00:01
So here i don't see a reference to a model.
00:03
And there's lots of models you can do this.
00:04
So maybe you're doing islm model, maybe you're doing a good demand aggregate supply model.
00:08
Maybe you're doing a mundell fleming model.
00:10
Maybe you're doing something more complicated.
00:12
So i can't tell the model, but i'll try to walk you through what happens, right? so first of all, we have contraction of money, of money supply, right? the federal reserve is engaging in a contraction of the money supply.
00:30
Sorry, my pen is drawing a little too much there.
00:36
That means that the money is going down, right? so what does that do? well, less money means that the interest rate goes up, right? the cost of money goes up.
00:52
With less money around, the interest rate has got to rise, right? money is becoming scarcer.
00:58
The cost of renting money is going up.
01:00
Now with a higher rate, the higher rate makes, sorry, the higher r makes usd more appealing.
01:13
People see the higher rate in the united states and they say, ha ha, i can get a higher rate in the united states.
01:21
I should move my investments into the united states...