make more money but Andy though
12:02we're buying all these Chinese
12:04products and the Chinese aren't buying
12:06our stuff so that means that the money
12:08is Flowing from United States to China
12:12so pretty soon all of our money is going
12:14to go into China and they're going to be
12:16rich and we're going to be poor right
12:18this is a terrible terrible thing well
12:19first
12:20off we are the Jeff Bezos of the world
12:25so if Bill Gates or Jeff Bezos let's say
12:28they have to pay three times as much for
12:32everything that they buy than what I pay
12:35right so we have a system where we're
12:36going say yep Jeff you have to pay three
12:38times as much he's gon to Grumble a
12:40little bit he's gonna say okay now who
12:43can buy more at the grocery store Jeff
12:45basus or
12:49me he could buy the grocery
12:52store and another grocery store in fact
12:55he could buy a food chain called Whole
12:57Foods yeah I don't shop at Whole Foods
13:00it's
13:02expensive and there's no Whole Foods out
13:04in North Bend where I live but same
13:06thing though I I he could buy a way more
13:09stuff because he's so rich can't he but
13:13Andy still our Mone is flowing into
13:15China and making them Rich
13:18okay you go to
13:20Safeway and you buy a loaf of
13:23bread there's your bread right buy this
13:27loaf of bread right
13:31you're giving them your money aren't you
13:33so money flows from you into
13:37Safeway the Safeway ever buy anything
13:39back from
13:40you if you ever sold anything the
13:43Safeway I've never sold anything to
13:46Safeway in fact I don't know if anybody
13:48who has sold stuff to Safeway well I
13:50know there must be people who do it but
13:52I don't know of any I've never met
13:54somebody said what do you do well I'd
13:56sell stuff the
13:57Safeway Maybe maybe I think they got to
14:00be there because how do you get the
14:01bread in the grocery store in the first
14:02place
14:05but I never I buy from Safeway but they
14:08never buy from me so money flows from me
14:10into Safeway now why do I buy it Safeway
14:13so could I make bread myself at
14:18home I could sure I go buy some
14:22wheat I can plant
14:24it then after it I water it and then
14:28after it grows enough then I can Harvest
14:31it then I can crush the the wheat into
14:37flour then I can take the flour and mix
14:41some yeast in with it and some water and
14:44maybe some sugar and some nuts or
14:46something right and then R to put it all
14:50together and then let put in the oven
14:52and bake it and then pull it out and
14:55knead it again and put in the oven and
14:58bake it and then take it out and slice
15:02it with my Dull
15:05Knife I could do that would that be
15:08smart so I can go buy a Loa of bread at
15:11Safeway for a dollar or $2
15:14doar or $3 if I want to get that that
15:18one guy's famous day no what's the guy's
15:21name he's got that crazy bread anyway I
15:23could buy one of his real expensive
15:26expensive gloves of bread
15:30which is way cheaper than actually
15:31making it myself isn't it because I can
15:33make a lot more money talking to you on
15:35this on this or teaching business
15:37classes then I can making bread plus my
15:39bread
15:40isn't it's not the best quality right I
15:44mean I can make decent it's kind of
15:45yummy but I don't know how to cut it
15:48it's all you know goofy it's thin on one
15:50side and top of the other and sometimes
15:53I overcook it sometimes I undercook it
15:56and you get the point right it's so much
15:58cheaper So when you buy groceries at
16:01Safeway you're saving money aren't you
16:04you might even be making money so Bill
16:08Gates let's say Belleview passed an
16:12ordinance and they say you're no longer
16:15allowed to have somebody else mow your
16:17yard so if you have a yard you have to
16:20mow it
16:23yourself now would that be good for
16:26Belleview
16:29so bill now has to mow his own
16:32yard think how much more money he could
16:34be making doing something else than
16:35mowing the yard in fact could he pay you
16:38$200 an hour to mow the yard and still
16:41be making
16:43money a lot of
16:45money Bill Gates pretty darn Rich you
16:48know Bill Gates he sees a $100 bill
16:50lying on the
16:52ground it costs him more than $100 than
16:56it takes him to take two steps and pick
16:58it up
17:01wow w w right so he could pay you $200
17:04an hour he could pay you $500 an hour
17:06and still be making money couldn't he
17:09wouldn't you rather be mowing Bill Gates
17:10lawn for $5 an hour than feeling smug
17:14say look at Bill he has to mow his own
17:17yard I would i' M he wants to pay me $5
17:20an $500 an hour to mow his yard I'm
17:23doing it he I'll even use a push mower
17:25if he wants me to I'll even use one of
17:27those rake thingies right you you get
17:30the point right so comparative advantage
17:32frees us up to do what we're good
17:36at also it created jobs over in China
17:39where they didn't have them and caused
17:41their standard of living to go
17:44up
17:46wow so comparative advantage okay okay
17:52we have a training balance yeah we buy
17:54their stuff
17:55okay comparative advantage so we make
17:58toast
17:59so we trade our airplanes for Chinese
18:02toasters you go to China you see a lot
18:05of American
18:06airplanes how much does an American
18:09airplane
18:10cost a lot of money they have to sell a
18:13lot of toasters don't they to make to be
18:15able to afford those airplanes it's a
18:17win-win
18:21situation so in other words the more
18:23toasters we buy from China the Richer we
18:26get
18:31okay now which country has the highest
18:35gni per
18:37person United States no we're what
18:39number seven yeah but we're also pretty
18:42big so we're have the highest G and
18:45I your mind
18:47blown love this actor it I never he
18:52Blends into so many movies you don't
18:54even know that he was in a movie and
18:55then he was and he's actually a really
18:56good actor mind BL so by giving China
18:59our money and buying the toasters we're
19:01getting
19:02rich see you didn't know how money
19:04worked did you you still don't know how
19:06money work don't wor I'm gon to show you
19:08we're gonna but all of a sudden you're
19:09realizing that money doesn't work the
19:11way you think it works Deb oh that's a
19:16terrible dirty word isn't it
19:20debt debt wow I hate debt debt is bad
19:24does the United States have some debt oh
19:26yeah did you know that the United States
19:29borrows money from China we do the
19:32richest country in the world and we
19:33borrow money from China oh my I'm
19:37alone oh my fact China has never lent
19:42the United States any money
19:45ever wait no they lend money to the
19:48United States no they don't whoever told
19:51you that does not understand money they
19:53don't understand what they're talking
19:55about but we owe them more we owe them
19:57money it's not what you think it is
20:01United States has never gone to China
20:02and says hey bud got 20 bucks that we
20:05can borrow or got a million dollars that
20:08we can borrow or $20 million that we can
20:10borrow we've never done that so you
20:12don't understand money you don't
20:14understand national debt though that's
20:15bad isn't
20:19it
20:21maybe here's interesting did you know
20:23that Jeff Bezos has
20:26debt richest man of the world has debt
20:29did you know Bill Gates has
20:31debt second richest man in the world did
20:34you know that Elon Musk has debt lot of
20:37debt do you know Warren Buffett has debt
20:39lot of debt did you know United States
20:42richest country in the world has a lot
20:43of debt a lot of debt do you know Boeing
20:46has a lot of debt a lot of debt
20:48Microsoft
20:51debt Airbus de Tesla
20:56de Toyota
21:02debt wow
21:04China debt
21:07Japan wait wait second United States
21:11China Japan richest countries in the
21:14world have
21:15debt the richest people in the world
21:18have debt the richest businesses oh
21:21Apple has debt oh yeah yeah yeah have
21:25debt oh wait if debt is so bad why do
21:29they all have debt so here's some
21:31information you didn't know about debt
21:33this again comes from PE Pew Research
21:36Center and PE is considered a
21:39nonpartisan they're not Democrats
21:41they're not Republicans both sides use
21:44them for information to and because if a
21:48Democrat says it you think wow it's a
21:50Democrat saying it it's Republican
21:51saying it wow it's a republican so if
21:53they have real facts they get the Pew
21:56Research Center to say it and then
21:59everybody
22:00says okay so five facts about national
22:06debt okay now first off if you look here
22:09you say look at from 1996 and our debt
22:13was going down in
22:151996 yep and then 911
22:18happened and our debt started to go up
22:21and now our debt is up and our current
22:23debt this is as 2018 so it's a little
22:27out of date especially with all the debt
22:29that we're taking on with the Corona
22:30virus we'll talk about that here in a
22:31second
22:33but we're at 104% of
22:36GDP we owe
22:40104% of what the value of the products
22:43that we make they say that's just
22:46terrible Japan's over
22:48200% wait third richest country is over
22:54200% okay well that's kind of weird no
22:56no here it gets most gets more
22:59interesting if you notice this this is
23:02called
23:03intergovernmental
23:06debt intergovernmental debt means
23:12debt that governments get from their own
23:18governments so
23:21when the Air Force want to BU able to do
23:23bomber they don't have the money so they
23:26borrow it from somebody else
23:30yeah so in other words they're borrowing
23:32money from
23:35themselves wait if you borrow money from
23:37yourself do you really owe
23:42money if you borrow money from yourself
23:45do you really owe money not really
23:48that's kind of weird so if I'm going to
23:50borrow money from my savings account to
23:52put it into my checking account did I
23:55borrow money no it's a money transfer
23:58right okay but you say but still 75% of
24:02the national debt is held by the public
24:05yes that's
24:07correct that's still a lot of money Andy
24:11yes that's
24:14correct that's correct okay interest
24:18payments so get
24:20this we don't borrow money never have
24:25the United States instead issues what's
24:29called a
24:30bond you guys have heard Bond bond is a
24:33debt tool and the United States
24:35government says whoever wants to buy a
24:38bond which is kind of a way to lend
24:40money whoever wants to buy our bonds we
24:43will sell them to anybody in the entire
24:47world anybody in the world if you want a
24:50bond we will sell it to
24:52you hey that's pretty cool but the thing
24:55is we'll sell it to the person who gives
24:57us the lowest interest
25:00rates so we say who wants to buy one of
25:03our bonds and uh Japan says oh we want
25:07to buy one of your bonds we say how much
25:09what interest rate are you going to
25:10charge us they say we'll give you 4
25:13per. and then we say okay who else wants
25:15to buy one of our bonds 4% is a lot of
25:17money who else wants to Germany says
25:20we'll buy your bonds for 3% we'll pay
25:25you 3% on your loan you go okay who else
25:28El wants to buy our bonds we want a
25:29better deal than that and China
25:31says we'll give you one and a half%
25:35we'll charge you one and a
25:38half% interest and we'll buy your bonds
25:41we go one and a
25:44half hey I like one and a half that
25:48sounds pretty cool so we sell it to them
25:51at one and a
25:52half then we also figure out what our
25:57what our uh inflation is so let's say
26:00our inflation is
26:032% right so in other
26:05words a
26:08dollar can buy 98 cents worth of stuff
26:13next
26:14year and
26:1796 cents worth of stuff the year after
26:19that in other words the value of the
26:21money goes down doesn't it value of the
26:23money goes
26:24down
26:26so we're we're
26:28borrowing the money we're selling the
26:30bond at 1.5 but inflation is
26:372% what is happening to the value of
26:41their bond over the years it's going
26:43down by half a percent in other words
26:46they are paying us half a
26:50percent on the loan to buy our
26:56bonds let's go back back to that mind
26:59blown mind
27:01blown mind blown think of
27:04this when we lend them when they lend us
27:09money they buy our
27:11bonds we pay back less than they gave
27:18us wait you mean to tell me that you are
27:22making money on debt
27:30yes we are making money on
27:34debt W so you go to an average person
27:37they
27:38say hey would you like to get $10,000 in
27:43in debt would you like to get a add
27:45$10,000 to your debt load and they'll
27:48like uh no I can't I can barely afford
27:52my credit cards as they are right now no
27:54way no no way Bill Gates would say
27:58Warren Buffett would say Jeff Bezos
28:01would say Boeing would say Elon Musk
28:05would say oh yeah you sure you only want
28:09one I should only take I'd rather get a
28:11hundred million do worth of because half
28:14a percent on a100 million is a lot of
28:16money so you're actually making money
28:18here here could Jeff Bezos pay off all
28:21of his debt
28:23tomorrow
28:24yes right why does it then why does he
28:27have that if he doesn't he because he's
28:29making money on his debt here's think of
28:31it this
28:32way
28:36you have two
28:39accounts One account is charging you
28:432% the other account is paying you
28:478% should you take the 8% you're making
28:51to pay off the 2%
28:54loan no no no no if you can borrow money
28:58and make money on that at a higher in
29:02more money than you're paying on
29:03interest rates should you ever pay off
29:05the
29:10loan so you mean sometimes debts good so
29:14sometime a lot of times debts good now
29:16it's personal debt is it good to have a
29:17big credit well I'm bump up my credit
29:19card and really show you no no but if
29:22you can find ways to make money on your
29:24debt then you should do it so when we
29:27sell
29:29bonds that we're basically paying
29:32nothing maybe even getting money when we
29:35sell bonds because we don't have to pay
29:36back as much as we sold them
29:41for
29:43then we're making money aren't
29:46we yeah yeah but no no no so that so
29:50just by by selling the bonds we're
29:52making half a percent sometimes
29:54sometimes a little bit more sometimes a
29:56little less we try to have a goal of 3%
29:58% inflation which means we would be
30:00making
30:031.5% on our debt which actually when you
30:06start to talk about trillions of dollars
30:08that's a lot of money isn't it yeah it
30:11is no no but it gets even better though
30:14what do we do with the money that we get
30:17so we sell the bonds we get the money
30:19what do we do with that money we
30:22invested we build things we do research
30:26and devel we we spend money and what do
30:29we do when we when we spend the money we
30:31create jobs and that stimulates the
30:33economy and it makes us money so on
30:37paper it might look like we're getting
30:39half a
30:41percent on the
30:43bonds but really we might be making 10
30:4712% as a nation on those
30:55bonds you got to think through this it
30:57doesn't doesn't
30:59seem if you just sit there and say debt
31:01Deb oh I owe people it it doesn't seem
31:04right because you don't understand how
31:05money works that's why we're I'm trying
31:07to show you how money
31:09works if debt was so terrible why would
31:12everybody have
31:13it right so for instance you borrow
31:17money to buy a
31:19car don't don't buy a used car buy a
31:21used used car but you borrow
31:24money so let's say you borrow $5,000 to
31:28get a
31:29car is it good to borrow the money to
31:31get a car yes because you're making
31:33money how can I make money by Boring
31:36$5,000 to buy a car because what do you
31:39do with the car you use it to get back
31:40and forth to work use it to get your
31:42groceries you use it to do lots of stuff
31:44don't
31:45you so if you didn't have the car could'
31:48you get to
31:49work maybe maybe not I don't know I
31:52couldn't I live in up in the jungle I
31:54live on a mountain in North Bend right I
31:59they don't even have trash service here
32:00I had to take loads of trash to the D I
32:02mean to give you an idea I couldn't walk
32:05I couldn't so is buying a car making me
32:07money yes because then I can
32:11work now I'm not saying debt is a good
32:13thing but it's not necessarily bad
32:16people say money is the root of all evil
32:18is money the root of all evil no no can
32:21it be can money be used to do some
32:22Terrible Things yes can it be used to do
32:25some wonderful things yes most the time
32:28when you use money do you use it to do
32:30bad things or good things I use money to
32:33buy food to eat is eating good or bad I
32:36use money to buy a car to get to work so
32:38I could earn more money is getting a job
32:41good or bad I use money to buy a house
32:44is living in a house a good thing I use
32:47money to rent an apartment still is do
32:49that or sleep in your
32:51car yeah yeah so sometimes money
32:54actually has some value to it here's the
32:56thing
32:58if you buy a house you borrow money to
33:01buy a
33:02house right and so instead of renting
33:04you bought this house and you buy live
33:07in the house for 20 years and you sell
33:10the house how much is that house going
33:12to be
33:13worth in a lot of countries houses
33:16depreciate in the United States houses
33:20appreciate so you're probably going to
33:22be able to sell the house for more than
33:24you paid for it you just made money on
33:25your debt didn't you
33:31pretty crazy stuff so let's learn some
33:33more
33:34about national
33:37debt okay so here's interest rates
33:40interest rates two and a half this is a
33:42little older data now it's it's
33:44effectively zero right now because we're
33:46trying to stimulate the economy we'll
33:48talk about here's what's even more
33:50interesting everybody say oh China they
33:53owe own all of our
33:55money mainland China only held 5% of the
34:00total
34:02debt in
34:052014
34:075% China doesn't own the United States
34:10they own 5% of our
34:15debt lots of other countries own our
34:18debt we own debt from them too right now
34:21if think you're you're thinking okay
34:24isn't that the same as borrowing money
34:26no no no so you go to to a bank and you
34:29say I want to borrow money for a car
34:31what's the interest rate and they'll say
34:327% right and you're like going okay then
34:35you go to another bank and they might
34:36say six% and you're like you really
34:39don't have a choice you have to borrow
34:40the money don't you United States we
34:43sell
34:44bonds so imagine if the bank comes up to
34:47you and say says you want to borrow the
34:50money here's what you're G to pay they
34:51come up to you you're the person
34:53selling so it puts you in a different
34:55position doesn't when you it's very
34:57different being a buyer than a seller is
34:59it better to be the doctor or the
35:01patient better to be the doctor in most
35:04cases I mean there s so now we're we're
35:07the ones selling the
35:10bonds yeah now you're
35:13thinking why would the Chinese do
35:17this if they're
35:21investing
35:22money in the United States they're
35:25buying our bonds and they're losing
35:28money surely they know that they're
35:29losing money yes they know that they are
35:31losing
35:32money so if
35:37they're buying us bonds they know that
35:40they're not going to get back as much as
35:43they paid for it and they're bought $1
35:47trillion dollar worth of
35:50the they and they're going to lose
35:54they're if they buy $11.11 trillion doar
35:56and it's going to be worth $1 trillion
35:58next year and .9 trillion next
36:02year why would they do that there must
36:04be dumb they're not dumb no no no no no
36:08why would they do that okay think of it
36:12if you put your money in the United
36:13States it's a pretty safe place to store
36:16your money isn't
36:17it so if you have a bank account which
36:20by the way you should have a bank
36:22account right no matter what you need to
36:23have a bank account okay if you have
36:26$10,000
36:28is it smart to carry that with you
36:30wherever you
36:33go no it's not right so what's a safer
36:39thing to do with the money put it in the
36:41bank yes and you put it in the bank
36:44because it's safer there isn't it oh
36:47yeah yeah now how much do they give you
36:49if you put it in a savings
36:52account what interest rate did they give
36:54you in the savings
36:56account all get
36:591% yeah wait you get 1% and we're having
37:03two and a half% in
37:07inflation so you're losing one and a
37:10half% in other words you are paying them
37:14to store your
37:15money is that
37:17smart yes because you could put it in
37:20your in your mattress underneath your
37:21bed you can carry it with you and show
37:23off and what what's that oh nothing
37:26don't look there that bed big bag of
37:27stuff I have with the with the uh uh
37:32handcuffs come on no there's nothing
37:34value in there it's just it's it's a
37:36it's my my my pet bunny or something
37:39like that no no no no you're smart so
37:41you say I'm gonna put it in the bank
37:43because it's safe now where's a safe
37:45place to put money United States is a
37:47very safe place where's another safe
37:49place to put it you ever heard of a
37:51country called
37:53Switzerland yeah people love to put
37:55their money in Swiss banks why they get
37:59terrible
38:00returns terrible return you don't want
38:02it but it's safe isn't it so also when
38:06they get paid back in US dollars US
38:08dollars is what's called A Hard currency
38:12a hard currency is a currency that
38:15everybody knows what it is you travel
38:18anywhere in the world you show somebody
38:20a $20
38:22bill they know what it is everybody
38:25knows what a $20 bill is
38:28and they have an idea on the value of it
38:31even you go places like I was in Maus
38:33which is in Africa right this little
38:35island off of
38:37Africa nobody spoke English right they
38:40spoke French they spoke all these other
38:42languages nobody almost nobody speaks
38:43English you show up with a $20 bill they
38:47go I know what that is right they know
38:50it they might not know the exact value
38:52they have a guesstimate on what that's
38:54worth compare that to the Korean wand
38:59first
39:00off how many people even know what a
39:02Korean wan looks like now if there's
39:05somebody usually I have at least one
39:07person who's Korean and they'll raise
39:09their hand I say yep we got one person
39:11who knows what a w is that that real
39:14joke doesn't work quite so well on the
39:16video does it but it was they kind of
39:20smiled when I said that yeah but most
39:22people don't know what the wand's worth
39:24so did you know when Korea South Korea
39:27trades with Japan they trade in US
39:31dollars because it's stable do you know
39:34when China trades with Japan they trade
39:39in US dollars because it's stable okay
39:45now if you had a trillion dollars would
39:48you want it of the value of a trillion
39:50dollars would you want it in Chinese R&B
39:53or would you want it in US dollars
39:57I'd rather have it in US dollars because
40:00the R&B they do currency manipulation
40:03they change the value of their money all
40:05the time we do that too but not as much
40:08as China China has their their value of
40:10their money set artificially low they do
40:13it they admit that they do that they say
40:14yes we do and we say well you're not
40:16supposed to do that and they go we're
40:18working on it and they've been working
40:20on it for a long time will they ever fix
40:22it who knows but it's it's what happens
40:25if they do fix it all of a sudden
40:28you don't know what the value of your
40:29money is would you want a currency
40:30that's worth this or a currency that's
40:32worth
40:34this I want a currency that's stable I
40:36want to know what the value of my money
40:38is going to be later on so the Chinese
40:42are smart they're saying hey let's store
40:44our money just like you're smart you
40:46store your money you know carry around
40:49you think Bill Gates carries around what
40:5198 billion dollar with him wherever he
40:54goes no no he invests
41:02wow I know it I just love that
41:05face
41:07so
41:09de there's Elon
41:14Musk yeah I don't know sometimes I think
41:17if you're a CEO it's not a good idea to
41:21smoke a blunt on television just isn't
41:25such a great idea and I doubt if if uh
41:28Jeff Jeffy put doesn't he look like Lex
41:30Luther from Superman oh man I know if
41:34Lex Luther here doesn't walk around like
41:36that and there's Warren Buffett these
41:38they all have debt because they're
41:40making money on their debt Amazon
41:43Microsoft Tesla Berkshire hathway all
41:45have debt making money on their debt
41:48which countries have
41:50debt well let's see so Canada very
41:53wealthy country
41:5562% okay United States 60% I don't know
42:00what this percent
42:02means percentage okay the 60% of the US
42:06you said but I thought it was 104% it's
42:08because of intergovernmental loans and
42:10this data is probably a little bit out
42:12of date but you get the idea so
42:156060 France rich country UK rich country
42:19Germany rich
42:21country Italy they've got some economic
42:25problems they're still a rich country
42:27okay Russia poor country
42:316.8 Japan rich
42:37country so China that they don't give
42:40you the list the number there but but
42:42it's it's it's not it's actually a
42:46they've been trending to go down on
42:48their debt yeah yeah now India they kind
42:51of goof it up in Zimbabwe they really
42:53goof it up and we'll talk about Zimbabwe
42:55and India later on but yeah rich
42:57countries have
43:02debt okay bonds I already talked about
43:07bonds so do you know what you can go out
43:09and buy a bond if you want to right now
43:11you can go out and buy one
43:15right you'll hear people say stocks and
43:17bonds when stocks are going down you go
43:19into bonds sure you can do
43:21that I wouldn't do it but you can if the
43:26economy starts to implode Lo and we
43:28start to have which could happen if the
43:30inflation starts to go crazy which could
43:32happen which I'll show you
43:34why then bonds might be a good place to
43:36do because it's a safe place but they
43:38don't give a greatest
43:40return
43:43okay already said is it smart to carry
43:46around fancy purses probably
43:54not let's look at this graph
44:02gni per
44:04person okay Switzerland do people store
44:07their money in Switzerland uhhuh do
44:09people store their money in Norway uhhuh
44:11do people store their money in maau I
44:13don't know I don't know enough about
44:14maau I haven't been to maau right is man
44:17lexber do people start Luxembourg is
44:20like this little manyi tiny Switzerland
44:22Iceland they did and then Iceland's Bank
44:26just blew up on them in 2008 and so they
44:29pretty much pulled out of Iceland so um
44:33they're wealthy but yeah is it is it
44:36safe is it better to store your money in
44:38these countries in Sweden and
44:40Denmark or do you think it's better to
44:42store your money in Madagascar and
44:46Central African
44:48Republic and
44:50Haiti
44:52Mali
44:54Tasmania Nepal I don't want to put my
44:57money
45:02here okay hard currency yeah see this
45:06hard currency everybody knows what this
45:08looks like you know what's fun is when
45:10you travel to other countries you get to
45:12look and see what their money looks like
45:13and some it's like playing Monopoly you
45:16know what I do when I go to another
45:17country and and I can't figure out the
45:18Curren The Exchange R I can figure it
45:20out but it gets boring I just go uh uh
45:24and they pick out what how muchy is
45:27worth right it's usually with coins so
45:29lots of countries use coins we don't use
45:31as many coins as a lot of other
45:32countries but if you have a handful of
45:33coins and you can't figure out what
45:35they're worth because they have all
45:36these numbers and they're tiny and you
45:38just want to get this you just want to
45:40buy that pack of gum so you just hand
45:42them and say uh and then they pick it
45:44out and I've never had anybody RI me off
45:46doing that yet well that I know of but I
45:49mean would
45:51you hard currencies again see all these
45:54weird weird Monies
46:00now we're going to
46:02change places a little bit right we're
46:05going to start to talk about a different
46:08now at the very beginning of this class
46:09it looks like we jump all over the place
46:12but then you're going to see that this
46:13will all start to
46:15colless and come into one area and then
46:18you'll see how it's all related to money
46:21so I said let's talk about my favorite
46:23board game what's my favorite board game
46:24I'm a business teacher who talks about
46:26money
46:28what board game involves
46:31business
46:34Investments and
46:37money yeah Monopoly Monopoly is my
46:39favorite game I I love Monopoly by the
46:42way I've been playing Monopoly forever
46:44ever ever and then I've a friend of mine
46:47told me he says you know because
46:48Monopoly gets boring it just goes on and
46:51on and on and I was playing Monopoly
46:55with a friend of mine and I know
46:57it was weird all of a sudden he had some
46:58hotels on his properties that I didn't
47:01remember him
47:03getting and I said how'd you get those
47:05hotels he says well I bought them I go I
47:08don't remember you buying them he says I
47:11I did you just don't have a good memory
47:15I'm okay he says you call me a cheater I
47:18said no I'm you didn't say you're okay
47:21and then I got up to go to the bathroom
47:23and he had houses on some other
47:24properties and I go you're Che cheating
47:27he says that's how you're supposed to
47:28play the game it's a cheating game it's
47:31so much more when you more fun when you
47:32cheat especially when you finally do get
47:35caught so people were having so much fun
47:37cheating at this game they actually came
47:39up with a cheaters version of Monopoly
47:42where the whole goal is to not get
47:44caught if you do get caught uh you have
47:47to wear handcuffs and everybody gets to
47:49be the banker so you like oops here it's
47:52a lot of fun so we're GNA talk about my
47:55favorite board game Monopoly but not now
47:58it's time to go right thanks for coming
48:01see you next time

About this transcript

This page contains the full transcript of Comparative Advantage by Andrew Johnson, generated from the public captions YouTube serves with the video. The transcript has 7,183 words across 1,067 segments, with the original timestamps preserved so you can click any line to jump to that moment in the embedded player.

What you can do with it

Use the transcript to take notes, quote the speaker, build a study guide, generate a summary with ChatGPT or Claude via the YouTube Summary tool, or export it as a timed subtitle file with YouTube to SRT. You can also re-open it in the transcriber to translate the transcript into 100+ languages.

Free YouTube transcript tool

YouTube2Text is a free YouTube transcript generator — no signup, no daily limit. Paste any YouTube link and get the full transcript instantly, with timestamps, click-to-jump, translation to 100+ languages, AI prompts for ChatGPT, Claude, and Gemini, and exports to TXT, SRT, VTT, or Markdown.