Fiat Currency Historical Inflation: Causes of Low Inflation

Skip this Detailed Page

1. Deflation Technology Offset: Current Inflation pressure has been largely off-set by Technological Innovation. The reduction in costs of miniaturization, robotics, better tools, and better control systems has had a great impact on decreasing the cost of goods for the average consumer while simultaneously increasing the quality of virtually all purchased goods.

   1. Cheaper Better Goods: Technology allows for the creation of goods for less real economic value and materially makes those same goods vastly cheaper for everyone, especially for the those with the least.

   2. Lower Operating Costs: As technology increases the benefits in energy usage, maintenance, and complexity decrease the cost of use. The cost savings results in Deflation as there is less net demand across the economy.

2. Labor Cost Optimization: With International Trade, the cost of goods and the labor component is decreased. This is a very complex area of economics, moral choice, and ethics.

   1. Free Labor Markets: Where workers are free to obtain good quality, safe, and better paying jobs, thereby everyone is improved as the cost of goods decreases in higher paying areas while the lower cost areas gain access to better work and better paying opportunities. It is better if the lower cost labor markets are in this category.

   2. Displaced Workers: The workers in the higher cost area who are displaced by the lower cost workers pay the "full price" directly for the systemic gain by other market participants.

      1. No Replacement Job: Assuming entire classes of workers, residents of entire states, or worker in any one sector can simply retrain, simply move, or simply find another similar paying job is not realistic. The consequences to the social structure and individuals that are displaced will be large, systemic, and profound.

      2. Secondary Affects: The waterfall affects, the spill-over affects, and the down stream affects of large scale state-wide, sector-wide, and generation-wide workers will have generational impacts. The consequences of this strategy are widespread.

         1. Impoverishment: Being impoverished early in life and during the socially formative years brings significant long-term negative outcomes. Having millions of families economically implode is very expensive for everyone. Impoverishment causes Deflation; there is nothing left. Essentially, the house is already burnt down.

         2. Government Bankruptcy: The government, especially at the state and local level, will be impoverished due to no remaining tax base, and much higher costs for police, welfare, social services, and incarceration costs. Certainly, state government and local government bankruptcy and desolation will be the solitary outcome with ever larger scale social cost expenditures, no remaining economic basis and no net tax in-flows.

   3. Limited Workers: Where workers are overly limited, indentured, nearly enslaved, or actually enslaved, then the economic benefit can be obtained at great moral cost. The duplicitous cheaper cost incentive drives everyone not in the lower limited worker position to make economic and socially undermining decisions. The gains from the economic displacement of the limited workers is wholly their burden alone. The use of limited workers has great moral risk and should be highly regulated.

3. No Financial Reciprocity: There is a theory that as the lower cost workers move up the economic system they will become consumers of the higher cost markets. The assumption is that at some point, those new consumers create labor in the higher costs markets.

   1. No Demand Increase: There may be some limited and marginal amount of increases in product demand; however, over the long run there is almost no benefit to a higher cost market for the displaced and lost labor in the high cost labor market. Due to no financial reciprocity from lower cost labor markets to higher cost labor markets, there is no sizable increase in demand for goods and services. This lack of demand offsets the Inflation pressure.

   2. Real Asset Increase: There may be some net increase in real asset demand as the net outflows from high cost labor markets to lower labor markets creates a Fiat Currency surplus. As those funds are typically in a 'foreign' currency in the lower cost labor market, those surplus funds are then redirected to real asset purchases by owners in the lower labor cost market. This impoverishes the higher cost labor market into a non-asset owning group over the long run.

4. High Cost Market Restrictions: Any government in a high cost labor market should likely carefully limit and regulate lower cost labor market imports to avoid undermining the economic basis of the entire economic system. If you no longer make anything, you no longer have an economic system.

   1. High Net Import Economic Distortion: In the short run, very high levels of net imports from low cost labor market have a high Inflationary affect driven by capital debt borrowing that is then spent on artificially cheap goods. Over the long run, it becomes ever more certain that a strong Deflationary collapse may be triggered by an economic system that creates nothing.

5. Counter Balance and Offset: XiXcoin^® works to counter and offset the natural debasement of government issued Fiat Currency.

   1. XiXcoin^® Alternative: 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.

Next: Fiat Currency Government Debt.         Next: XiXcoin^® Download.         Next: XiXcoin^® Purchase.