How COVID-19 MAKES the Rich Richer - Gary EXPLAINS the theory

Summary

This video explores the financial consequences of the Coronavirus crisis, focusing on the impact of government money printing, the shifting dynamics of income and wealth distribution, and the growing wealth gap. With the UK government printing £300 billion, most workers are receiving reduced incomes, while the rich are accumulating savings. The video explains how money flows through the economy and highlights the potential long-term effects, including rising house prices and stagnant wages. It proposes taxing wealth instead of income to address the crisis and ensure future financial security for everyone.

Takeaways

• 😀 The Bank of England printed £300 billion in response to the COVID-19 crisis, which is a massive amount of money.
• 😀 This money was created by the central bank, not raised through taxes, and is used to support the economy during the crisis.
• 😀 Most of the printed money is lent to the government, which increases the national debt.
• 😀 While many workers are receiving furlough payments, they are still earning less than before the crisis, with only 80% of their original wages covered.
• 😀 Although furloughed workers are receiving some support, the real beneficiaries of the printed money are customers, especially the wealthy who spend less on luxuries.
• 😀 The wealthy are accumulating savings during the crisis as they reduce their spending, particularly on non-essential goods.
• 😀 When the rich stop spending, it disrupts the flow of money through the economy, leading to lower wages for ordinary workers and higher prices in the market.
• 😀 Rich people typically invest in assets like real estate, stocks, and bonds, which increases their wealth further, leaving ordinary people behind.
• 😀 The increase in government debt could lead to future austerity measures, similar to those seen after the 2008 financial crisis.
• 😀 The crisis is causing a widening wealth gap, where the rich get richer while wages stagnate, housing becomes more unaffordable, and living conditions for regular people worsen.
• 😀 A potential solution to fix the growing wealth inequality is to tax wealth rather than income, ensuring that the richest contribute to solving the crisis.

Q & A

What historic changes are happening in the world of money due to the Coronavirus crisis?

The Coronavirus crisis has led to unprecedented levels of government and central bank intervention, including the printing of large amounts of money. These changes are likely to dominate the global economy for years or even decades, affecting financial positions worldwide.

How have most workers' incomes been affected during the crisis in the UK?

In the UK, most workers' incomes have been relatively protected through government furlough and self-employment schemes. However, about 5.5 million workers are falling through the gaps and not receiving adequate income support.

What is the Bank of England's role in the crisis, and how much money has it committed to printing?

The Bank of England has committed to printing £300 billion to support the economy during the crisis. This amount is more than three times the net worth of Jeff Bezos and equals £4,500 for every man, woman, and child in the country.

How does money printing by the central bank work in practice?

Money printing by the central bank means creating brand-new money that doesn't come from taxes. The Bank of England credits its own account with new money, which is then put into the economy, mainly through lending to the government.

Where does the newly printed money go once it is created by the central bank?

The newly printed money is lent to the government by the Bank of England, leading to an increase in government debt. The government then uses this money to provide income support to furloughed workers and others affected by the crisis.

How has the income situation of furloughed workers been affected by the new money?

Furloughed workers are receiving only 80% of their original wages through government support, which means they have less income than before the crisis. This leads to a discrepancy in where the new money goes.

Who ultimately benefits from the new money being printed, and why?

The rich, who tend to spend more on non-essential items and luxuries, benefit the most from the new money. As many consumers reduce spending on non-essentials, the wealthy accumulate savings and money while the general population struggles.

What impact does the decline in spending by the wealthy have on the broader economy?

When the wealthy stop spending, the flow of money to businesses, which normally employ workers and pay wages, diminishes. This disrupts the circular flow of money in the economy, leading to a loss of income for workers and worsening their financial position.

How does government debt affect the general population, and what lessons can be learned from the 2008 financial crisis?

Increased government debt can lead to austerity measures, as seen in the 2008 financial crisis. This often results in cuts to public services and social safety nets, directly impacting ordinary people, especially those already struggling financially.

What will likely happen to the financial situation of ordinary people in the coming years due to the actions of the rich?

As the rich continue to accumulate wealth, house prices and prices for goods are expected to rise, while wages remain stagnant or even decline due to rising unemployment. This will make housing unaffordable and further deteriorate living conditions for the general population.

What solution does the video propose to address the inequality created by the crisis?

The video proposes taxing wealth, not just income, to address the growing inequality. By targeting the wealthiest individuals and corporations, the government can redistribute money more effectively, helping to stabilize the economy and improve the financial situation of ordinary people.