How to End Inflation Permanently

Several weeks back, I wrote about an idea that could be the world's next reserve currency. Now, I am taking it a step further. And there is a reason for that.

Inflation is the world's next big problem. I don't see it going back to 2% (which is the central bank's target) with the current wave of government borrowing and spending.

The financial system is near a breaking point. The government has cajoled the banks to do their bidding by buying up government debt with depositor's money. And that has created a liquidity challenge when times got tough.

And by the way, this is why the Federal Reserve will cut rates. Not because the economy is going into recession, but because the banks are in serious trouble.

But it is funny how depositor's money gets to buy government bonds through banks and then the government tax people to pay back the bonds. Looks like a robbery where the people are the losers on both ends.

First, the money they earn is heavily taxed. Then, when they hold it in a bank, it is gone too. The government still gets it. Most people don't realize this.

And the question I like to ask people is this. The national debt in America has grown by over 3 trillion usd in the last 1 year. What has changed? What value has been added to mankind in the last year that justifies that amount? What value has been added to America that justifies the 3 trillion new debt within 12 months?

You get my point. This is why inflation is not going anywhere. You cannot have that kind of money being released into the economy and there will be no inflation.

So, how will this end? How can we end this?

Well, my answer is to have a two-currency solution. The currency for the measurement of goods and services must be different from the government currency that the transaction is conducted in.

The Two Currency Solution

Let's assume we are in the USA. So, we have a transaction currency which is the US dollar. Then, we also have a measurement currency, let's call it Kash.

If you want to buy a product from me, I will quote the price of my product in Kash. So, for example, this particular product is worth 15 Kash. But for you to buy it from me, you have to pay in dollars. This is because Kash is only a measurement. It is not for transactions.

Therefore, you will look at what the exchange rate of Kash to dollars is for the day. And then pay the equivalent dollar. So, the price of anything in Kash will rarely change.

How then will the value of Kash be determined? I have shared my ideas on that in a previous article. It will be fixed and verifiable. Just like one meter is one meter anywhere you go in the world. 1 Kash will be the same and would be the standard.

This is how we permanently destroy inflation. So, if the US dollar is having issues because of too much easing, people just switch to another transactional currency. Plus, central banks can print as much money as they want and don't need to tax anybody.

The Future of Economics

The future is a two-currency solution (in my opinion). One currency is a standard measurement of value, and the other currency is the medium with which transactions are carried out.

If the government and central bank can print money without it affecting the quality and quantity of value, then there is no need to fear inflation. All they need is to be conscious of the credibility of their currency. If the currency stops being credible, people can switch to other currencies like bitcoin.

It is obvious that the government and the central bank are in collusion. So, why not just merge them into one?

People will love the two-currency solution because it stops taxes and ends inflation once and for all. Governments will love it because they can print unlimited money as long as they find ways to keep their currency credible. Central banks will love it because now they can stop pretending and act like a real arm of the government.

I have given this problem of financial stability and inflation a lot of thought. And this is the only lasting solution I can think of. Otherwise, people will just end up getting more oppressed.

I believe this will end wars too. There is a war because someone is willing and able to finance it. Without financing, there is no war. Everybody will be forced to the negotiating table to settle.

With governments having to maintain the credibility of their currencies to be continually used for transactions, they will avoid wars. And even if they decide to plunge themselves in, it will be difficult to manipulate people to join the war because the people set their own values by the measurement currency.

The future is self-governance. I believe the "democracy" era will soon come to an end. If there will be self-governance, it has to be reflected in finance and economics first.

Conclusion

The permanent solution to inflation is to have two currencies. One currency to measure value, that never changes. And the other currency to carry out transactions.

We have transactional currencies in the world today used to measure value. This is why there are serious economic problems every now and then. Let the government issue transactional currencies (such as the US dollar, euro, GBP), and let there be alternatives too (in the form of crypto). However, we need a standard measurement currency that will completely separate the creation of value from transactions.

Think about this

P.S. Here is a previously published article on what the measurement currency could look like