Posts Tagged ‘one minute’

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The Money Supply (Monetary Base, M1 and M2) Defined & Explained in One Minute

The money supply tells us how much physical currency as well as assets so liquid that they are pretty close to the acting physical currency exists in the economy of a country at a certain point of time. This data is usually reported by the country's central bank and the way it is measured can differ from country to country. In the US, for example, the most popular data points are Monetary Base It tells us […]

Altcoins (Bitcoin Alternatives) Defined and Explained in One Minute

Altcoins are alternatives to bitcoin, they appeared because those who are behind wanted to put something new on the table. The first altcoin was namecoin, released on April 2011 to facilitate the formation of a decentralized domain name system, thereby marking the internet harder to censor. On October 2011, litecoin appeared and used script as a hash function and many more altcoins started popping up. Now, over 1,600 altcoins are listed in the altcoin […]

The Market Capitalization (Market Cap) as an Indicator Explained in One Minute: Stocks, Bitcoin & Cryptocurrencies

The market capitalization of a company or market cap, basically tells us how much money would be generated by selling all the shares at the current market price. In other words, you multiply the market price of 1 share by the number of outstanding shares, and there you have it, that is the market cap. The number of shares is not static and it goes up if that company issues new shares so as to raise […]

Diversification Explained in One Minute: Don't Put All Your Eggs in One Basket When Investing

If you knew for a fact that currencies will collapse next month, then you will quickly get rid of all bank deposits and cash savings by buying all sorts of assets from stocks to precious metals. The same way if you knew a deflationary crash was coming, you would do the exact opposite and sell various assets before prices will collapse. There is just one problem, […]

The Standard Deviation (and Variance) Explained in One Minute: From Concept to Definition & Formulas

Practically, nobody calculates the standard deviation by hand as there are tons of applications that do it for you. However, it is crucial to understand what exactly this term means and you know why we care about it. To understand what the standard deviation tells us, think about the huge room in which one on the left side, there are all of the male members of your family. On the right side, there […]

Currency Wars (Competitive Currency Devaluations) Explained in One Minute

Let us assume two orange juice producers are competing against one another, one from USA, and one from Spain. Each only employs people and buys ingredients from its own country. We will assume that the US company can export frozen concentrated orange juices for two dollars per pound, whereas the Spaniss company can do it for 1.95 euro. If the exchange rate […]

The Gold Standard Explained in One Minute

Almost 2600 years ago, the first gold coins were minted and used for trade. Later on people started storing their gold in well guarded vaults and bought goods and services using the receipts given to them by those running the vaults. Pieces of paper they could always exchange for real gold. That is how paper money first appeared and things of all from there. Initially, most currencies were pegged to gold […]

The Paradox of Thrift (Underconsumption and Oversaving) Explained in One Minute

The paradox of thrift was popularized by John Maynard Keynes and adopted by many economists since then, especially the Keynesians. However, the concept itself was mentioned in various publications much earlier. The paradox is called the paradox of saving or the problem of under consumption and over saving. As these names suggest the principle is simple. Saving money may be good for the individual, but if everyone does it, society as a whole be worse off […]

Globalization Explained in One Minute

The concept of globalization and the potential benefits are not hard to understand. By eliminating trade barriers in an honest manner, everyone could theoretically win. Poor countries would receive a signficant influx of capital as international companies take advantage of the lower wages and in time this could even lead to a gradual eradication of poverty. Those who live in rich countries can take advantage of greater product variety as well as better prices, thanks to imports. The world […]

Hyperinflation Explained in One Minute

Yes, money can indeed become worthless. Zimbabwe is the most popular recent example of hyperinflation. Believe it or not, they even printed a $100 trillion bill. Earlier in the 20th century, the same thing happened to Germany after World War 1. How can something this dramatic happen? You need to understand that money is just paper or numbers on a screen. It only has value if people […]