“Greedy billionaires” don’t cause inequality – the central bank does. Thoughts?
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Even if CPI were 0%, fiat currency would still be causing inequality. Technological progress is constantly driving the costs of producing goods and services down, and yet the public rarely experiences the full benefits of these cheaper products. This isn’t because of greedy billionaires—supply and demand would naturally drive down prices if it were just left to them—it is because central banks expand the money supply to mask productivity gains.
If an apple, for example, halved in cost to produce, due to technological gains, then those cheaper costs should pass on to the public. But if simultaneously the central bank doubled the money supply, the costs of an apple would remain as it was before the technology gains, and the public would be unaware of all that had taken place below the surface. All of that additional wealth created from the productivity gains, then, would be transferred from the public to investors.
This scenario plays out even if CPI is 0%. Everything, in reality, is becoming cheaper, but the public never experiences that because all of the wealth gains are transferred from the public to asset holders via the fiat monetary system and expansion of the money supply.
And there really is no way for fiat money NOT to work this way, because the design of the system can’t handle deflation. The problem with fiat money in the 21st century is coming from the exponential gains in technology, it is a system that never took the idea of exponential technological progress into account in its design.
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