Summary of The Reason Behind Lizz Truss’ Resignation: UK's economic crisis Explained in simple words

00:00:00 - 00:15:00

The video explains the UK's economic crisis in simple terms. The government is cutting down its own revenues during a cash crunch, which is the reason why everybody is scared that this scenario will spiral the entire economy of UK into a freaking disaster.

• 00:00:00 The UK is experiencing an economic crisis due to high inflation, food prices, and the prospect of a Recession. The cause of the crisis is reportedly sabotage of the north stream natural gas pipelines.
• 00:05:00 The reason behind Lizz Truss' resignation is the UK's economic crisis, which is explained in simple words in the video. The cost of energy has been increased, and the citizens don't have to bother about energy bills even if the costs go up. This is due to the class of people going from poor to rich, and states the money that they spent on energy. The poorest segments of UK spend close to 2750 pounds on energy, while the richest spend 5 thousand pounds on energy but it is only three percent of their income. If you charge the same unit price to both rich and poor, then it is bad economics to give you an oversimplified context. Finally, the government will have to raise money through bonds, and the problem is that UK is heading towards a bond crisis which will cause a currency crisis, which will cause a mortgage crisis, and so on. This will turn UK into a complete economic mess.
• 00:10:00 The reason behind Lizz Truss' resignation is the UK's economic crisis, which is explained in simple terms using a simple example. The longer you keep government bonds, the more interest they'll pay you. The primary focus of the yield curve is no longer the interest rate, but the cost of borrowing for the government. When the bond market in the UK becomes unusable for big traders, currency depreciation creates a disaster for investors. The UK government has to borrow more money, which further decreases demand for the pound and increases the cost of energy. This cycle will continue until the government defaults on its debts.
• 00:15:00 In this video, Lizz Truss explains the UK's economic crisis in simple terms. The government is cutting down its own revenues during a cash crunch, which is the reason why everybody is scared that this scenario will spiral the entire economy of UK into a freaking disaster. The bank of England is now about to buy 65 billion pounds worth of bonds to prevent the interest rates from falling. This is the story of the economic crisis of the UK.