Okay. Welcome back to Gary’s Economics.

Today we are celebrating the four year anniversary of this channel

by rewatching our very first video

All right, so we're going to put this out in the middle of July.

I started this channel with my mate

Simran on July 14th,

2020.

And the first video we did on the channel was basically a video

which explained how the money being

given out by governments during COVID was going to end up with the rich.

How it was going to lead to a massive increase in inequality

and how it was going to cause a massive financial crisis.

You know, back at the time,

at the beginning of COVID, I became really obsessed with this idea

that COVID was going to cause inequality and it's going to cause an economic crisis

and I was writing articles for newspapers and things like this, and

I really wanted to start a YouTube

because I wanted to be like, send this message directly to ordinary people.

And I used to chat on my school WhatsApp chat to my friends, like,

I'm getting really pissed off writing for newspapers

ordinary people are not seeing it.

So I want to start YouTube.

But you know, I don't know anything about videos.

So I was really lucky.

A friend of mine called Simran messaged me and said, you know, I've got a camera.

Just come to my place and we’ll shoot a video and start a YouTube channel.

So that was four years ago.

We made this video and I thought for the four year

anniversary of the channel, it'd be nice to go through it.

I still remain convinced that this money

given out during COVID is what's driven the fall in living standards.

And I talk about it a lot in a lot of my videos.

The government's given out £900 billion, it’s ended up with the rich.

That's increasing inequality.

And people sometimes ask you know, how did that money end up with the rich?

And obviously,

people who have come to the channel more recently, haven't seen the first video.

So I thought it would be nice for the four year anniversary

to do something a little bit different and to go through together

that first video on the channel. So you can see

how the channel started off.

The predictions I made back then at the beginning of COVID.

And yeah, have a bit fun as well.

So let's get started. Let's watch this video.

This video is about coronavirus and money.

Now, this is a really important video

I've been wanting to make it for a long time because

huge, huge, historic things are happening in the world of money.

So this is the opening of the video.

We're really lucky Simran had like a big white wall

behind him in his in his front room which we could shoot in front of.

And we wanted to shoot there so we could do some animations,

which we’ll see the animations come in.

First thing is, we messed the audio up really badly.

We forgot to turn the lav mic on.

So this is just camera only audio.

You can see the audio quality is quite bad.

Secondly, you can tell I'm really pumped up and excited

because I'm talking a little bit more ghetto than usual,

which is which is what happens when I get very emotional

When I was working as a money trader

in the 2008 crisis, nothing ever happened of this speed.

That's me just very briefly mentioning I was a trader.

I actually wanted to do this whole video without talking about that.

So we'll see if I mention it again.

What’s happening in the world of money here is going to dominate the economy

for the next few years, quite possibly within a few decades.

It's going to affect you, going to affect your family's financial position.

So if you want to understand what's going to happen in the economy

going forward, you gotta watch this video.

people complained a lot that I was clapping my hands too much.

I was emotional.

Now, so far in this crisis.

Most workers have had their incomes relatively protected.

In this country,

the UK. Most workers are still working and getting their regular incomes.

Of those who can't work.

The majority are being supported by government

furlough and self-employment schemes.

Now, as many as five and a half million workers are falling

through the gaps of those schemes and are getting almost no income support.

Now, those guys already are feeling the pain of this financial crisis.

But what we're going to explain in this video is how

even if your income is being supported, the change in the world of money

behind the scenes are going to affect your financial position going forward.

Man I'm talking really quickly, this video,

I think I was erm, I had a lot I wanted to say.

I was really

worried about what was going to happen with this money,

where it's going to end up and this funny thing happens where

you've kind of semi scripted the video in your head

and you’re just trying to get out really, really quickly.

But yeah, just to make the ideas clear, you know, we knew government's

going to give a ton of money out and my background

is and was as an inequality economist.

So I really wanted to know who's going to end up with that money.

And we're going to go through the logic of it.

Now the biggest changes have been happening

in the world of government and central banks.

couple of good photographs there.

That I went and took for the video Now, this is happening all over the world.

But in the UK, the central bank, the Bank of England

has committed to printing £300 billion So that was the initial amount.

That was the initial amount.

I think something happened which confused a lot of people here,

which was governments ran a £300 billion deficit,

which means governments gave out £300 billion UK government

and at the same time the central bank, the Bank of England did 300 billion QE.

I think these numbers get confused a little bit.

The best way to

understand it is that the central bank printed 300 billion.

They gave it to the government and the government gave it out.

There's two separate

numbers here, which is the amount

of quantitative easing, which is the amount of money

printed by the central bank and given to the government and the deficit.

I think the deficit is more important.

But at this point the two numbers were the same.

So that 300 billion, if we consider the deficit, is now 900 billion,

it ended up being much, much more.

But the beginning of COVID,

we knew 300 billion was the amount that we knew at the time.

£300 billion.

It's an enormous amount of money.

It is a massive amount

It's four and a half thousand pounds for every single man, woman

and child in the country.

900 billion is obviously three times that.

It's more than three times the net worth of Jeff Bezos, the world's richest man.

Just to clear things up a little bit.

That three and a half thousand pounds is man, woman and child.

Recently, I use more amount per adult.

So 900 billion, which is the current amount, is about £19,000 per adult.

That's the total government deficit since the beginning of COVID.

Now, when such a huge amount of money, gets printed and put into the economy,

its really important we understand three things about it.

One, how does it work?

So we're going to talk about exactly what money printing is.

Where does the money go?

And three, where does the money end up?

Now, those last two things, they may sound similar,

but they're actually crucially different.

I'm going to explain why Okay.

So number one, how does this new money work?

So I think a lot of people are confused by the concept of money printing.

It's important to understand that this £300 billion is brand new money

created by the central bank.

Now, if that's confusing to you, you just need to understand

that the central bank has the legal right to print or create brand new money.

Now we say print money to

give the visual idea of a printing press printing out new banknotes.

But in reality, nowadays, most money is electronic.

So what that means in practice is that the Bank of England is allowed

to simply credit its own account with new money.

Some good visuals there.

Again, this is a slightly confusing idea here,

which is first the central bank prints it,

then the central bank lend it to government,

then the government gives it out.

Since this video, the picture

has been complicated a little bit by the fact that

government deficits now.

So money which government gives out above and beyond taxation,

is no longer funded by printing.

So the initial COVID government deficits

were essentially funded by printing money.

But since then it's largely been funded

by borrowing money from the rich.

In both cases, somebody gets richer.

If I print money and give it to society, somebody gets richer.

If I borrow money and give it to society, somebody gets richer as well.

I think the best way to understand it is Imagine you have £100

and I borrowed £100 from you,

so now I owe you £100.

And then I give

the hundred pounds back to you,

but not as a repayment of the debt, just as a gift.

You now have £100 and your owed £100, so you get rich either way.

So there's two kinds of government

deficit here which sometimes confuse people a bit.

One is funded by

central bank printing, one is funded by borrowing.

But in both cases, the government gets poorer and somebody somewhere gets richer.

And further into this video we're going to discuss who it is who gets richer.

Okay, so this is brand new money.

It doesn't come from anyone.

It's not raised through taxes.

It's simply created by the Bank of England.

When that money gets poured into the system, we need to understand

who's going to get it. And the next question.

Where does it go?

this, you know,

this is a really good analysis by young Gary.

You know, I was amazed at the beginning of COVID.

We knew enormous amounts of money were going to be poured into the economy

by the government.

We knew the government would be impoverished.

We knew somebody would get richer.

I was amazed, and I still am amazed today how little discussion

there was at the time and how little discussion has been since

of who has gotten richer as a result of those deficits.

So the young Gary is asking the right question.

Now, most of this money is getting lent from the Bank of England

to the government.

Now, even though this is brand newly created money

and the Bank of England is a government institution,

the government still has to borrow it from the Bank of England.

This creates a debt which legally the government has to pay back.

and we're still talking about that government debt today.

Obviously, it's affecting government spending.

So this reason government

debt has increased hugely already in this crisis and just recently UK

government debt has gone above 100% of GDP for the first time in over 50 years.

That was partially because GDP fell because of COVID. But

government debt

is still so much, much higher than it was before COVID.

So what does the government then do with this money?

Well, the government gives most of it to furloughed workers and other workers

who can't get their income during the coronavirus crisis.

This brings us to part three.

Where does the money end up?

Now we know the money is being paid to furloughed workers.

But if we look at the actual situation of furloughed workers,

they're actually receiving less income than they were before the crisis happened.

This is really, really important.

People still to this day will post my videos

and say all of that money the government gave out,

it went to nurses, it went to furloughed workers.

It went to, you know,

how can you criticize that?

It's the furloughed workers.

But the money went in the first case to the furloughed workers.

But furloughed workers don't get richer, right?

This is the thing that

I was really thinking a lot about early COVID.

So, yes.

And I think I'll probably say this in a video. Yes.

The furloughed workers get the money in the first instance,

but they’re not the people who end up getting richer.

This is because even though they're receiving government

income support, it's only 80% of their original wages

and their original wages are no longer coming in.

So this creates a mystery.

We know that a lot of new money is coming into the economy,

and we know that ultimately it's going to the furloughed workers.

But the furloughed workers are no richer than they were before.

So where's the money going?

Good analysis.

Good. It's a good question.

That brings us to question number three.

Where does the money end up?

Now we know the money is being paid to the furloughed workers,

but the furloughed workers

have less money than they had before the coronavirus crisis

because they've lost the wages that they were originally being paid.

If we want to know who ends up with the money,

we need to find out who has those wages.

Where have the wages gone that used to be paid to the workers.

So if you want to understand, we have to follow this cash flow back

through the system.

Now, normally wages get paid to the workers through the companies.

But if we took the companies, we'll find that most of these companies

are struggling as well,

because customers have simply stopped coming to their stores

and stopped buying their stuff.

So we need to follow the cash flow back one step further to the customers.

Now, the customers in this crisis

have dropped their spending massively So this is a good analysis, right?

The money, the furloughed money goes to workers,

but they’re not getting richer because they're not getting their wages.

So who has the wages?

The companies that employ them.

So are the companies getting richer?

No, they're not because they've been shut down.

So they're no longer getting their normal revenues.

So who has the revenues that used to go to the companies

that used to pay the wages or the photo, the workers?

That's the customers.

This is really, this is really good logic and it really explains

how the the end

benefitors of the COVID deficit

and the deficits we’ve had since are ultimately the customers.

For that reason.

Many of these customers are holding more money in their pockets.

That money is not going to the companies, which means the wages have stopped.

So the people who are holding more money, the net benefitors

of the new money being put into the system are actually the customers.

Now, when I say that,

you're probably thinking, wait a minute, I'm a customer.

Where's my £4,500 per man, woman and child?

And that would be a good question.

The reason why you might not be holding £4,500 more than you were before

is because not all customers are created equal.

Remember the reason that customers have more money

now than they had before the crisis is because they've cut their spending.

But it's not all spending that has cut here.

Spending on essentials such as rent, mortgage, food and bills

still has to be paid.

So if most of your spending is on those essentials,

you're spending won’t have fallen by much.

The spending that has fallen is on non-essentials and luxuries.

So see here, the customers who are saving the most money...

I pull a really great pose there when I say, “see here”...

Again, this is good analysis, right?

Customers save money,

but it's not all customers because ordinary families

are still spending just like they were before.

It's only richer people who have a lot of luxury spending,

their spending collapsed during COVID.

So these are the guys that accumulated the money are the ones who have very high

spending on non-essentials and luxuries.

Well, you're probably starting to see where I'm going with this.

Who spends a lot of money on luxuries.

The customers who are accumulating money during this crisis are the rich.

This is a good conclusion, correct conclusion.

Good analysis.

Now, I wrote an article predicting this back in March

explaining how rich people, because they would cut

their spending, would accumulate savings and money during this crisis.

Gary’s that proudly predicted it in advance.

Since then, data

has come out from a lot of institutions, including the IPPR in the UK,

demonstrating clearly that rich people have been accumulating money

during this crisis because their spending has reduced so much.

There’s a good story here.

I wrote this article for a website called openDemocracy

in March 2020, and then I wrote for The Guardian shortly afterwards.

And somebody from the IPPR contacting me saying, oh that's interesting.

And I was like screaming at her, “why aren’t you guys doing this analysis?”

How could you allow the government to give out £300 billion

and not do any analysis of where the money is ending up.

So I haven’t mentioned in the video.

But the reason the IPPR did that analysis was because of my first article.

It's interesting to compare the situation of a furloughed worker

with a richer person in the economy.

Furloughed workers have lost their income, which comes from services jobs,

but they've kept most of their spending, which is largely on essentials

like rent and bills.

Richer workers who tend to work in office jobs and can work from home

have kept their incomes.

Whereas their spending, which is largely on luxuries, has collapsed.

That's quite interesting.

Everybody thinks the furloughed workers are getting the money,

but if you look at furloughed workers, they're poorer than they were before.

The people who are actually getting richer are rich people

because they've kept their income, lost their expenditure.

And nobody was saying this at the time, really.

And I think even now, there's not really enough discussion

of, you know, how much richer rich people got during that period.

It's important to understand

the significance it has on the economy, when the rich people stop spending.

Now, in normal times,

rich people have very high spending much higher than ordinary workers,

because that spending goes to companies which employ workers.

It contributes to wages being paid.

This is really important because ordinary workers

have to pay bills, rent, food.

When they pay that money,

a lot of that money ends up going to the owners of the houses

and owners of the corporations who are themselves, the rich.

Owners of the mortgages as well.

Some good,

some good

animations, some good animation work there from Simran.

We actually stopped doing animations after this video because they increase

the time it took us to make the videos so much, but they are good.

I’d love to do more.

If we had like, if we had more money

to put in the channel, we would do more animation on the videos.

So as you can see in this diagram, in a normal situation,

the spending of the rich goes to the workers.

And when the workers pay their rent, bills and food, it goes back to the rich.

Some good class analysis there.

The money flows around in a circle.

So what happens when the rich suddenly stop spending?

Well, that money was driving the wages for ordinary workers.

Suddenly, the workers wages have disappeared,

but they still have to pay the rent.

They have to pay the mortgage.

They still have to pay the bills.

How are they going to do that with no income?

It's a massive problem.

And if nothing happens, some of these guys, they could become homeless.

They could even not even get food on the table.

So it's no surprise that in this emergency situation,

the government and the Bank of England stepped in with the furlough scheme.

This provides a substitute income to ordinary workers

who have lost their wages.

It's important to realize that at this point, from the perspective

of the worker, things actually look quite similar to pre-crisis.

They've got income, they've got their expenditure,

their incomes a little bit less.

They have to save a little bit.

But from their perspective, the situation is largely unchanged.

But look at what is happening outside of the system.

It's really interesting.

You're an ordinary worker, you've lost your wage,

but you're getting this money from the government.

You just think everything's kind of the same.

You lost one income, you gained another income.

But the money, government money is flowing through workers to the rich

and government is accumulating debt and and the rich are accumulating money.

It's kind of like a massive money laundering scheme.

Where the government is just, money is funneled

from the government to the rich through ordinary workers.

And nobody, ordinary people didn't realize it was happening.

Kind of crazy.

And it was obvious once you did this analysis and it's amazing nobody did it.

That behind the scenes,

inequality would be increasing enormously during that period.

Previously, the money was going round in a circle.

What's happening now?

The money gets printed by the Bank of England.

It goes to the worker.

The worker pays their bills.

It goes to the rich. And then

it just stays

there because the rich are not spending their money anymore.

I must have said the wrong word there and we tried to overdub it.

It sounds ridiculous, but we did our best.

That means money piles up with the rich and accumulates.

And what happens with the government?

They accumulate debt.

This is such an important thing to understand.

Such an important thing to understand.

During COVID, the government accumulated an enormous amount of debt

and the rich have the income on the other side of that.

We often talk about the debt as if it's just, you know, like a

it's kind of a conceptual evil of the debt is owed to the rich.

The government debt has increased

in proportion to the cash holdings by the rich.

Okay.

So we've learned that during the COVID crisis,

most people's financial situation appears relatively unchanged.

However, behind the scenes, the government is accumulating

big piles of debt and the rich are accumulating big piles of money.

The next question is

why does that matter?

Well, the easier part of that question

is to talk about why big government debt could affect you.

Those of you who are old enough to remember 2008

will remember at that time too, government debt increased

and the government came in and used that to enforce austerity.

My favorite guys, David Cameron, George Osborne.

Now, that impacted a lot of people.

It had a lot of effects in many, many different ways

that could happen again if government debt increased again.

It's a good prediction.

It's a good prediction.

Government debt has increased massively and now we're in a situation where,

you know, increasingly having austerity forced upon us

because the government basically gave a ton of money to rich people.

Now, I'm not a politician.

I'm not a political forecaster.

I'm an economic forecaster.

I can't tell you if austerity will happen again.

It is happening again.

But what I want to talk about is those big piles of money

stacking up in rich people's bank accounts.

It's a good question because everybody talks about the increase

in government debt, but nobody ever talks about this massive increase

in cash accumulation by the rich, which I think is arguably more

important and more damaging.

How is that going to affect you?

So what does it mean if the rich get richer?

I mean, if they just stack the money in their bank account,

it's probably not a problem right?

Personally, I worked in the finance industry for a long time.

I managed money for the rich.

I got involved in understanding how they invest their money.

Through that, I made some money myself.

I got involved in investing myself.

I know a little bit about what the rich do when money starts

piling up in their bank account.

so I didn't mention I was a trader.

Number one, they buy houses.

But it's not just houses they buy.

I want to be clear at this point in time, The Guardian were predicting

and a lot of the media predicting that because of the weak economy,

house prices would collapse.

So this is a very good prediction because house prices

have gone up a lot since July 2020.

When this came out.

They buy stocks.

They buy shares. They buy bonds.

Stock prices are an all time high in basically every country in the world

again, Gold prices hit a new all time high.

I actually put a massive bet specifically on the gold price

a few months before this video.

I bought gold, at I think 1470

or 1460 an ounce and it's 2300 now.

It's gone up massively.

What's that like, 60, 70%?

To be honest, they buy everything.

Now, let's look at what happened last time

the government used money printing to solve a financial crisis.

We can look back to the 2008 crisis.

In many ways that was similar.

That time too, the Bank of England

printed a huge amount of money to try and deal with an economic crisis.

What happened then?

Well, within six years, stock prices in London had doubled.

It’s happened again.

Within three years, the gold price was up 150%.

It's not quite 150, but it's gone up well in pounds, maybe 70, 80%.

These are very good predictions and very monetizable predictions.

You know, it’s not easy to do that.

And within ten years of the crisis, London house prices had doubled.

That will happen again.

What does that mean?

Well, in the 20 years since 2000,

through that period of crisis and rising house prices,

the percentage of young people who've been able

to afford a home in this country has fallen from 65 to 27%.

That will continue to fall, definitely.

What will it mean if house prices double again?

It will mean that realistically,

people who are from a family that doesn't have a home now

will probably never own housing.

This is obviously continuing to happen.

It means that those people will be locked out of the housing market forever.

It means that young people find it more difficult

to get the security of a home, to raise a family.

And at the same

time as that is happening, stock prices are going to go up.

Gold prices are going to go up.

The rich are going to get richer than ever before.

I don't want to big myself up too much here, but

nobody was saying these things at the time.

And this is a succession of extremely accurate predictions made four years ago

But it's not just stocks and shares and housing that these guys are going to buy.

They'll be in the shops too, and they’ll have a lot more money

to push those prices up.

I don't think I need to comment on the accuracy of that prediction.

It's very likely that over the next few years,

we're going to see the prices of a lot of things increase.

He's pretty good.

He's pretty good this guy.

At the same time, what's going to happen to wages?

Well, we've already seen the unemployment rate double in this country,

This is the first prediction. I've watched this before.

This is the only prediction

which was not really accurate in this video and we'll talk about it.

and that's in spite of a furlough scheme encouraging firms to keep jobs on.

There's currently 9 million workers on that furlough scheme.

And when that starts to be wrapped up, a lot of those workers

will probably be pushed into unemployment.

So at the time I made these, people will not remember this now.

At the time I made this video in summer 2020.

The furlough scheme was due to end

before lockdown ended, which

was obviously an insane policy.

And what you kind of see here is my naivete as an economic forecaster

rather than a political forecaster.

It probably should have been obvious at the time that they would have

had to extend furlough, but I've just got my kind of economics

maths brain on, which is if you end furlough before you end

lockdown, you're going to see a massive spike in unemployment.

But of course, we know now in hindsight, furlough was extended for years,

which at the time people people didn’t know it was going to happen.

But clearly, I didn't anticipate that

With unemployment going up and up and up.

It's very likely that just as house prices and prices in the shops are rising,

wages will stay low.

I mean, that's pretty consistent.

You know, wages have definitely not kept track with shop prices or house prices.

That’s definitely correct.

Okay, so what can we do?

We know that under the current situation, the rich are going to get richer

while wages fall, house prices rise and shop prices increase.

It's going to make housing unaffordable and it's going to drop living conditions

for regular people.

it's bad grammar, drop living conditions.

It's a big problem of mine, bad grammar.

Well, personally, I think that it can

if you go back and look at this slide explaining the problem.

We can see what's happened.

Money currently is flowing from the government to the rich,

leaving government with big piles of debt and the rich with big piles of money.

We can actually fix this with one single arrow in this diagram.

If we start money moving

back around the system away from the rich, no more cash piles to the rich.

No more debt for the government.

In my opinion, we need to find ways to tax the truly rich in our society

by taxing wealth rather than just income.

It's good analysis and it's amazing fewer people are making this point.

You know, in the last five years,

the wealth of the richest has exploded,

Government debt has exploded

as a pretty obvious result of

these furlough and these COVID policies.

You can reverse that if you tax the rich.

You know, it's amazing that we don't do it.

And here you see me just trying to make it clear

when I say we tax the rich, we're not talking about

necessarily high wage earners.

We're talking about extremely wealthy families,

which is something I continue to say to this day.

This will draw money from the wealthiest people in our society,

the people who get their income from owning assets rather than working.

Ultimately, we need to find a way to make the richest in our society

contribute to fixing this crisis rather than simply profiting from it.

Otherwise, financial security

is going to move out of the reach of our kids.

Thank you for watching.

This is a message which is really important to me.

If you think it's important too, share with your friends, share with your family.

If you want to know more about me,

you can see my Twitter and my website in the description.

Come back for more videos.

Okay.

Thanks again.

Me trying to figure out what to say at the end of the video.

You know, it's a really good video.

I'm glad we’ve gone through it, because I know

obviously at the time we made this video, we,

it's the first video on the channel, so obviously we didn't have no followers.

We probably got like a couple of thousand views,

which is mainly our friends and our friends of friends.

You got 60,000 views on it now, but obviously the channel

has grown massively, especially in the last sort of six months,

and a lot of new people won't have seen it. So,

you know, my background is as an inequality economist

and I made a lot of money betting that inequality will damage living standards

in the last five years and see the biggest

and fastest increase in inequality in the history of the Western world

and I believe it’s driving living standards down.

It's a powerful video.

You know, even now, five years later, I think the predictions are really good.

It's not easy to make good predictions like that. So,

yeah, you know, watch it, understand it, share it,

but more importantly, understand that

inequality is hurting living standards and it's not going to get any better.

It's going to keep getting worse.

Hopefully our videos

have gotten a little bit better in terms of professionality.

And I think maybe some people question that.

But more than anything,

the channel is growing a lot and we're really reaching of people.

And that's thanks to all the people who've been watching all of these four years.

Unfortunately,

inequality has continued to get worse and worse and it's not getting any better.

But thanks to the work of people like you who been watching

throughout the years,

we managed to educate more and more people that it's a problem.

And hopefully if you keep teaching people,

we can eventually reach the politicians and we can force them

to reverse this growth in inequality.

And if we do that,

then we can improve living standards and we can stop seeing this

dreadful increase in poverty.

I want it to change.

I've been doing it for four years now.

I'm going to keep doing it.

And thanks for your support.

And let’s try and make things better. Tax the rich.

Reduce inequality. Save the future. Thank you