Towards a Universal Exchange: Zero Inflation

Inflation Solution Part 2: The SORAnomic Definition of Inflation and Deflation

Jun 25, 2014

In a previous post, I explained the metaphysics of value and why our goal is zero inflation.

Economics is a science centered on the self. This makes it view price-particles as the end goal, instead of value-waves. It creates profit maximization which takes advantage of the difference between low buying prices and high selling prices, so that the self can get more pleasure. The high selling prices then manifests as inflation, which economists want to be between 2-4 percent annually.

SORAnomics, on the other hand, is a science centered on society. This makes it view value-waves as the end goal and how each person in society can partake of that value-wave. It knows that the gain by the profiteer is a loss to its customer or competitor, who are also parts of the same society. This then renders social progress minimal. Instead of profit maximization, SORAnomics focuses friendly competition to remove the lack in society. It views inflation as beneficial to the producer or merchant (as Economics does). But it also views it as hurtful to the rest of society. To illustrate why it is hurtful, we have to apply Dialectics and define inflation and deflation according to its metaphysical nature.

Inflation is Not Really Price Inflation

Economics shallowly defines inflation as a rise in prices and deflation as its decline. This definition obviously does not hold because Japan has been in deflation for a long time and yet its prices, such as rent and consumer prices, remain high.

What really 'deflated' was economic activity, arising from Japan's declining population. Activity is based on the desire, will, or demand to act and so we can define inflation as demand inflation, and deflation as demand deflation.

With this new definition, we can derive the following concepts intuitively:

Under Classical Economics, those who want to oversupply money cancels out those who want to undersupply money. The Roman emperor who overcirculates his debased currency will likely be deposed by a usurper using the old currency. This natural competition creates a reliable balance or predictable outcomes.

The Natural Balance was Disrupted by Profit Maximization

The industrial revolution allowed mass production which then allowed greater profits. Remember that we defined profits as revenue from lack. At the start of the industrial revolution, the whole world was lacking in steam engines, machines, steamboats, railroads, etc. This allowed the great profits to be realized by the producers of such items at that time. With the great profits came the idea of profit maximization which was taught by the Marginal Revolution of the 1870's in order to justify such a phenomenon.

The downside to teaching profit maximization is that everyone from the 20th century is now programmed to go after high profits, instead of low profits at higher frequency which was advocated by Classical Economics:

A country fully stocked in all the trades possible would have great competition everywhere. It would reduce ordinary profits to the minimum
Wealth of Nations Book 1, Chapter 5

A rich county will naturally have lower profits, representing its low levels of lack. Profit maximization, however, forces its capital-owners to withhold money in expectation of higher profits, which are not there. This then starves the rich economy of its lifeblood, causing a recession. It leads to a Depression if the profit maximization doctrine is so strong as to overcome the natural reaction to buy sale items and hire people desperate for jobs.

If the selfish pursuit of profits via arbitrage is bad for society, then why is it promoted and even imposed by Economics on the people? If a 2% inflation represents 2% unanswered demands in society, why is it set as a target by economists?

Part 3answers that.

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