Learning the hard way: Null Economic Memory

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Throughout history, we see how nations and humans tend to learn things the hard way. It might be believed that by intelligent reasoning, by extrapolation and by transitive property one could learn better and more quickly, but it is a proven fact that human beings need to know obstacles first-hand in order to realize that they really are obstacles; regardless of how much you've been warned about it.

I say this because it is usual, for example, to see that peoples tend to choose leaders from ideological currents who know very well that they have not worked well in all the other countries in which they have been applied.

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We can also appreciate it in the fact that governments know very well that the indiscriminate issuance of money is what produces the highest inflation in nations, but even so, they continue to do so while pretending and claiming to be doing everything possible to reduce it.

And in electoral campaigns, political candidates run for public office offering to end inflation, or reduce it significantly with the objective to be elected. And they do this even knowing that they will not be able to really achieve this goal, because it goes against the establishment itself, and because they will always need money to pay those who financed its campaigns; money that they will get by issuing more money without real backing.

More and more money, and less and less value

The economies of nations are then filled with more fiat money, and by the principle of scarcity we know that the more something is abundant, the less value it acquires. Therefore, when the government of a country issues more and more money, because it does not need any real commodity backing it, then said money undermines the economy, making goods and services become more and more expensive and therefore that the money loses value.

But how does money lose value?

This is a difficult concept for most people to understand because they think in simple, basic nominal terms. So they think "if I have $ 100 in my pocket, it will always be $ 100 in my pocket.

And technically it is right, because a $ 100 bill will always be a $ 100 bill, nominally speaking; But the problem is that the real value of those $ 100 is determined by what it can pay in terms of goods and services. Therefore, in an economy where more and more dollars are issued, such as the North American one, those $ 100 each time can buy fewer goods and services.

This is why $ 100 from the 70s of the 20th century is equivalent to more money than $ 100 today; because with $ 100 in the 70's you could buy and pay for more goods and services than you can buy today; and that is a proven fact.

But beware, I mention the US because I'm talking about dollars, but it really is the country with the lowest inflation worldwide (or one of the lowest inflation) in annual percentage terms. Truly worrying cases in inflation terms are Venezuela and so many other countries with enormous inflation, due to acellerate advance of phenomenom year after year.

Bad historical memory, null economic memory

But if I'm honest, I am not saying this in the case of any specific country, because it really applies to each and every one of the countries of the world; since they all suffer from the same evil to a greater or lesser extent; from the moment they all abandoned the gold standard, after that the US did it in the 70s of the 20th century to finance the Vietnam War.

So, all countries suffer from these vices and evils mentioned when it comes to issuing money without backing. In any case, all peoples suffer from a poor historical memory to elect their rulers, and from no economic memory to understand the mistakes made by their governments. So, we can find the dire equation:

Bad historical memory + Null economic memory = Null economic understanding.

And it is from that null understanding of the economic factors that govern the economy of the countries that all the vices and evils of the nations derive, starting with inflation itself, and this due to the fact that then the worst rulers, with the worst preparation in matters of economy and finance they are elected by majority to govern and legislate the countries. Everything mentioned becomes a vicious circle from which nations cannot get out.

The solution to the inflation problem

The massive adoption of cryptocurrencies on a global scale is, in my opinion, the only viable solution for the inflationary phenomenon of nations, because cryptocurrencies are not issued by central banks or governments indiscriminately, and because they are decentralized.

But achieve the global adoption of cryptocurrencies is very hard, because there is a lack of understanding of the economic elements that govern economies for people part; due to as we have already said, people suffer from poor historical memory and null economic memory, which makes it impossible they understand what they need understand for such adoption of crypto to become a reality.

Either way, perhaps at some point in the future, people will begin to be more aware of all the things mentioned in this post, and then, only then, will there be a chance to decrease, and even end, the inflation of nations. Who knows? It only remains to hope...

Please, comment your opinions on the subject discussed. They are read there!!

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