Let's get started. Today's topic is how to make money. For example, let's try making money excitingly. First of all, we need to understand what money is to make it. Money is the ultimate and professional means of payment that is commonly used in transactions among economic entities. In essence, money is not fun from an economic perspective. Therefore, defining money is a bit difficult, so we just define it as a function. So, what is money? Money doesn't have much use other than being used as money. So, the shape of money doesn't have to be what we traditionally think of as currency. It can be a medium of exchange, a store of value, and so on.

There is a discussion going on about barter, metal coins, gatherings, and credit currency. It's funny even with credit currency. What kind of credit is this? Credit doesn't have a physical form, that's why it seems like this. So when we commonly say that the central bank prints money, the central bank actually has to print money. They print money like this. Among them, the 50,000 won bill accounts for 164 trillion won, and the 10,000 won bill accounts for 15 trillion won. However, in reality, the government's budget for 2024 is 654 trillion won. So, if the government only has 185 trillion to give to the banknote issuer, there is a shortage of money. The money is much less. Then if you ask where that currency is, in fact, money doesn't only exist in cash. When we use things like electronic payment services...

Isn't there money in my savings account? Yes, it's money. It's money, you know. So, now we're categorizing this. Because the definition of money is not very clear, so, first of all, the original currency, the money printed by the Bank of Korea. There is money made by the Bank of Korea, and there is also money just in central bank accounts. So, from the original currency to even things like that, we call it the original currency. This is simply created by the Bank of Korea. It's the money we commonly think of. But in reality, we don't use that money. We use a bit of that money for daily transactions, but nowadays, there isn't much cash being used. Our deposits, which we can withdraw at any time, are combined into the currency of agreement. So, we call it M1. It's the money that can be withdrawn immediately. We call this money. If we talk about the broader sense of currency, we can find it right away. But we have to suffer some loss of interest, even up to time deposits.

Including M2 money supply, we talk about things like liquidity, etc. Usually, we just talk about money up to this point. When we say that liquidity in the market is increasing, we often talk about how stock prices rise. The common term used when talking about increased market liquidity is M2. So, when money flows and stock prices are compared, if the money supply keeps increasing and then decreases slightly, there could be a slight drop. Money is needed to buy stocks. For example, if a journalist buys at 150 won and wants to sell at 200 won, they need at least 200 won. But if they want to buy again at 250 won, they need more, 250 won. If I want to buy it at 30000 won, then I need 300 won.

You need to have 300 won, right? So, liquidity and the stock index must be related. But currently, there is a lot of liquidity flowing, and these days, they are saying that the currency is being withdrawn, and because the interest rate is high, the currency supply has decreased. It has decreased by this much. It's much higher than before, several times higher. So, as the stock index is rising sharply, when a lot of money flows, it's good for the stock prices. So, what does it mean when a lot of money flows? It's different from printing money. They say that printing money is not much. Actually, the money used by the public to buy stocks is not in cash. How is money created? They often express money creation in this way. The Bank of Korea issued 100 won.

I borrowed 100 won from the bank. Then the bank keeps 10 won and lends me 90 won. Now I have 90 won, so I bought something from a merchant. Then the merchant has 990 won. I used the loan to buy the item I wanted. Then the merchant, oh, will deposit or keep the remaining cash in the bank. You don't have to deposit it, you can buy things without depositing it, but anyway, the 90 won that was generated will go into the deposit. Eventually, at the bank called B, a deposit of 90 won is created, and from there, after deducting the reserve of 9 won, they lend out 81 won again. Even if the second merchant borrows, the same thing repeats. So, initially, the Bank of Korea issued 100 won, right? There is a deposit of 100 won, oh, here's another 90 won. That's right, so it becomes 190 won. But...

Here is another 8 won. Oh, in Korea, the money issued by the Bank of Korea is 100 won. When you add up 100 won, 190 won, and 1811, it becomes 2711. The money has increased. It has increased. This is how the currency supply increases. So, when you take out a loan, the money increases. When you take out a loan, the money gradually increases. At some point, there will be no one to borrow money from, then the money does not increase. This is how money increases. But let me explain this more simply. Some may wonder about this. I will stop here. If I have assets of 1 million won, I just make ten times more. I lend it to people. Then, in the individual's account, there is a deposit of 10 million won and a loan of 10 million won. This is a debt. So, there is a liability of 10 million won and a deposit.

I've made 10 million won, right? In the bank ledger, it says I made a deposit of 10 million won. Just like that. And then, a loan bond was created. Yes, this is money that can be repaid, just created out of thin air by a commercial bank. They just create it. But it works. So, it increases. It works. Yes, when you borrow, they just make it by typing. That works. If I withdraw 1 million won in cash instead of depositing 10 million won, then the deposit becomes 9 million won and 1 million won is in cash. So, what happens here is, does the bank have money? Banks don't have cash either. So, they borrow cash from the central bank. They don't have 1 million won. That's how they just calculate it. The remaining 9 million won in the deposit stays the same. This is just creating money out of thin air at a commercial bank.

It's amazing, isn't it? So, the central bank is believed to print money. The money printed by the central bank is about 100 million won in face value, and on top of that, commercial banks have about ten times more money at their disposal. Is this for real? Yes, it is. Because they can freely print money, that's where money is created. Therefore, strict regulations are imposed on commercial banks. However, there is one premise when creating money, which is to lend it out. Therefore, loans need to be made. So, increasing money is simply an exchange between loans and cash. Therefore, how can we increase money significantly? We need to generate a lot of loans. Yes, we need to generate a lot of loans. To generate a lot of loans, interest on loans needs to be high. Interest on loans needs to be high. Otherwise, it's too good to invest. Like when housing prices rise, interest rates go up.

Even if the interest rate is high, the house prices rise faster each year, right? So, the relationship between the economy and interest rates is that when the economy is overheated, they increase the interest rates. Then, people will try not to take out loans, leading to a decrease in liquidity, which will stabilize the economy. On the contrary, if the economy is cooling down, they lower the interest rates. Loans increase, liquidity rises, and the economy becomes active. What we need to focus on here is precisely the decrease or increase in liquidity. The central bank determines the interest rates and manages liquidity. Instead of printing more money, they lower the interest rates to encourage people to take out loans, which in turn injects new money into the market. This is how the mechanism works. However, if too much money is released, they raise the interest rates. Then people will think, Oh, I can't afford this with the higher interest rates, and they will focus on repaying the loans.

When you repay, the money just decreases in the middle, right? Because you made it and then you collect it, right? So, the money increases and decreases. Oh, that's why they keep calling the five major commercial bank presidents. There must be that kind of thing. But interest rates are crucial. Interest rates affect all industries. But they only want to focus on real estate. Then they go to the bank and lose. Hey, don't lend to real estate. Just stop lending for mortgage loans, lend to businesses so they can invest. Hey, real estate prices are too high, so it shouldn't be like that originally, right? But changing interest rates affects the entire economy, so they do it. Because commercial banks create money. Oh, then we should think like that. It's not good to print a lot of money. It's good to have a lot of money. I like it, you like it, everyone is happy.

You might think it's not right. If you look at the central lobby of the Bank of Korea, there is a sign saying price stability. The Bank of Korea is an institution that stabilizes prices. So, it's tough for us to live even without the prices going up. So, the reason they use the expression price stability seems to be that stabilizing prices is the goal. But in reality, when prices are stable, the value of money becomes stable. Therefore, Korea's goal is to stabilize the value of money. Stabilizing the value of money equals price stability. So, writing price stability on the Bank of Korea's central sign means that stabilizing prices is not the goal of Koreans. When you take money, there should be gold to give back gold. But now, it seems like before, you could hit ten times. It's just talk.

So, blocking with regulations can increase by 20 times, 30 times, or even 50 times or 100 times, right? If you invest, the money will keep increasing. For example, if I deposit money in a savings account and I have a deposit certificate, I can take the deposit certificate and ask for money, then they will give me the money, right? That's the thing. But commercial banks can just print money. So, if they keep printing money, what will happen? If they keep printing money, then since there are too many gatherings of money, the value of goods goes up. The value of money goes down. So, what used to be purchasable with 100 won in the past, now requires 1,000 won. We like money, right? People find money very attractive because it is controlled by humans. Therefore, there have been many cases in the past where people who could print money just printed money. It has always been like that, printing money.

People with the power to print money always printed money. When they print money, there are too many gatherings. It's better to have goods. This is a story about rising prices. It's hyperinflation. In the past, this didn't happen with gold coins because you could use them as gold when melted. But gatherings can be used as building blocks. So, they have no intrinsic value. This is because we believe in the value, exchange, and payment, so it loses its value if there is too much. You can't trust it. For example, if you exchange the value of a computer for money and save it, the value of the computer remains the same, but the value of money plummets. Then I'll take the computer.

It's better to have it, right? Then people won't spend money. They don't trust money, so they would rather exchange goods or exchange something else they believe has value. Yes, or go to the bank and withdraw all the money. If that happens, it's bank run. Oh, money exists because we believe it has value. So, money is about trust. That's why commercial banks create money and we use it. But if commercial banks just print it, it's not allowed, so regulations are in place. Then the central bank gives more, so the money supply increases. Therefore, they set interest rates to control it. Why did they create a central bank separately? The government could create it without a central bank. When the government creates it, it's because the government needs it.

Just creating it makes it authentic. For example, if a war breaks out, oh, it looks like all our people will die. Then we have to buy weapons, we have to buy food, so we have to print money. But will you stop printing money? You have to print it at that time. You have to print it. That's why this situation arises. Every time there's a war, printing money leads to ruin. So, to prevent the government from doing whatever they want, an institution that maintains the value of money independently was established, which is the central bank. So, that's the idea. Then, what about cryptocurrency? What is cryptocurrency? Earlier, we said money is a function, and it's about trust. If I just print money and say, This is money, give me 1 million won in exchange for this piece of paper, how can anyone trust that? If not, they could punish me.

Yes, scold them and write this. Then it becomes money, but you can't use it elsewhere. You can't use it elsewhere. So, it's something that many people believe in. That's right. Therefore, those who have the authority to issue currency always wanted to print money as they pleased. By doing that a lot, they eventually lose trust, leading to hyperinflation. Then money becomes too fascinating for humans. However, what is cryptocurrency? Earlier, I mentioned making paper cups. I didn't make those paper cups; machines did. What algorithm creates them? That algorithm cannot endlessly produce them. It can only produce them according to predetermined rules. So, while the central bank is considered an independent institution, if the government pressures it, it will print more. It's not like that with this one; no one can control it.

Unable to create something according to predetermined rules, and then use it as money. So, that money is exchanged, and then you have to write it down. So, if you transferred from Bank A to Bank B, you have to write that down. Then, who will write it? How do you know if it was written correctly or forged? That's why they created something called a distributed ledger to perform a certain function. And using it as money, on the first day Bitcoin became a currency, it's called Pizza Day. Let's try using Bitcoin as money for once, they say. Since it's done by machines, humans cannot control it. So, there is regularity. Let's use it with trust. But why did someone raise their hand and say, I will give you two pizzas? Oh, if you give me Bitcoin, yes, sure, here you go.

I bought two pizzas with one bitcoin, so now I can finally buy things with bitcoin. Let's use this as money. But why use it as money? Then someone says, I'll buy something. When it becomes like that, it becomes money. So, if you just use it, it becomes money. You used it. You bought pizza. It's money. Then, isn't it money? This is cryptocurrency. Yeah. So, people started making various altcoins. People don't even trust them, but they just buy and sell them because they go up. In that process, it became cryptocurrency. Oh, I see. So, money is created like this. In fact, we always like money and use it, but many people don't really understand money. Because even if you know, it won't change anything. It won't change anything.

I mean, just because I understand this, it doesn't mean my salary suddenly goes up today. And just because I print money, it doesn't mean anyone believes it. So, the concept of money is based on trust, but in reality, we are using it too much as if it were an illusion. Even if you don't understand the concept of money, it doesn't cause much trouble in living. However, don't cling to that illusion. For those of you watching right now, don't cling to the illusion, but if you give me the product of that illusion, which is money, it would be great. Thank you. Ah. [MUSIC]

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