ShmoopTube

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finance a la shmoop what is inflation-adjusted hyper currency and

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commodity no no no no no I said frozen concentrated orange juice right there

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that's better commodities that's what this is frozen [milk shake]

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concentrated orange juice yeah it's the same whether you buy it here at Uncle [canned orange juice]

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cheapies fruit barn or from Amazon or from Safeway it's a total commodity and [barn, Amazon website, Safeway building]

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when inflation hits the fan yeah like that then commodity prices are usually [inflation hits ceiling fan]

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the first to react commodities you know things like oil and electricity and [oil ships, light bulbs]

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roundup weed killer and the price of generic picture frames on Amazon you [weed killer, picture frames on Amazon]

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know those things all right well why does commodity pricing even matter well

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let's talk about inflation for a sec inflation measures the rate at which

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prices of goods and services are rising and they generally rise over time the

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greater the level of inflation the lower the purchasing power of your currency

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well in a world of inflation taking off going up up up and the Fed raising rates [house floating up with balloons]

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hoping to tamp it down down down well equities or stocks and debt or bonds [house floating down]

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will get crushed while commodities should just keep going on up up up in [air balloons rising]

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lockstep with inflation rates because they're basically a store of cash and

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you can turn them into cash so quickly and they don't really change that way in

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essence commodities are a good balance to an investment portfolio highly

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exposed to oh say the stock market well what else acts this way real estate yeah

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it's kind of a commodity or at least it behaves like one in the grips of [air balloons rising]

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inflation oil yep gold yep what about currencies commodity well yes and no [oil rig, gold ingots, paper money]

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currencies react to other currencies generally on a relative basis but they

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behave very much like commodities so then if you turbocharged inflation well [different world currencies]

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yes you get then hyperinflation in most times the US dollar has been considered [house rocketing out of orbit]

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a relatively stable bet like think Latin American debt in a historical frame that

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is the countries were swimming in debt payable in their own currency in the [world map]

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1980s and much to the chagrin of the Western countries who loaned them [bags of money in western countries]

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billions and billions of dollars those latin-american countries decided to run

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the Xerox machine all through the night and weekend printing more and more money [money being printed]

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so hyperinflation would be created and the 18 kajillion dollars owed by

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Venezuela would feel instead like only a few million bucks to that country and

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while the West learned a big lesson about loaning people

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irresponsible with her own currency oh and there was that other little one

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lesson that the West learned about punitive war reparation rules check out [world map]

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1930s vimar germany's hyperinflation currency issues this wheelbarrow full of [wheelbarrow full of money]

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german marks yeah at the time this picture was taken it bought a loaf of

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bread and only like two glasses of juice juice juice [two orange jews turn into orange juice]

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