So I uploaded my video yesterday about the how we make money making YouTube videos So let's talk about how we make YouTube videos and specifically the course questions that came up was the gear I use and This is one of those things that I'm going to recommend. There's a lot of channels I think one of them is actually called tube noob It's kind of cool because they have a whole list of different things you can get to help start your YouTube channel on a budget This is not your base budget stuff This is what I use and kind of why I use it There's a lot of different setups and it's not like there's one better than the other kind of comes down to what you're comfortable with Now I have a background in photography I have a background as a wedding photographer not everybody knows that about me But it's really not a secret if you do know anything about me I've long loved photography and I was a cannon shooter when I was doing the wedding photography And I probably shot over 500 weddings Canon just became my go-to I had a ton of photography equipment Which I slowly sold and traded in to get video equipment because I you know made this run at YouTube here And the first thing I'm gonna talk about this is my old spare camera from doing wedding photography It was like the backup one, but it became an easy shooter here for doing video So this is a Canon 70d and I still use it and all the b-roll in this video will be from my Canon 70d It is still a great camera. It still holds up really well It does have a couple issues and actually I had two of them and the other one died Is which led to the next camera we're gonna talk about I have this with magic lantern Which allows you to really unlock features that can didn't really ship it with And I believe and this is a guess that all the extra Usage and the really long record times I was doing when we were doing some of the vlogs and things like that That actually had to be split up because we were running so long That's where you run into a challenge with this Canon 70d and a lot of other SLR cameras that don't do long record times And the camera burned up So now I have one that is just my 70d of spare parts and this one is still in use But it's just used for b-roll and it works really well for that now because I'm using Canon We're gonna talk about the next camera The one I chose was the Canon c100 mark 2 Now it's not the popular choice of youtubers But it is a popular choice for people who do documentaries and things like that So it's it Canon's camera has been around a while so it's no it's not some fancy new 4k camera Canon sells this camera and it's I think still goes for a little under $4,000 maybe 3,500. I haven't looked at the price on in a while. I've had it for about a year I love that camera one of the reasons why is I don't want to spend a lot of time in post-production And the c100 has top-notch audio input, so I really don't have to do any post-processing and audio video wise Canon is a weird camera the way they did this and this is really cool It has a 4k sensor that down samples to 1080 with dual pixel autofocus and really crispy sharp pictures The weird part is I'm shooting this on a 50 millimeter f 1.8 lens sometimes referred to as a nifty 50 Great lens you can pick it up for less than a hundred dollars like I did and It's really weird to get this kind of quality out of a you know sub one hundred dollar lens with a $3,000 plus camera, but the results are great And to shoot with this shallow depth of field with all the lights around me and balancing the light I have it with two ND stops and if you're not favorite neutral density filters Something you don't get an SLR cameras you have to put them on the lens It actually has a whole series of ND filters to stop down the light to keep these really shallow depth of field focus Right out of here and Canon's color science as it's referred to so you have color profiles like C log for Editing and so you can do all your post-production once again. I don't want to do post-production So I use a color profile load it in there So the video comes out of the camera no post-production color has to be applied I mean obviously you could always spruce it up a little bit But it doesn't make a big difference on my videos So I'm actually gonna upload this directly out of the camera with no adjustment just to give you guys an idea That's Part of the reason like I said for the Canon. It's an expensive camera It's probably not the most ideal but in terms of being a studio camera It does have clean HDMI out and that clean HDMI out really is nice when you're doing things like a live stream It's a workhorse of a camera So it's it like I said, maybe it not that I'm gonna say every youtuber should get this but is not a bad one Plus it has XLR mic inputs. I'm not currently using XLR mic I will get to the mic in a second But it's nice that it has that support if you have other microphone other audio inputs It just makes it really nice speaking of streaming live gamer portable 2 I'll give a shout out to the Linux gamer on this. This is how we do our live streams There's actually a TV on the wall over there where I have this being viewed or cam viewed So that's how we do our live streams using OBS and this plugged in is just great So HDMI in on this works in Linux works in Windows like I said Linux game I seen them review it and I'm like, oh cool. This works in Linux. I'm a Linux guy So that's how we do our live streams and capture for that It's actually really nice because of being an HDMI capture My friend Jay has actually used my studio a few times to do distro reviews with it where he can directly capture instead of doing a screen Capture so he can capture things like loading and stuff like that a great little device and I'll leave a link to all these things below But yeah, that's we've been using that for our live streams. Next. We're gonna talk about lighting now These are Aputure AL 528 s amaran lights and they have the Aputure easy softbox on them. They're simple. They're easy They do support running on battery or being plugged into the wall They're easy to quickly dial in and get my lighting set and the softboxes make them just really I think they look professional and they work because they're nice soft light because if you don't have them with the softboxes The light's just really harsh and it makes me win some when I try to look at the camera without them So this is kind of like a good kit to put those together and then my back lights provided by an Aputure amaran AL F7 3200 to 9500 K, which means it's got adjustable color So the other ones are fixed color, but this is an adjustable color so you can make it really warm or really cool light It's nice. The one thing I'll note about it as much as I do like it And it's running right now off of USB C But you can put a battery on it and if you put the battery of Sony NP series battery It will run off the battery, but it won't charge the battery So that's kind of weird versus the other lights will run on the battery and when you plug them in They charge the battery at the same time So they're always charging and whenever I have to do a product shot where I don't Have a cord easily reaching or have to worry about plugging a wall I can just grab the lights and move them over with the Sony batteries plugged in and they'll run off the Sony batteries I think I get almost an hour or two of runtime on there So that's how I move the studio lights in other areas and it works really well Microphone just out of view here. Actually, I'm gonna drag it down in view a little bit and then we'll switch to b-roll The as-in microphone, it's been a great choice. It sounds good in my opinion. I watched a few reviews on it I don't know that downside is of course it takes batteries, but that's not too big of a deal I have rechargeable batteries that I just pop in and at the beginning of each session It's got a couple different boost options and with the processor in the C100. It just I never have to only make any adjustments I have the C100 on auto. I have this Boosted and it just sounds great the other cool thing. It's a two-in-one microphone So you've got the shotgun mic which is what we're on now And it's got a stereo option and I've used that when we have a few of us when we're around the table I just switch over to stereo if I got to pick up more than one person So the pickup pattern, you know narrowed down for shotgun like when it's just me talking But you can just add another pickup pattern for stereo If you want to do it kind of like in a group setting and have everyone talking around it and hanging above them Off to the side here is the feel world t7 7 inch IPS display field monitor And now this was a bit of confusion to me until I got into this This feel world is really nice. I actually like it it for as inexpensive as it is. It's us in $200 on Amazon it runs off one again one of these Sony batteries and the difference between a field monitor and a Just plug in an HDMI monitor like Tom was doing turns out one color accuracy So the TV does not show me it shows me me really big It does not show me the details I need as a YouTuber to make sure my videos being produced properly what I mean by that is this shows me like what they refer to as focus peaking Which is also supported on the C100 camera, but it's really quick to view that now The confusing part is it's called 4k now It does not have a 4k display But that means it will take a 4k input even though my camera is only 1080 But if I upgrade to a 4k camera it will downsample that and still display everything here Apparently some of them won't down sample because cameras will put out at a fixed rate And then you have to have something that deals with it, but this field monitor is nice It has audio monitoring on it Stupid problem is it doesn't have a mute button that I can find for the audio So I took a broken headphone jack and popped it in the headphone side because it output sound all the time And I don't want it to do that So it's actually you can't even see it because it's flush with it. It's that's actually a broken headphone jack in there So but it's got two HDMI inputs if I had two camera feeds I can feed it with both cameras I can switch between them. I think so. I've never tried that. I think that's why there's two HDMI feeds Anyways, I've never tested I only ever feed it with one camera So I'm there's playing reviews on this that are better than mine I'm just showing you what I'm using for the camera stuff, but it does work really well The other being that it's a less expensive field monitor is if you Want it off it does have an off button, but it still seems to drain the battery less than when it's on but it does drain it So whenever I'm done with that is pop the battery off and that's been my solution base. It's a good thing I'm glad reviewers told me that because if not a bit I go turn it on later. I wonder why the battery is dead Now I'll talk real quick about batteries. I have chose the Kastar I don't know how to pronounce things sometimes and this battery kit Amazon inexpensive It charges up these and has a nice display. I used to have a cheaper one that didn't have this play It's kind of annoying. You don't really know where it's charging it blinks a pattern like hey if it blinks this fast It's this charge net charge this has nice and 10% increments of how charged the batteries are and it does two at a time So I always have two batteries on it and that way my field monitor Which has the NPN or if I have that other light that requires it to easy to charge both of them And just have two batteries at the ready all the time. It was inexpensive, but definitely Worth it. It was it's great charger Now let's talk about this because this is kind of neat. I don't use it all the time I keep planning to use it more. This is for doing product shots It's sometimes called a dolly or slider that it's actually a combo dolly slider So one it can slide the camera back and forth like this for a product shot or and this is where it gets kind of cool You adjust these up and down so it locks in place or doesn't lock in place The wheels because obviously you don't always want it to move what you want it to move So actually when you get the wheel to the edge here I Can send it all the way around me and back and of course the product was there Well, I'm gonna hit it, but you kind of get the idea if you get if you get the placement You can do these kind of cool spin around This thing is actually so stupidly fun to play with it's got really nice wheels with bearings in it and then you spin these little rubber stoppers and They just bring the wheels up off a little bit and then it's actually pretty stable so we can then do it as a slide or Spin it around like this because you want to bring it closer to your product for that kind of zoomed-in effect If I do more product videos, I bought it for that. It was on sale on Amazon and I couldn't resist I do really like doing some of the higher-end photography work, but it comes down to processing and editing and I'm like, okay Let's just get this review done But I plan to do some more stuff on here I don't want to get overly processed because I care more about the content than The glam of it, but these tools will make it handy Now I will address real quick how we mount everything and how we mount everything is actually with These Joby mounts now. I believe the Joby is compatible with what they call Arca Swiss mount It seems to fit in the Joby. I have at least one Arca Swiss that I've tried with them If you want to look that up, you'll see what they are. There's different mount plates But the nice thing about the Joby is I'm very very confident with it So I can put this Joby in here I know it's tight net and I'm not worried about it or this and when you have expensive equipment And I do use these mounts for everything. They're kind of an investment But once you've got them It's so nice because everything is so easy to articulate put exactly where you want and you can feel confident when it's on there It's not coming off. It just has a really nice feel great build quality and Even with a heavier DSLR like this if I put the camera at an angle and dial it in It doesn't creep on you because there's nothing more aggravating you get a product shot set up You hit record and then you're doing it and you're watching the camera slowly fall over now I also do have this which is the Gorillapod made probably famous by Casey Neistat for a lot of his work This is a great tool if you got to wrap it around something For a shot or you're what I'm doing some of the onsite videos, which I need to do more of But you can just wrap this around something and mount it and I did one of them where I was standing on a man lift We literally just wrap this around the edge of the man lift It's a solid mount and solid here when you're 20 foot up on a man lift You really don't want to drop your camera your lenses and things like that because it'll just it'll go horribly wrong So that's all the mouse now quickly on the lenses. I only have a couple of them I used to have a lot more when I was in a photography But the ones I use is the nifty 50 like you're watching right here from this part This is the Sigma 10 to 20 millimeter and this is you know for those really wide angle shots and then the last lens I have is the 1835 STM Canon lens and One of the cool features of C100 is it has facial detection But the facial detection only works with a certain limited number of lenses One of them is that 1835 so it's not like a professional cinema lens But it gets a job done and it does support facial detection It doesn't have that super shallow depth of field like this 50 millimeter and it's on there now But it's great for a knife shot a lot of my other videos on there Now the last thing about the mounts is how does it all you know, what's on this mic stand? What's on this? Well, let's talk about that. This is usually out of frame and this is a pro cam LS I'm sorry pro master LS6 Boom stand and I got it down lower than usual It's usually completely out of frame here once again Joby mounts on there, but what I'm gonna do is show you how we do these overhead shots what I'm doing me I'm usually standing up to do this but I can do it like this. It's kind of get the camera in place and Tighten this up a little bit and I'm just centering it because I'm particular like that. So now that that's centered and we do that and Then we take the camera. I was gonna make sure all this is nice and tight nice and tight Tighten this up and there's a little lever on it and that's how we get these shots What's loose this one it's hard to reach them because I'm other just out of frame And there we go once you tighten them up. They're not that hard to tighten I'm just reaching and then this is how I get the overhead shots So we line the camera up here Tuesday Just like I said above so when you're seeing me do a product one camera shooting down seeing the product and then this one And I the audio is not as good on a 70d So I always refer to that as my narrative track that comes off the C100 because the audio is going to be so much better and I just cut back and forth between the cameras But that's really it for all the gear I use the only other one that's not featured here is out there at home is I do have a GoPro hero, I think it's the black five or black six. I don't remember which one it is I use that for my time lapses It works really well for that and it's got the same thing. I got these same Mounts on it and I usually to stick the GoPro on here In a cage and hit time lapse that's how we get some of those time-lapse videos You've seen of some of the wiring installs we do and things like that, but it's all been yeah It's all worked really well for me in terms of that and I don't use it as often But if you wonder I still have my phantom for drone, I need to use it more It's always on my to-do list whenever we do a project But then I get sidetracked because I don't go on site as much Because I just don't know we have the time to do it to go fly over through a building or something like that I'm hoping we can do it We have a client that I want to showcase some of the stuff and I'm hoping to get permission to do a drone there Plus I want to do a drone we got to do a wrap-up on another video for the bowling alley And I want to use a drone for that, but I don't use it as often as I'd like Lastly and I can leave a link to this. I'm still using Kaden live for all my editing. I run Linux I run pop OS that's December 2018, but I'm still running as my operating system And I still use Kaden live for all my editing someone's gonna say have you tried DaVinci? I've looked at it. It's neat Maybe because I will need more titling That's the one big hang-up I have when I'm doing this is the titling is just awful in Kaden live I've donated money to the project. I've watched him really evolve it. They've become a very stable product It doesn't crash as often. It's really good to features It's how I've got over 600 videos on my channel edited with it Only a few videos were edited with open shot Which is when I really really first started and before I moved to Kaden live, but when it comes to adding titles Yeah, they they really need a good titling system I usually have to do the titles with some other random thing and Import them and overlay them and it's tedious and that is getting to me a little bit I am considering DaVinci at some point. I've really been trying to stick with it all open source But sometimes if it just isn't there it just isn't there and if I can't get Some of the titles put the way I want I may have to switch to something like that to really add and enhance the titling features This just looks nice when I can put all I'd like to be able to easily because it's so much work and post-production to put Just the specs next to me or whatever I'm talking about So that is something I'm considering for those wondering no I don't have any interest in using the adobe suite or learning it I was a full-blown and long-time adobe user when I was a wedding photographer hands down The adobe lightroom and adobe Photoshop is perfect for photography And I know the adobe editing suite for video is really good But I'm just been determined for no other reason than feather in my hat to keep using open source for this Kind of a prove-you-can type thing and I don't know I can't really answer other than torturing myself as to why so I'll leave links to all this gear where you can buy it Pretty much all of it's available on Amazon. I have some affiliate links I'd appreciate to help out for the channel if you click those to buy this If you have any questions comments or care to have me elaborate or review more on any one particular thing Let me know I don't do a ton of gear video because I'm not Well, I'm not a camera gear expert I did thought talk about talking about the C100 a little bit more but yeah for the most part Let me know if there's some interest like hey I really want to know more about this if not I can really recommend tube noob and DS I think DSLR video shooter they have just I've learned tons from both of those channels and Probably if I can remember the names of some of the other channels that were just immense resources besides Like Casey Neistat who know I don't shoot in his style nor do I plan to but his Casey Neistat skill guide to filmmaking to me is one of those things that can really help you get at least an understanding Because you have to create your narrative and things like that and that makes me think of how do I tell the story? Which I probably babbled a little bit here, but it is a guide to help how you maybe should assemble What you want to do for YouTube and you know It all depends on what your purpose is mine and more mostly is you know sharing knowledge about Everything open source firewalls blah blah blah, but I wanted to share what I'm using for equipment And how I built my studio for those of you wondering one last thing I want to cover real quick is just a layout of the studio so I'm standing like in our what we call our kitchen and If you're wondering what this is this is for a future video. We're gonna be doing soon Anyways, so this is the layout of the studio with all the foam on the walls There's more foam than you need if you're soundproofing, but it does make a big difference So now I'm in the soundproof area. I don't know if you notice the echoes start going away The camera sits here and we run everything Which is some magnets and wires we have HDMI wall jack we keep all the wires above our head and just using little magnets that were from Harbor Freight with Hooks because when you walk in please note the lack of wires on the floor I hate wires on the floor. It doesn't look good. It's a trip hazard and people walk through here all the time I can't have people coming in a studio including myself and Knocking things over because you yank something and then as the equipment being expensive pulling a camera over things like that So that's kind of just the general layout of the studio and then when we're all done with this big table We clear it all off. We just put the lights off to the side But all the little photography gear actually ends up all in here. It's just a metal cobalt cabinet from Lowe's and Then we lock everything in here And it's also where we keep all the charging equipment so that way it's all nice, you know the drone batteries are here the cannon battery chargers It's over here still on the table from the demo But the the Sony NP battery charger all that just goes in there, so it's all consolidated in one place But that's it. Thanks, and I'll leave links to everything below Thanks for watching if you liked this video go ahead and click the thumbs up Leave us some feedback below to let us know any details what you like and didn't like as well because we love hearing the feedback Or if you just want to say thanks leave a comment If you wanted to be notified of new videos as they come out go ahead and to subscribe and the bell icon that lets YouTube know That you're interested in notifications. Hopefully they send them as we've learned with YouTube Anyways, if you want to contract us for consulting services You go ahead and hit launch systems calm and you can reach out to us for all the projects that we can do and help You we work with a lot of small businesses IT companies even some large companies and you can farm different work out to us Or just hire us as a consultant to help design your network Also, if you want to help the channel in other ways, we have a patreon. We have affiliate links You'll find them in the description You'll also find recommendations to other affiliate links and things you can sign up for on Lawrence systems calm once again Thanks for watching and I'll see you in the next video


Welcome back. It's time for off-the-press. Unfortunately, we couldn't connect with our analyst, Opunabon Okotaria, for some technical reasons. We tried really hard to connect with him, but we couldn't.  So we begin with the punch newspaper. Cameroon Dam opening. That's the leading headline. Evacuate to prevent deaths. FG states won flood prone communities. The writers there NIMA advices governors on evacuation. Nasarawa Taraba set up IDP camps. Others. Anambra orders evacuation in affected areas. Flood slips away. Two children. Oh my God. Do we have to go through this every year? That's the question. Do we have to go through this every year since 2012? We kept hearing that there was an agreement between these countries that have to open their dams. Cameroon specifically and Nigeria. Nigeria was supposed to do something. Build a dam, yes. Which we never did. And now, anytime they open the dam, we are at their mercy. Evacuate people from their villages to where? To where? Why are they taking them to? This is a season that most of these communities are agrarian and then they have food or things that they have crops that they have planted on their farms. So if you evacuate them, are you evacuating their crops as well? So you allow the crops to to just waste. Yes. And then annually, are you going to pay them? Are you going to give them the value of the food that they are not going to have any more money? Why did we fail to keep our own part of this deal? Who are those that failed? Why did we fail? These are some of the questions that should be asked. And then when are we going to do it? Are we just going to live it like that and just be at the mercy of Cameroon every year? And it's not as if they do it to spite us. It's something they have to do. But if there was something we could have done to make sure we prevent this every year happening, why are we not doing it? Yes. Are we supposed to dredge our rivers? Are we supposed to build our own dam? Are we supposed, whatever we're supposed to do, we should do because if you evacuate these people, like I said, there's food in the land that they have planted. That same food gives them money to train their children in school. Everything hangs around that. Two children have already been swept away. Yeah. And then how do you compensate parents for children? It's just not right.  It was removed by storm or something. You come back three, four years later and give them like three sheets of roofing sheets, three roofing sheets. To roof a house that was, the roof had been damaged or something. You come give some people seed yams, maybe 10, for a farm of about 500 heaps that have been destroyed. I'm also wondering, can the states relocate, you know, move them from the parts where this flooding, the water passes through, let them move their location, you know, move them to another part of town where this flood does not pass through when the dam is open. That's in addition to the government, our government, Nigerian government, finally doing what they should do in building the dam that was, you know, they were supposed to build to mitigate this. The states themselves should just not wait every year to deal with this, but move these people from the way to maybe the higher lands or where... As a palliative. Not just a palliative, to mitigate this, to avoid a situation where on a yearly basis this can happen. It's, you know, moving someone from an ancestral land is really a difficult thing for a lot of people they would not want to move. And especially knowing that they have been here without experiencing this until the time that government failed to do what they were supposed to do. Because when Cameroon built their own dam, yes, they knew that things would change. And if Nigeria had done what they were supposed to do, these people wouldn't have been facing all this. So Nigeria has not done what Nigeria was supposed to do. And yearly, since 2012, they've been going through this. So what do we do is the question. Nigeria should do what they're supposed to do. And while Nigeria is doing that, the state government should move them. Move them because ancestral land or not. Because after they do the thing, they wouldn't need to move them. Exactly. They could return. Be safe first before you talk about ancestral land. So it's just, I don't know. We keep hoping upon hope, but there's only so much a man can hope. Every time things will happen that you are just, you just wonder why these things are happening. Hope deferred causes the heart to be sick. And many Nigerians, their hearts are really very weak right now in terms of hoping for a better tomorrow for the country. So governments should begin to be seen to be doing something. So moving forward from that story, you have the picture of the president there. And the caption there, the caption there is servicing debt with 90% revenue path to destruction. Tinibu tells NBA. He was at, you know, addressing the NBA and telling them that we cannot continue on the path where we use 90% of our revenue to, to service debt. So what are we using our revenues now to do palliatives? Because I haven't seen any concrete thing that will be giving us money enough to not need to borrow or that we will be servicing tomorrow. Because after four years, we'll find out that this same government will leave so much debt that the next government will start complaining from day one and all that, except they're taking over from themselves. But even this government took over from the same APC and they're saying that the economy was in shambles when they took over. Where were they when the economy was going to shambles? Where we use 90% of our revenue to service debts? Where did we collect the debts from? Even from our own central bank, we collected too much debt. And then we asked the central bank to print more money than we needed and all that. And it don't forget the JPMorgan revolution that our 37 billion dollars which we thought we had in our foreign reserve is no longer, I mean no longer be that, but 3.7 billion dollars in debt. Yeah. And right now they're saying external reserves have fallen by 915 million dollars after Naira float, which means just this year, that is what has, it has fallen, you know, how it has fallen, which means it is reducing, it's depleting and all that. Of course it has to deplete when, and that is why I like what's happening with the bricks. But before we go to that, part of the things that the president also said at that NBA meeting is electricity. That's unfortunate that, you know, we're having this electricity inability to power to give ourselves the adequate electricity that we require and you cannot, you cannot banish poverty without fixing the power sector. So his promise that his government is going to see to it. And he also talked about the salaries of the judges, you know, and Nigerians are picking holes in that and saying, what a time, what a time to make the judges happy. Nigerians are seeing what a time to make them happy. Yeah. Poor timing. Timing is everything for everything that we're doing. And if you have to increase that of judges, increase the, across board, so that we know that it's everybody, but you're selecting the judges. And in a particular time that the judges, your feet seems to be in the hands of judges and you're selecting, it's poor timing. He might have the good intention, but the timing is so, so poor. And when he's talking about power, what kind of power are we talking about? Are we talking about power that is generated from Kanji Dam? Or are we talking about power that does not even need water? You need light, which we have in abundance, which is sunlight, which we have in abundance. Power that can be generated by the winds and all that. Are we talking about that kind of clean power? Because that one definitely is cheaper. It's cheaper and cleaner. Yeah. So if you tell us that I will be having 24 hour power and then I can't pay the bills, then I still don't have power. I'll be lighting my candles and lighting my lanterns if I can still buy kerosene anyway. Or, you know, so if you talk about power, what kind of power are you giving us? And when you give us this power, can we afford to buy the power? That is the question that we'll have to ask. Okay. So let me just read out these other smaller headlines before we go to the next paper. On the master, you have Niger. Echoes demand shorter transition period from Junta. You have external reserves fall by $915 million after Naira float. Then you have cash shortage, bank borrowing from CBN heats, $12 trillion Naira. And under there you have banks, 18 others find $125 million Naira for late filings. And senators aid murder cases take time to resolve. Please reply family. And finally, you have I am loyal to Orbasiki. I still want to be governor. That's Shuaibu, the drummer playing out in Edo state. All right. So that's it for the punch newspaper. I don't know what is going on in Edo state. Shuaibu was loyal to Orbasiki even fought against his supposed godfather who is a Shimole to contest second term with Orbasiki. I don't know what is playing out now, whether he thinks that Orbasiki thinks that he would not be loyal because every politician wants to secure their place in the political space of whatever state they find themselves. I don't know whether it is a problem of loyalty or something. I even heard the other day there was headlines saying that someone was accusing this deputy governor of stealing his watch. I was just laughing. Where is this coming from? How would the deputy governor steal your watch? How costly can it be that you cannot resolve somebody? Is it kleptomaniac or something? Well, I can tell you that one thing that's playing out there in Edo state is politics. And in politics, there are no, yeah, there are globally, when you were politics and politics, there are no permanent enemies, just permanent interests. They're all protecting their interests. And so Shuaibu is looking for his iron, the number one state in the state. And so he's aligning and re-aligning himself. And that's what most politicians do. Well, normally the people who invented that phrase that is about permanent interests, I'm not sure that we're thinking about personal permanent interests. Because in some other countries, the way you want to pass to achieve a particular goal may not be the way I want to pass, but the interest of the country is constant. Everybody wants the country to grow.  That's all. They're just thinking about, you know, what can I get for myself? And that's what they're doing. So you're aligning, re-aligning. You know, ideology whatsoever. And you're just there. You're anywhere below face, as they say in Nigeria. That's what our politicians are doing. And we can see the result of that in the state of Nigeria's economy. It's terrible. At the state, at the local government, and at the federal. You just be hailing someone doing something really wrong, instead of you to say what you are supposed to say, because you think that your money or your food on your table could be cut from you. You just be hailing badness. You just be hailing... By the way, Nyamgo, have you noticed how that these offices have so lost their glories that people no longer say that that thing that they used to say about children say, be careful. You don't know whether this would be the next governor or the next president.  It's not a big deal. They haven't made an impact in our lives and in the society. So it's not a big deal. Let's move to the next, these people. I was just wondering, what will I advise my children to be like so that when they grow up, they will become important people, as important as governors. You know, I'll tell them, don't steal. Stay off drugs. Don't fight. Don't do this. All the don'ts are now the things that are almost like they do before you can become somebody in the political space especially. It's just a terrible thing. Well, in the Guardian newspaper, we have federal government estimates, federal government estimates reduces unemployment on paper, means almost 100 million job deficits. So on paper it has reduced, the unemployment has reduced when really it is. To four points something, we saw that last weekend, people were like, Habba, how is that even possible? But then they said there's a new matrix for calculating that. So now, if you work for just one hour a week, your term to be employed, unlike in the past, when I think it was supposed to be 40 hours a week before you can be described as someone or counted as someone who's gainfully employed, now the matrix has changed. And so it's four points, something percent, and Nigerians are saying, please. It's not even possible on any level. I saw another headline which says that they are going to create employment, so much employment. What business does government have with creating employment? Give the necessary environment for businesses to thrive. The employment will come to the people. Like I say, government has no business doing business. So I'm going to create employment, I'm going to do this, and then you're calling even recruiting people into the police force or the army, employment. Yes, it's employment per se, but this should be people who have the conviction that they want to stand for what is right. They want to serve their country. They go there with a patriotic heart, and they come. Not people who are hungry, first of all, before they go there. And then when they go there, a lot of these people, whether they like it or not, have to bribe, maybe 120, 150, 200,000 to become a policeman. And then you go into that police force. First six months, maybe you're not paid, which means whether you like it or not, born again or not born again, you're going to take bribe. And then you get used to it before they begin to pay you. So it's, I don't know how we define values in this place. It's just, so on paper, the unemployment has reduced, but really it has not. We've talked about the Nigerian losing 400,000 barrels of crude oil daily, according to Ribadu. We've also seen where Atiku has asked, this is a 30 issue though, but Atiku asked Tinobu to come clean on academic, I quote now, fit ingenuity. A situation where you have two certificates signed by two sets of people. And different dates. Yes, different dates. And then you're blaming it on the clerk or something and all that. But the fact that if this is true, the fact that he survived 1999, saved two terms, he was Senator and he has done, he walked in ExxonMobil and all that till now, whether we like it or not, he's something that should be studied. He's a person that should be studied. Indeed. But let's hope that the judiciary does the needful. Whoever should be there, should be there, whether it is the present president or someone else, let Nigeria work. Let Nigeria work. And work indeed. And move from the garden to nature news that leads with flooding looms in Nigeria. As Cameron opens, Lado Dam, the writers, Minister of the States, LGs to me to get disaster, FG to release white paper and flood control. So you have the picture of that dam there. And so other headlines, sub headlines, Abia State Government to collaborate with private sector on waste management. You have governor orders, relocation of Chinese firm, I meet environmental concerns.  And Ikeja Electric CEO urges Nigeria to adopt renewable energy. If you ask me, who are going to ask? Just take out your plug, put it in the sun. Ikeja CEO. Ikeja Electric CEO is urging, you know, he's talking about renewable energy. So that's not something good. That's something good. Are they doing something that we need to adopt? Because if you give me solar panels, for instance, I will take. If I can afford them, I will take. Because of a lot of things, the health issues, everything and all that. So I will take. But are the, or is the government taking deliberate steps to do this, to give us renewable energy, to give us cleaner energy, to give us whatever we need to do, to have, sorry. So you're urging us to adopt to a new situation that you have not pointed us at, you've not pointed us to. And it's worrisome. I do hope that they are going to involve themselves in alternative energy rather than the one they have now. And then we will embrace whatever comes. Ikeja Electric CEO. All right. Well, thank you so much, Nyam. Go for that. As we move forward to our next segment, which is the first hot topic, we'll take a break now and come back and give you the first hot topic. Stay with us. We'll be right back.


Dylan. Let me know. Hello? I put Megan on. Dylan. Hello. Looking to me, if you would have spoken to me, if you carry on screaming at me Dylan, I'm going to hang up. Why are you going to the party when I need you at my house? I like we spoke about it and hurry with calling off private number. When I see her do everything cool morning he had one thing to go and get a cake and he can't even do that on time. And he wants to run around with God knows who. It's his son's birthday party. I thought Dylan had changed but I've got an awful feeling he's been seeing Rian again and he's trying to hide it from me. I need to know for sure. I'm calling Rian. Why? Because I need to speak to Dylan and tell him where it is. I don't know. You's are busy. Are you with Dylan? I knew it. Today he was meant to be about family and he's been with Rian instead. See if his mum was here where it's game over in it and his mum would have gone mental. I'm stressed out today because she's not here because he returns in turn three. Come on man, what are you doing? I need to breathe in it because I swear to God I'm going to have some sort of breakdown. How are you running around doing this one when your mum's not here? Come on. How did it go with the doctors? Good. What was said? Basically said I've got depression and she's always great. I'm booking a therapy session. I've taught someone. Do I'm not looking forward to it? Why, it's not that bad. I can't talk to anyone anyway. She was like the therapy would be better than drugs. So I need to exercise more and stuff like that. It's always good for your mental health. Try and do that more. We're sharing the therapy as long term though. Well obviously I'll support you. I will still love him and I won't see him any differently and he'll still be Marley's amazing dad.  Knowing my mum has enjoyed herself makes all the effort I put in feel worth it and I'm so pleased Steve came. For me, it wouldn't have been the same without him. Glad I come. I actually am. I think we've had a proper good laugh. I genuinely feel like we've proved to people that this is me and Steve. We're more than just Steve and Amber what argue all the time. I feel like we have proved to people that we can get on. We're at the time. It's good. I'm glad that we can be civil. I like your speech. I wonder how it'd be if you weren't in. I think you'd be chasing after Brooklyn non-stop. Thank you. I'm glad that you've enjoyed it. I'm glad that you've come as well just to get that out there.


Good morning, everyone. It's nice to see that Dr. Solarno has kept your energy level up. I understand he said a few controversial things, so we'll have some interesting discussions ongoing through the rest of the week, maybe, about this. But what we're going to talk about in the next session is, of course, the rate of interest. Yesterday we did a lot of coverage of material on the Austrian theory of price. So we talked about prices of consumer goods, price of producer goods. Dr. Sandy Klein talked about the price of money and the purchasing power of money. But we have yet to talk about prices that are inter-temporal, right, that have to do with the span of time. So far, we've only talked about what, in finance, we would call spot prices. What's the existing actual price of a consumer good right now, as opposed to, say, forward prices, right? Prices that people arrange to trade at some date in the future currently. And then the interest rate. So this is what we want to tackle this question in our session right now. We'll proceed in three steps. There are a few fundamental points that we want to make first about time and action. How do we incorporate the existence of time into our logic of action, our praxeological analysis. And then we'll talk about the two ways that human beings value action with respect to time. And as I did in the lecture on Monday, I'll follow the terminology here of Frank Federer. Terminology is always problematic, right? You may recall on Monday we talked about the personal economy and the social economy. So now we're going to talk about temporal valuation, which refers to the timing of an action. How do we choose when to take an action? And then we'll talk about the inter-temporal dimension of valuing in action, which refers to whether the satisfaction we receive from an action can be brought closer to us in time, whether we can get sooner satisfaction as opposed to later, which is a different issue from the timing question. So we'll separate those two out. And then the third thing, we'll just talk about the logistics, the details of the theory of interest. OK, so let's begin with these basic points. Action always involves a sequence of steps that occur then over time. So action is always in time. There's no such thing as a timeless act. The fulfillment of the end then comes later in time from the decision to act in a particular way. So we decide to act, and then only at a more remote future do we actually achieve the satisfaction from the end. Dr. Peter Klein, of course, talked about the implication of that in his talk on entrepreneurship yesterday. The implication of this, of course, is that for finite temporal beings like us, the future is uncertain. And so at the moment we decide to engage in an action, we can only anticipate the realization of the satisfaction of the end. We don't know it for certain. We're just involved in judgment of the realization of the end. We're involved in entrepreneurial foresight. So that we don't want to talk about today. That's been covered already, so we'll set that issue aside. And we'll turn instead to another dimension of action, which is its duration. So if action occurs in a sequence of steps over time, then it always is contained within a certain duration. The action starts at one moment and then stops at some later moment. The action is always in a duration. That is to say, the person acting always has a choice with respect to allocating moments of time that are either before the action or during the action or after the action. And again, if we want to think about this in an entrepreneurial way, we would of course have to include the fact that a person can start an action and then be engaged in the steps and then decide, oh, no, things have changed. And it's not going to work out and I quit. But remember, we're setting all those complications aside. So we're saying there is always a duration that the person intends. They start the action at one moment. They choose to stop the action at another moment. Then as indicated in the slide, we can subdivide the duration into two categories. There's the period of production. And the period of production itself can be further subdivided into stages of production, steps of production. This is what Dr. Patrick Newman was talking about yesterday. We want to build an automobile so we mine iron out of the ground, then we refine the iron, then another step of production, we make steel, and then so on and so forth. And none of those acts of production give us direct satisfaction. They're not consumer goods. They're just producer goods. We're moving through this period of production. And then sometimes as we move through steps of the period of production, there's also what Mises calls waiting time. So an example of this in the production of an automobile would be this. You're moving along the steps of producing, and you get to the step of painting the body of the automobile. And once you apply the paint, there's a period of curing. You just have to sit there and wait for the paint to cure, right? You're not actively doing anything. There's a waiting period sometimes in an action, in the production process of an action. And the point, again, of categorizing in this way is simply to highlight the fact that human persons choose periods of production. We can choose different periods of production. We can lengthen them out if we think that lengthening out the period of production will generate more value in the end product. And we can arrange factors of production in shorter periods of production. It's a choice variable what the period of production looks like for us. And then there's the duration of serviceableness of the good, the consumer good now we're saying that's produced. So it's a duration of serviceableness for the car that's produced through the period of production. Period of production takes whatever, eight months, then there's a car. Then the consumer buys the car, and now we can realize the satisfaction of all of that production. We realize the satisfaction of all of that productive activity that just generates the consumer good. Then the consumer good can be used over and over and over, at least in principle. They're perishable goods. They're used just once. But they're different durations of serviceableness for different goods. But the idea is that this is a category. We choose, people choose with respect to the duration of serviceableness in their action. They can produce cars that have less durability, and they would choose to do this because the cost of the production process is lower. Or they could choose to engage in a more extensive production process and get a more durable good. So this is the idea. This is all subject to our choice. And if it's subject to our choice, these elements of action, the time element of action, then of course we're going to choose, according to the way that we value the alternatives, longer periods of production, longer duration of serviceableness, shorter periods of production, shorter periods of duration of serviceableness, and so on. This is the way we would analyze these elements. So we're going to always economize with respect to these different elements. Okay, so now let's go, this is background, let's go to the two ways in which we value action with respect to time. So second step of our talk. And let's start with timing or this temporal element. So here we're concerned with this question. We have a given action that a person's going to take and the person can choose the moment in time, right? The moment ahead of the person in time to start the action, to place the action, right? To start the action. Could start today, could start tomorrow, could do the action next week. At least in principle, this is always the case for action. So we have this question of the timing of action. So it can start, like on the left side, right? It could start in an earlier moment in time. The action could be placed there by the person. The action could be placed at a later period of time by the person. So this is the basic question of timing. And the point is again that a person will choose with respect to these options, the person will choose to place an action at the moment in time which he or she perceives as being most advantageous to the satisfaction that's gained by the end that's anticipated by the action itself. So this is the idea of economizing. What I like the way Mises puts this in human action that he has a nice turn of phrase throughout the book, right? But he says time is an irreversible flux. By which he's trying to call our attention to the fact that the moments in time that are ahead of us that we anticipate are not homogeneous to us. Time is not like a units of money that are just equally usable across different things. The moment, as we move through our lives, the moments in time, we can see this by looking back, right? The moments in time present different possibilities for engaging in successful action. The circumstances change, right? For successful consumption and production at different moments in time. We in fact will change. Our subjective valuations will change later in life and so on and so forth. And so when we're thinking about when will we take an action, we take all of that into account, right? That can be part of the way that we economize with respect to time. So this is the idea. Now we can apply this. Let me give you an example of the timing of action. In this first part where I'm just talking about the value of a good itself, the subjective value of a good. We mentioned yesterday in talking about the laws of utility and the setup for the personal economy. So suppose we have a person who places value on growing a garden. And one of the consumer goods they want from the garden are tomatoes. So they plant some tomato plants, right? And then they do the proper fertilizing and weeding and so on and watering and in anticipation they take all these steps, the period of production. And then at the end they get this robust harvest of tomatoes. So now they've got whatever, 100 tomatoes. Now the marginal utility of a tomato at that point, to just sit and allocate immediately in the present the 100 tomatoes to various consumption acts, the marginal utility is very low. But the marginal utility of a tomato in the winter time when production can't be undertaken, at least not where this person lives, is very high relatively speaking, right? The person anticipates it, it would be higher. And so they can engage in this temporal movement of the consumption of the tomatoes from the present to the future. They can can the tomatoes or freeze the tomatoes or whatever and just bring them out and eat them in the winter when the marginal utility is higher. And you'll notice when people act in this way, when they economize across different moments of time, they bring the marginal utility of the good together. They exploit the fact that they can move it from where it's lower value to where it's higher value. And by doing that arbitraging activity, they bring the value at the margin together. And this of course is where we get to forward prices. Suppose we just moved to the market, okay, well. Then people who are trading oil, let's say refining companies, buying oil from producers of oil can anticipate that six months from now, the price of oil is going to be, the spot price of oil six months from now is going to be higher than the spot price is today. If they think that, then they can form a contract today to agree in advance to trade six months from today at a price they agree upon today. They can make a forward transaction. And suppose the forward transaction is at the price of oil that people are agreeing that they'll trade out in six months is $100 and the spot price is 60. Well, then we have the same issue, right? We have the same economizing opportunity where producers and holders of oil can simply hold the oil or delay production into the future and supply more of the oil where its price is higher by removing it from where its price is lower. And when they do that, the prices will come together and the benefit of reallocating the good in an economizing way are exploited, right, are undertaken. So this is the principle of forward transactions. Okay, that again is not our main topic, right? Our main topic is to talk about the second way in which we value action with respect to time. And this again, Federer calls the inter-temporal dimension where we're not concerned with the timing of action, when will we take an action. We're concerned with any action that is to be taken. So everyone or a person will just go ahead and place the action in the time that they think is economizing. They say, I'm going to do this tomorrow. But within the duration of the action, there's another element of time that a person must express value with respect to in order to act in an economizing way. So within the duration of time, once the action starts, remember, there's the period of production and then the consumer good is produced at the end of that, the middle bar, and then the duration of serviceableness, right? You have the consumer good and then you use it in production over time and it generates the satisfaction. So the other dimension of valuing with respect to time is this point here on the slide. It says that a person always prefers for the satisfaction to begin sooner. They always prefer for the line that divides the two to be moved to the left. They would always prefer if the period of production could be shrunk and you would get the same exact duration of serviceableness. Now maybe that's possible, maybe it's not. We're just saying a person's valuation is always to start a given satisfaction from an end sooner as opposed to later, which must mean then that the period of production is diminished, period of production is shrunk and that dividing line moves to the left. People always prefer that. Again, whether or not they can act in such a way to bring this about is an open question that we're just saying this is a preference that people have. Now this preference we call time preference. So just now that we have the strict technical definition, we can just use a kind of a little bit more amorphous definition, right? So instead of saying over and over this technical definition, we'll just say that time preferences, the preference a person has to get the satisfaction of an end sooner as opposed to that same satisfaction later. This is the idea of time preference. Now, just to emphasize that this is a praxeological notion. This is just bound up in the logic of action. There isn't any, it couldn't be otherwise. That this is just the way the logic of action is as we are as human beings.  In other words, time preference isn't the impatience that we have, that refers to the psychological aspect of action, not the logical. And it also is not a physiological claim. Now there's, we're not saying that people have time preference because well, when they eat, then they get hungry again and then they want the food again. And then, no, no, no, that's just a different altogether different dimension of human behavior, right? We're not saying that's nonsense or not relevant. It's just not part of economic theory. It's not part of the logic of action or the praxeological structure of action. Okay, so then I just wanna mention briefly this first implication of time preference. And I'm gonna mention this just briefly because Dr. Jonathan Newman will talk more about this in his talk on the business cycle this afternoon. And this is the inter-temporal production choices, how they depend upon time preference. So here all I'll mention is just this and then he can elaborate on this for your own knowledge later. The basic point is this. Suppose we have a person who's urgency for present satisfaction is very intense. Suppose a person is like that. Well, if a person is like that, they're going to want the shortest production processes they can get. This is like Robinson Caruso just washing up on the island and he's on the verge of starvation. He just wants to pick berries and eat them, right? He wants any immediately available production process or very short production process so that he can get the consumer goods and begin his satisfaction. But if a person has less intense preference for sooner satisfaction, then they're more willing to adopt longer production processes that are more productive in generating consumer goods that will give satisfaction, like Caruso going through the process of making a bow and arrow set and then hunting small game and so on and so forth. So that's the sense in which, the basic sense in which we're, Austrians are pointing out that time preference is what gives the dimension to the capital structure, right? It gives the dimension to the length of production processes. What we want to focus on though is the second implication which is what we'll call the pure rate of interest. And we define it this way. The pure rate of interest is the time preference premium of present money over future money. So the time preference premium of present money over future money. And the idea here is of course that, suppose, I'll just use an example to illustrate this. Suppose we have a family and they want a new car and there are various ways they can fund this. They could take a second job, one of them could take a second job. They could earn a little more income and then save or they could lower their consumption and increase their saving. And then they would go through this longer period, right, of production where they're going through this process of producing in the market and then saving. And then they could buy the car in three years or whatever it would take for them to save up sufficiently. So they have a longer period of production before the start of the satisfaction, the duration of servicefulness. But on the other hand, they could just find some other person with lower time preferences who's willing to lend them the money. And then they could borrow the money and they can move the duration of servicefulness, the satisfaction of their end, they can move it sooner to them, closer to them in time. Notice this is not the timing of the action, right? This is a different dimension. They borrow the money in order to move the start of the satisfaction closer to them in time. Entrepreneurs can do the same thing, right? Producers can do the same thing. They could save up and provide the funding to buy a capital good or they could borrow. If they borrow, they can move the satisfaction that they get subjectively, right, of having the producer good. They could move that closer to them in time and they could move the whole social structure of production, the period of production, they can shorten it and move it closer to the duration of servicefulness in time, right? So this is what we're speaking about when we say, when we talk about the interest rate, the pure interest rate, and how it efficiently allocates intertemporally. Okay, so now let's go through just the logistics of this or the details and the particulars of the argument. And what we'll argue, of course, is that the time preference theory of interest is simply the application of the general theory of pricing to this question of the intertemporal price of money, when people trade present money for future money, what is the price that's paid, right? The premium that's paid in this exchange. So we saw on Monday that when we applied the general theory of pricing to goods, that we just had the top line, right? The different people with different preferences, we have the iPhone SE buyers, right? And then the iPhone SE sellers and they just have different preferences for the iPhone relative to money. So some of them are demanding, some are supplying, and then the price emerges that clears the market and that's the argument, right? That the price of this consumer good is based just upon people's preferences. It generates from people's preferences as their preferences are guiding their demands and supplies. So it's the same argument for the rate of interest. We have some people with intense time preference, we say a higher time preference, we have people with less intense time preference, lower time preference, and the lower time preference people and the higher time preference people can make a mutually advantageous trade. The lower time preference people can lend to the higher time preference people. I hope I don't get canceled for categorizing people this way. But you know, and then the interest rate would emerge as the market clearing interest rate so that every borrower can find a lender, every lender can find a borrower. Right, the same argument that we made on Monday. Okay, so that's how it's going to work out. And I want to emphasize one other thing. This is a somewhat more sophisticated point, but I just want to insert this here in order to ward off any confusion or misunderstanding about what is exactly being argued here. And this has to do with this point that the inter-temporal trade that people engage in is always present money for future money. This isn't to say that people can't inter-temporally trade goods, they can do this. You could inter-temporally trade an apple or whatever. You could lend and borrow an apples or men's dress shoes or transmissions on a 2017 Honda Accord or whatever. You could do this, right? But we're not referring to that phenomena. That phenomenon, that sort of phenomena takes place in financial markets, more sophisticated financial markets. What we're talking about is just the rate of it. We're trying to isolate just the rate of interest to give you a better example than the ones I just did. People can buy and sell stock in companies, but the return on stock is a combination of interest and profit or loss, if you suffer loss. It's a combination, right? People are trading a complex good here that has different dimensions to it. And we don't wanna focus on that. We could do that, but that's a more advanced topic. Here, we just wanna look at the interest rate in isolation, so to speak. And there, what we find, of course, is in the real world, if we look out into the world, we see that lending and borrowing, people do it in money. When they just want to lend and borrow, they do it in money. And so this is why we say, well, the intertemporal trade of money is what we focus on theoretically, because this is what people are actually doing. We'll talk a little bit more about why they do this in a minute, but just to be clear. Okay, so this is what it would look like if we look at a specific case of this, just like we did again for the preference rank on Monday when we did goods. So suppose we have person A on the left who has less intense time preference than person B. So notice that person A and person B both prefer $1,000 today to $1,000 in a year. And we're assuming, again, because we wanna isolate time preference, we're assuming that the purchasing power of the $1,000 is the same, is anticipated to be the same in the present as the future. Maybe it isn't, but that's a complication we'll get to at the end. And then the rest of the preference rank, you can see for the person with lower time preference on the left, that person requires a $100 premium on $1,000 to prefer the future sum in one year to the present sum. So notice that person would be willing to lend $1,000 today in order to get a payment one year from today of $1,100 or more. $1,200 would be better, $13 would be better, right? The person on the right has higher time preference. Notice this person too prefers $1,000 today to $1,000 in a year, but this person's preference for future money requires a premium of $300. So this person would prefer $1,300 payment in a year to $1,000 today. In other words, they would lend $1,000 today if the interest rate were 30% or above, but not if it were 29% or below. If that were the case, then this person would be a borrower. Remember, I'll point out to you again, what we're doing with this kind of preference ranking, we're not establishing preference ranks in the abstract, we're saying we look into the world and we see that there's some people lending and some borrowing. If somebody lends, right, $1,000 in a contract to be paid back $1,100 in a year from today, then we can infer from that that they prefer the $1,100 in a year to the $1,000 today because that's what they did. And if we see somebody borrow, we can see that they had the reverse preference, right? They actually preferred the $1,000 today to the $1,100 in a year. They actually do, right? And then the rest of the preference rank, we can just build by logic. So what would make a person lend more, well, maybe a higher interest rate than the lower one, the law of supply and so on and so forth. Okay, so clearly you can see that these two individuals could make a mutually advantageous lending agreement. A could lend $1,000 to B at some interest rate between 10% and 29%. And they would negotiate this out and make their mutually advantageous loan. The only other thing, of course, we need to do in order to have an interest rate theory is expand this to the market. Again, just like we did on Monday with consumer goods, we just started with basic demand and supply and then we put in competing buyers and competing sellers. So I won't bother with charts to show this, but just go to a diagrammatic representation. So there's certain, in other words, we look out as economists into the world and we see that they're loan markets, they're markets where people are lending and supplying and then there's a certain interest rate at which this particular loan, let's say 15-year mortgage loans or whatever, is taking place and a particular amount of lending and borrowing that's going on. And then how do we explain this? And the Austrian answer to this is, well, we have people with lower time preferences and we have people with higher time preferences, people with more urgent desire to have their satisfaction sooner. And they can make mutually advantageous lending and borrowing agreements so that the people with more urgent desire for sooner satisfaction can attain that end by borrowing the money and the people with lower time preference could attain their end by getting the greater future payment that they value more, right? And then the market will clear when these people come into the market with all these different time preferences, then the market will, the interest rate will adjust to the point that clears the market. So this is the idea. We get the pure rate of interest, we get the total amount of indebtedness, lending and borrowing that goes on in the economy through this configuration. And just like, as we've been suggesting, just like with goods in the goods markets, the present money is reallocated to people who value it more in this process, right? Just like the good, the iPhone SE that we worked with on Monday through trade is reallocated to the people who value it the most, again, relative to money, right? So this is what's happening here also in the loanable funds market. Okay, so we want to take one more point along this line. And this is the final point on this slide. Just to note that once we have an interest rate in the market, then the interest rate itself equates the present market value of money with the future market value of money. And this is what allows the interest rate to integrate inter-temporal economizing into economic calculation. That's why it's important to stress this. So what I'm doing on the bottom two lines is just the standard straightforward compounding of interest and discounting. So we've got the future value that would accrue to someone who lends money on interest is the present value, the present sum, multiplied by one plus the rate of interest. They get the principal plus the interest payment, right? So a person who lends $1,000 today at an interest rate of 25% would get a payment of $1,250 in a year. That's the first line, right? That's compounding. But what we wanna focus on is since we're concerned about the inter-temporal periods of production is the entrepreneur. The entrepreneur is going to take present money and buy inputs and then produce a good and sell the good in the future. The entrepreneur needs to know how much is that future money that I'm going to get worth to me in present money given the market itself, given what exists, people's preference array in the market. And the answer is in discounting, right? So the entrepreneur just does the reverse calculation of compounding in order to find the present value of the future revenue that will be generated by some production activity. This would involve also investing in fixed capital as well as working capital, right? If that's the case, that's how the market works, then you can see immediately how the interest rate will integrate inter-temporal dimension of activity, of human activity, into the overall system of economic calculation because now future money and present money can be equated in the mind of the entrepreneur just like the present money, an entrepreneur who sells to one customer in the present relative to another is comparing equal monetary sums, right? So again, this is another reason why inter-temporal trade is done in money and not goods. Okay, then really the last step that we want to take in this is to talk about the two components of the time market, what Murray Rothbard calls the time market. So the time market is all exchange of present money for future money, and then again, we can look out into the world and we see that there are two categories that we can describe for the exchange of present money for future money. The first are credit markets, what we've been mainly discussing here, right? Lending and borrowing contracts. And the lending and borrowing contracts could be for consumer loans, you take out a mortgage, buy a house, you take out a car loan, general merchandise loans and credit cards and so on and so forth. With a lower time preference people lend to consumers who have higher time preference and then the sooner satisfaction of the consumer with higher time preference is satisfied. And then the producer loan markets, so they're bond markets, commercial paper markets and so on and so forth, where the entrepreneur is borrowing from again the capitalist lenders who have lower time preference and this moves the period of production, it moves it forward or closer to the end of it is move closer to the persons in time. So it shrunk, right? Because the entrepreneur doesn't have to wait to save in self fund, you can borrow the funds and start right now to get the inputs. And so notice the production structure, this second part of the credit market, all of that funding goes into the capital structure. So the production loans all wind up in the second part of the time market which is the capital structure. And there as I've been alluding to, the funding source could be either from the entrepreneur himself or herself, right? They can self fund in other words, they can save up their past profit, retain earnings and then fund their purchase of inputs that way or they can borrow from outside capitalists and then fund these purchases. So what the capitalist entrepreneur is doing, we sort of put these functions together, right? Dr. Klein likes to do in the entrepreneur. So the entrepreneur backed by the capitalist or if the entrepreneur is self funding he's a capitalist himself, right? These functions are together. So the capitalist entrepreneur is doing again is fronting money to the owners of the factors production. So the car company entrepreneurs at Honda or whatever, they're paying workers, they're paying suppliers of tires and steel and so on and so forth. Now to get these inputs in order to produce the car and then sell the car in four months or whatever, they're advancing money to the owners of the factors of production. And in doing this they earn the interest rate. They pay the discounted marginal revenue product of the factors and earn the full marginal revenue product of the factor, right? This is the point. Once we see that there are different components of the time market, different ways that loans can be made or present money can be traded for future money, then we also notice the arbitraging that can take place between the two subcomponents, right? So suppose like I've got sketched out here that the interest rate is real low on consumer loans, the R0 point A on the left panel and very high in the capital structure, that is if you pour lending funds into production processes, you can get a higher rate of return than if you lend to consumers. That sort of situation will not persist, right? That is not completely economizing because you have higher valued lending in one place and lower in another and so the capitalist lenders will simply shift their funding. So the supply will shift, right? Until the interest rates come roughly together in those two different endeavors. In fact, this isn't just the case for different components of the time market. It's also the case for every production process in the economy. So let's say we had a situation where the interest return in smartphone investments was 7.5% and the interest return in tablets was just 2.5%. Well, that too would not persist in the market, right? The capitalist investors in tablets would sell out their assets in tablets, lowering the prices of those assets and they'd buy assets in smartphone production, boosting the prices of those assets. And so the cost structure in tablets would fall because asset prices are lower and the cost structure in smartphone assets would rise and so the cost structure rises there and then the interest return would come together. And those of you again who are more sophisticated about all this recognize that this happens almost instantaneously, this kind of movement, this arbitrage in financial markets. We don't actually need movements of the physical objects themselves in order to get the movement of prices that's occurring in the market economy. And then the last point that I wanna make on the interest is this point at the bottom. Just to emphasize this because this distinguishes the Austrian view again for many other views of interest. Neither physical productivity nor value productivity of assets affects the pure rate of interest. Quite the contrary, so let me take an example to illustrate. Let's suppose we have a production process and it uses these inputs. There's capital, so on the left-hand side, suppose the entrepreneur anticipates that the marginal revenue product from using a capital good that he owns will generate $10,000 in the sale of the consumer good in a year's time. And the natural resources that he uses will generate $5,000 of marginal revenue product. And the labor he uses in this production process will generate $2,500 in the price of the product that he generates. So the left-hand side is the revenue that's generated from the sale of the product broken down as the entrepreneur sees it allocated to the different inputs that he's using. And the question is, if the entrepreneur, if the interest rate in the market is 25%, what would the entrepreneur pay today to buy those inputs? Will it depend on the productivity, the value productivity of the capital or the value productivity of the labor and so on and so forth? And the answer is clearly no. It doesn't matter if the marginal revenue product of capital in this example is 20,000 or 10,000. What the entrepreneur, the interest rate element of what the entrepreneur is willing to pay is the discount. The entrepreneur pays $8,000 for a $10,000 payoff in a year. If the capital good were worth more, say $16,000, the entrepreneur would pay that discounted by 25%, right? The greater productivity of capital doesn't affect the interest rate. They're independent elements of the price of the input. And so you could see in this example that the net income for the entrepreneur would be exactly 25%, right? Because he's discounting the advance payments and we're setting aside profit here, remember no entrepreneurial profit considered. So let me end on this then. This was mentioned in a talk also yesterday, I think by Dr. Patrick Newman. Oh, he's talking about the benefit of the capitalist. Maybe this is Dr. Sean Rittenauer. Actually, he was talking about the benefit of the capitalist. He's not a parasite, right? He's actually doing something valuable in the social order. And we can actually see now, we can break down the contribution that the capitalist entrepreneur makes to successful production. And so here's the way that economists categorize the what I've called the sources of net income that the entrepreneur earns. The first that we just mentioned, right, is the entrepreneur fronts money, lends money to workers. And so the entrepreneur will pay the workers a discounted wage, a wage from what the revenue that the output generates that the worker is producing. By the way, this is not exploitation. The worker could take the wage that's paid today and lend it out on interest and would have the exact same money sum that the entrepreneur would pay if the worker agreed to be paid upon the sale of the good, right? It's not exploitation. The entrepreneur is just satisfying the higher time preference of the worker. Entrepreneurs can provide labor in the production process, in their own production process, for which they would earn a wage since they don't pay someone to do this work that value of their labor would wind up in their net income. They'd earn the revenue from the output, the contribution that that labor makes to output, but there's no cost, right? No out-of-pocket cost. The entrepreneur can also supply leadership skills. This would be the ability to organize factors of production to make them more valuable than if they're organized less effectively. So here the entrepreneur isn't contributing a labor skill for which he's earning a wage, so to speak, but is simply making other, the marginal revenue product of other workers go up. And this too, then, since no payment is made for this by the entrepreneur, this would wind up in the entrepreneur's net income. And then finally, of course, there's profit from the superior foresight. And once again, this is not parasitical, obviously. It's that different people have different skill sets, different abilities were, thankfully, not ants in the anteep, right? Where this is the true diversity, the true actual diversity that's important in human life were different from each other in these ways. We're the same in certain respects and different in other respects. Thank the Lord, right? Isn't this a blessing to us? And because we can then interact in ways that we couldn't otherwise. And so yes, entrepreneurs self-select. If they're good at providing foresight in the market, they'll self-select into that area and they'll be successful earning profit in their operation and can have an ongoing operation. If they're unsuccessful, they'll drop out of the ranks of entrepreneurs back into the ranks of workers, which is again, the social economizing thing to do. Thank you for your kind attention.