Deflationary Economics

I’m far from a macroeconomics expert and will not pretend to be remotely studied in this area. In this post I am simply reflecting on our current and future position as a society to live happily, healthily, and sustainably through current and possible future economic systems. 

Print your own in 3 easy steps

Where do we place our value? Is it in assets, resources, or currency. We currently live in an inflationary system where currency is infinitely created. Because of this, the purchasing power of our currency will always decrease as the intrinsic value of assets remains equal.  What this system does is place bias on storing value in assets. Assets are bought and held as a way to store value. As a consequence, these assets are often bought up by the wrong hands, leading them not being used to their full potential. Rather than being used for the good of society as a whole, they are left unutilised. The opportunity cost of assets used as a method of storing value will eventually put a great strain on global resources. Already the larger corporations are understanding the value of assets and ownership of land. They have come to understand the low-value of currency. We are moving very quickly to a fully integrated, large-scale global economy where there will be few big winners (who hold the majority of assets) and many, many losers. 

A real image of our global leaders fighting for world resources

In a deflationary system where there is a finite amount of currency (of which is infinitely divisible), we can generate more volume of currency without diminishing our purchasing power.  What is surprising in this type of system, is that assets become a poor store of value, as you are better off accumulating currency to store value.  Large corporations and individual consumers will be more selective when making purchasing decisions, as purchasing assets will have a long-term negative effect on your net-worth. This will force us to allocate resources more effectively. Afterall, you would hope that as a positive society, one in which we are all trying to better the human race and ourselves, we would all be united in placing value and allocating resources more effectively. 

I'm excited for this kind of future

In the future I believe we will have consistent, renewable energy sources. Lab grown meats, vegetables, and even common resources with carbon neutral footprints. To do this we have to be smart, and extremely efficient with our current resource pool. The future will hold many great challenges, and many more great opportunities. Our ability to solve global and immensely complex issues through AI and machine learning will catapult the human race exponentially. Large scale simulations and the automation of repetitive tasks will reserve our greatest creative thinkers the free time they require and deserve. I, for one, remain extremely optimistic of the future of the human race.