Fiat Currency: Government Structure

Fiat Currency Historical Inflation and Debasement: A Detailed Analysis

  1. Ownership in Any Structure is Ownership-In-Fact :

    1. Controlling Class: Generally speaking, in more capitalistic the societies, the investor controlling class and the government controlling class are more decoupled.  In Socialist and Command-and-Control societies, the investor class and the government class are more tightly bound.

      1. Structurally Neutral: There is a distribution of control alignment and control binding between these two structural approaches to societal structure.  From a currency perspective, there is little difference.  There are only so many was to organize large scale societies in a sustainable structure.

      2. Natural Control Limit: It is likely that our current governmental control structures have reached the natural limit of peer-based control structures.  Through observation, there appears to be a natural limit to the efficiency of human or institutional control systems.

      3. Evolved Later Systems: It is extremely likely or virtually certain that little more improvement can be naturally obtained without highly developed and refined Artificial General Intelligence Agents (AGIs) running large parts of society.

    2. Social Control Group: In social systems where the government partially owns, owns-by-taxation or proxy, or outright owns the Means of Production, the government is simply the Economic Concentrator, Capitalist, Owner, or Investor for that society and its structure.  Under all current government systems, control remains; it always remains in the hands of someone or some subgroup.

    3. Combined Government and Investor Class Societies:  Where the government class and the investor class are combined, the government becomes the owner of the Means of Production and the beneficiary thereof.  Generally, the government merges into one concentrated and controlling interest.

      1. Pre-inflation: Where power is concentration and combined, the government has an additional power to limit or restrict the income of workers.  The worker's pay can be structurally suppressed in true economic value terms.  This strategy simply slips another layer of inflation between the value created by workers and the cost of goods.  This method is just pre-inflation.  The economic inflation occurs before the workers receive value.

      2. Market Priced Goods: Thereafter, the consumer buys and procures goods and capital assets at the natural market price.  This price is generally materially higher than the workers received value via earnings or pay.  This policy and practice hides or masks inflation extremely well, but it remains inflation as a fundamental economic process and outcome.

      3. Inflation Based Control: The important insight and correlation is to understand that generally all governments use pre-earnings inflation or post-earnings inflation as a tool of control, manipulation, and behavioral modification.

        1. The government can use pre-inflation through suppressed worker income versus the worker market value created.  Using standard inflation, the same economic value difference is maintained.  The gap between value creation and value retention is decreased systemically in virtually all cases.  By design, the average worker or investor will have less real value over time.

  2. The Government Creates the Financial Structure of the Society:

    1. World Reserve Currency: US Dollar as World Reserve Currency and the Current Debasement: After World War II, the implementation of the Bretton Woods System, and after the British Pound crisis of 1976, the United States Dollar became the World's Reserve Currency.

    2. Gold Standard Loss: The acceleration of Inflation was concurrently multiplied after the removal of the right of Conversion of Dollars to Gold or the removal of the Gold Standard via Decree by the United States of America in 1974.  Inflation decreases the Numerator in the simple economic equation of [ (Retained-Value) / (Value-In) ].

    3. Government Manipulation Destroys Value: Governments and their managing institutions implement a Policy Mix with a combination of a country's Monetary Policy and Fiscal Policy to influence growth and employment.  This is generally implemented by the Central Bank, Banking Regulation, and the Government.

    4. Financial Manipulation: The government uses Financial and Banking Stimulus to control, manipulate, and artificially accelerate Monetary or Fiscal Policy  under the reasoning of implementing a Stabilization Policy and to Stimulate the Economy.

      1. Debasement: These policies included trying to lower short-term interest rates and ultimately leads to quantitative easing.  Inevitably, this naturally leads to significant Inflation or Debasement.  In most cases, over the long-run, these policies create massive Inflation.

  3. Government Fallacy of Control and Results:

    1. Creating an Inefficient Market: Under the economic theory of Functional Finance governments promise and proclaim that these policies create Effective Demand in the marketplace and under Chartalism assure to all that the government should finance itself to meet explicit goals.  These goals include taming the business cycle, achieving Full Employment, ensuring Growth, and low Inflation. In the long run it may be certain that the various means of Government Debt will not be sustainable without large negative economic impacts.

    2. Non-linear Economic Conditions: Sooner or later, the average consumer unknowingly discovers the Ricardian Equivalence Proposition.   The Average Consumer will simply and logically internalize the government's budget constraint when making their consumption decisions.

    3. False Capital Scarcity: There is a false assumption by most governments that the method of financing government spending does not affect consumer or investor consumption decisions.  It is also assumed that it does not change aggregate demand for economic goods, services, and capital.  However, simple logic dictates that over time government excessive borrowing and overspending clearly does by primary, secondary, or tertiary affects.

    4. Loss Aversion: The nominal or average Consumer or Investor will encounter fear through Loss Aversion, Economic Recession, or Economic Depression.  This leads to a decrease in economic activity.  Over time, the government ends up directly competing for capital through higher Interest Expense, or through the affects of Inflation, Hyperinflation, or Economic Collapse.

    5. Economic Instability Through Debt: Simply by continuously manipulating the economic environment, especially by mandating inflation, governments create Government Failure and Economic Inefficiency. In general, due to a lack of immediate value transparency or feedback, government intervention generally makes matters worse, rather than better.  In the end, the average consumer has less real Economic Value, less Economic Security, Impoverished future generations, less Civil Liberties, massive expansive Public Debt, and a absolutely certain Currency Crisis.

  4. Digital Currency as an Offset to Fiat Currency:

    1. Asset Class Diversification: XiXcoin® works to counter and offset the effects of the ever present Debasement of government issued Fiat Currency.  This is done through Diversification utilizing the concepts of Modern Portfolio Theory (MPT). Simply having ownership in another asset class or asset type, on average and over time, will likely decrease volatility.  This counterbalance works at all levels including the individual, regional, national, and international economic level.

    2. Transferable, Unique, and Alternative: XiXcoin® is transferable.  XiXcoin® is mathematically unique to you and protects your value.  XiXcoin® is simply the best real alternative available and works for you and the economic system.

 

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