Borrowings and hard science… Gil Mito, promoter, breaks down three preconceptions about…

While economics applies to very concrete situations, it remains too abstract for many of us. In order to illustrate this discipline, Gil Mito, alias Yes? Rica, Create His YouTube channel He published a book: “Almost Everything About Economics.” To really understand what's wrong with the system. Here are three of the beliefs he exposes in his work.

In economics, the state and the family do not behave in the same way

In economics, you should always keep one thing in mind: one person's expenses are another person's income. If you stop spending, the corresponding person loses his income. If she loses her income, she won't be able to come and spend at my business until she can pay me my income.

At the individual level, at the household level for example, since the economy is gigantic, I can afford to completely reduce my expenses while imagining that my income will remain stable. But if you are big: a big company or a country. So cutting my spending would mean causing layoffs throughout the economy. Because I am reducing the revenue of many companies, they will react this way.

When you borrow money, it's not someone else's savings

We often have the impression that banks use savings for lending. But this is not true: they use a printing press. They are making new money Every time they give credit. Of course, these are not paper tickets. It is electronic money that is created by banks.

When you repay the loan (excluding interest), the banks destroy this currency. But in any case, they never lend Savings that other customers entrust to them. On the other hand, they need these savings for other issues, especially flows such as interbank transactions.

Economics is not a hard science

Some may think that the way economics works is the same as the way hard sciences, such as physics, work. That there is only one way to make the economy work, that we know all the laws and that they are unchangeable. But no, economic laws are historically rooted and context-related.

When the economic context changes, when institutions change, these labor laws do the same. Thus, there is not just one way to make the economy work, but rather an infinite number of ways. Therefore we must understand that the performance of the economy and politics are linked. Therefore, expressing an opinion about the performance of the economy necessarily means having a political opinion.