- 4. The Evolution of the Monetary System ------
The wealth gap between countries will be decreasing fast meanwhile the gap between rich and poor individuals will be increasing in the world. The world financial market remains to be active and expanding meanwhile it is become considerably competitive. This is the entire influence of the globalisation on the world financial economic situation. It provides individuals with the wide range of opportunities meanwhile it exaggerate competitions in the wide range. The new era of the information technological advancement combined with the globalisation will gradually transform the international macroeconomic environment and structure. The world monetary system will be based on the dual currency system of both the traditional currencies and the newly introduced digital currencies.
- 4.1. The invention of a digital currency and its influence on the monetary system
In particular, the introduction of the digital currency such as Bitcoin will be beneficial for individuals living in those countries where their national monetary system is immature and constantly in a turmoil situation. Many emerging countries (The term called LDCs and the third world will cease away) will adapt the electric currency such as Bitcoin or something similar. The leapfrogging development of the technological innovation allows various emerging economies in Africa, Asia, and South America to introduce the international electric monetary system like Bitcoin.This is far less costly than improving the already existing traditional monetary policy units. This is similar to the situation that these countries are much easier to adapt the new mobile phone devices and their market competition not restricted by the monopolistic corporations of the landlines.
Even the advanced economies with the relatively stable monetary system will be still impacted by the spread of this kind of digital currency. More individuals in this world will start using Bitcoin or any other digital currency due to the accessibility to currency and the scale of trading places connecting the entire world via the world wide web. So, the market transaction based on the traditional currency issued by central banks will be more influenced by this new market based on the digital currency.
The great advantage of Bitcoin is that its default programme limits the maximum money supply. The money supply can be increased by adding more CPU capacities to calculate in the entire system connecting the whole world. An individual contributing to adding the capacity with her/his PC gain some extra Bitcoin, and this is called mining. The reward of this mining process becomes smaller when the aggregate supply of Bitcoin becomes closer to the supply limit set by the default programme. Therefore, there is no authority which is able to either increase the excess money supply or prevent individuals from accessing to its usage.
In another word, Bitcoin is more likely to be considered as a commodity like Gold. However, Bitcoin enables far more individuals to access to its usage than Gold. This is because it is electrically traded at the speed of light because it is more efficient to set its market value than Gold. The value of this digital is instantly measured by the products traded in this market and their trade frequency via the transaction based on this digital currency. So, its value is instantly adjusted to the purchasing power of the entire world market using this digital currency.
The traditional currency of central banks of a nation or a group of nation will lose its authority over economy, and individuals will start choosing both currencies, the traditional one and the digital one, for each different situation. Central banks will struggle to keep their security of maintaining their authority over the market where their issuing currency is distributed. Any devaluation of and/or any usage limitation of the traditional currency will encourage individuals to use the digital currency more often. Therefore, the authorities of nations and a group of nations will attempt to maintain the royalty of citizens to their traditional currencies so that they will inevitably need to restrict their asymmetric distribution of the money supply which deviates from the optimum level required by the market.
The world monetary system will be the system combining the advantage of both the fixed foreign exchange market under the gold standard and the free flexible foreign exchange market. The value of the traditional currencies will be less deviated from the purchasing power parity due to the influence from the competition with the digital currency. Even though the foreign exchange rate remains to be fluctuating, the value of currency will be much faster to converge to the optimum stable rate in the market. This also implies that it will be more difficult to gain profit from the arbitrage in the foreign exchange market.
All in all, any individuals will be emancipated from the dominance of national monetary authorities. Furthermore, it will be difficult for anyone to maintain their dominance propped up by gaining profit from the market arbitrage. Then, more financial institutes and individuals participating the market will severely struggle in their cut throat competition. These financial corporations will shift to create the alternative model of their investment strategy based on this new market situation, and those who are behind adapting this new model will lose their revenue. Hence, the dynamic transformation of the market competition and the wealth distribution system takes place in not only the real market situation explained in the previous chapter but also the financial market.
- 4.2. The still hotly debated Eurozone future
Both Euro, the currency, and the European Monetary Union (EMU) might remain in the future because it is costly for many EMU members to replace it with their independent monetary system. However, there is a high possibility that some of the members will leave the EMU, and there is still a small possibility that the EMU will completely break up and Euro disappears. The common monetary union has both advantages and disadvantage by means of economic analyses.
It will be highly dependent on the philosophical view of these Europeans to decide whether they preserve it or not. The pure reasoning is not completely based on either an objective reality or a rational decision-making process. It is highly influenced by the subjective feelings of individuals deriving their reasoning. Then, any friction of their daily life events easily change their mind for determining their long term future political decisions. The cause of both the European Union (EU) and the EMU was based on not only the economic purposes but also their political ideal to unify Europe. Therefore, it is unpredictable to forecast whether their will remains to pursue their ideal or some influence on their mind disturbs their pursuit of the ideal.
The future situation is still relatively unpredictable for the EU. Only what can be predicted is that resolving the EMU will reduce the economic strength of the member countries. The world economic trend still encourages shifting to borderless trades and the big economies of scale which the current EMU provides all the Eurozone countries to develop their economy. Therefore, the EMU still have the enormous advantage of maintaining the EMU.
Only the problem is compromising the reform aimed at the further integration of the Eurozone economy including their fiscal integration. Otherwise, the unbalance of the economic environment of each Eurozone country among the EMU will be perpetuated, and it may urge some deprived Eurozone country to leave. Their future is determined by the will of European citizens to pursue development and progress or refuse drastic reforms for their stability.
Tuesday, January 17, 2017
Thursday, January 05, 2017
2017 New Year Forecast (2 of 3): A Gradually Emerging Complex & Incomprehensive World & Society
------ 2.2 From Capitalism to the Anticipated New Era ------
From now-on due to the information technological development, including both the internet and the artificial intelligence (AI), which has widen the market entrance of both the real-market (dealing with the goods and services) and the financial market (dealing with money and other forms of capital assets). It used to require a high volume of capital investment to open a new business so that those who were already wealthy to own enough capital had a much stronger advantage. By contrast, the current technology enables individuals to gather efficient tools and investment resources from a far bigger information resource than few decades ago.
This leads to the situation where it does not longer matter to seek a heavy volume of capital investment from banks and private investors for starting up a new business as long as any individual has an attractive idea of a new business. In another word, the cost of capital investment has become substantially low. This is one of the reason why the interest rate set by central banks in developed countries is close to zero or even minus. The supply of entrepreneurs will become far more abundant and the market competition among business owners will become far more competitive than it has been.
The traditional bourgeoisie such as the owners of big enterprises are going to face the severe difficulty in maintaining their dominance. These bourgeoisie owning huge enterprises with a high volume of capital are not flexible to change their policies and their organisational structure in comparison to the newly emerging entrepreneurs having started their business with a low volume of capital investment. These new entrepreneurs are far more flexible to adjust their business structure to the market demand and requirement even though their economies of scale is not big as much as the traditional capitalistic enterprises.
The economies of scale are also predicted to be smaller than they have been due to the technological development such as newly invented AI and 3D printers. Furthermore, the division of labour will be more emphasised in this coming era so that it seems to be the case that the industries had better include various independent small enterprises competing and often cooperated together instead of allowing one or few monopolistic big corporations controlling it.
The development of the cloud data base and the close-based administration system also devalue the importance of these big corporations because industries no longer need a big organisation constantly administrating and monitoring the business activities as well as their data-management. These administration tools will be organised by decentralised platforms such as a set of the remotely located hard-drive centres connected via online. The outsourcing will be more popular as there will be more small enterprises offering flexible services with good-quality. Therefore, companies no longer need to marge various departments and divisions inside their company, and these tasks can be easily outsourced.
This decentralisation process will also lead not only the previously mentioned traditional bourgeoisie owning private enterprises but also government-bureaucrats administrating public sectors and the market regulations, who can be called the new bourgeoisie, will also struggle to maintain their dominance. Not only the previously mentioned technological development and the market decentralisation but also the decline of nation-states caused by the globalisation are devaluing the necessity of the bureaucracy. Some of the public sector projects will be outsourced and the communication tool and the administration tools of public sectors will be so efficient that it will require less man-power.
In addition, both the already developed information technology and the newly developed AI will replace many tasks of these bureaucrats. Also, the diversification of this entire world will require anyone including the tasks of the bureaucracy to constantly change enough to frequently requires their skill sets to be always updated or even replaced by a completely new ones. Therefore, the structured static structure of the bureaucracy will be simply inefficient, and it will devalue the level of intelligence, wisdom, and hard-works of these elite bureaucrats.
At the same time, this transformation of the market structure will cause a hardship for the citizens who are already accustomed with their traditional way of living by being employed by a private company, public sector, or any structured organisation. The market becomes far more capital intensive owing to the technological development and the popularlised entrepreneurship owing to the information technology and networks. Then, the number of labour employed will become far smaller than it has been. Therefore, unless they find any new means of living such as starting their own business or any alternative way of sustaining their life, they will struggle to find their means of living. This may result in an increasing social problem of anomie (Normlessness or Meaninglessness) predicted by Emile Durkheim.
Overall, owing capital will become less important meanwhile people will be employed less and market competition becomes more competitive. Because owing (physical and financial capital) will become far less significant to become successful in the market competition, the name called capitalism may be going to be old fashioned. This newly emerging era should no longer be called capitalism although the market competition becomes much complex and intense and the social stratification still remains (It is far from the utopia for all individuals).
- 3. Diversified Education System
As the market becomes far more competitive as well as diverse, the skill sets required for succeeding in this market competition frequently change all the time. In this situation, there is no definitive skill guaranteeing individuals' job security. Then, the compulsory education will be more diversified unlike the current homogeneous plane style of education. As the change of the required skill sets becomes more frequent, individuals will rather prefer learning multiple skills in various methods to spending several years for obtaining one degree.
These organised educational institutes used to be valuable for children to gain an access to the basic educational information and the social skill with the others. By contrast, the primary education system is diversified nowadays and the remarkable development of the information technology enables anyone to gain the access to the education, the essential information required for life, and various diverse social networks. Therefore, compulsory education is no longer essential for individuals to obtain.
Nonetheless, education and nurturing will still be the key critical factors for succeeding to become the dominant class more than it has been. Those who can access to the flexible choice of education and nurturing and be brought up in an emotional stable environment while their childhood are more likely to succeed in the survival in this new era. Then, the family background, the chance to have a right mentor, the relationship with friends and acquaintances, and the living environment endowing individuals with innate abilities will become unavoidable variables to acquire the higher social status.
From now-on due to the information technological development, including both the internet and the artificial intelligence (AI), which has widen the market entrance of both the real-market (dealing with the goods and services) and the financial market (dealing with money and other forms of capital assets). It used to require a high volume of capital investment to open a new business so that those who were already wealthy to own enough capital had a much stronger advantage. By contrast, the current technology enables individuals to gather efficient tools and investment resources from a far bigger information resource than few decades ago.
This leads to the situation where it does not longer matter to seek a heavy volume of capital investment from banks and private investors for starting up a new business as long as any individual has an attractive idea of a new business. In another word, the cost of capital investment has become substantially low. This is one of the reason why the interest rate set by central banks in developed countries is close to zero or even minus. The supply of entrepreneurs will become far more abundant and the market competition among business owners will become far more competitive than it has been.
The traditional bourgeoisie such as the owners of big enterprises are going to face the severe difficulty in maintaining their dominance. These bourgeoisie owning huge enterprises with a high volume of capital are not flexible to change their policies and their organisational structure in comparison to the newly emerging entrepreneurs having started their business with a low volume of capital investment. These new entrepreneurs are far more flexible to adjust their business structure to the market demand and requirement even though their economies of scale is not big as much as the traditional capitalistic enterprises.
The economies of scale are also predicted to be smaller than they have been due to the technological development such as newly invented AI and 3D printers. Furthermore, the division of labour will be more emphasised in this coming era so that it seems to be the case that the industries had better include various independent small enterprises competing and often cooperated together instead of allowing one or few monopolistic big corporations controlling it.
The development of the cloud data base and the close-based administration system also devalue the importance of these big corporations because industries no longer need a big organisation constantly administrating and monitoring the business activities as well as their data-management. These administration tools will be organised by decentralised platforms such as a set of the remotely located hard-drive centres connected via online. The outsourcing will be more popular as there will be more small enterprises offering flexible services with good-quality. Therefore, companies no longer need to marge various departments and divisions inside their company, and these tasks can be easily outsourced.
This decentralisation process will also lead not only the previously mentioned traditional bourgeoisie owning private enterprises but also government-bureaucrats administrating public sectors and the market regulations, who can be called the new bourgeoisie, will also struggle to maintain their dominance. Not only the previously mentioned technological development and the market decentralisation but also the decline of nation-states caused by the globalisation are devaluing the necessity of the bureaucracy. Some of the public sector projects will be outsourced and the communication tool and the administration tools of public sectors will be so efficient that it will require less man-power.
In addition, both the already developed information technology and the newly developed AI will replace many tasks of these bureaucrats. Also, the diversification of this entire world will require anyone including the tasks of the bureaucracy to constantly change enough to frequently requires their skill sets to be always updated or even replaced by a completely new ones. Therefore, the structured static structure of the bureaucracy will be simply inefficient, and it will devalue the level of intelligence, wisdom, and hard-works of these elite bureaucrats.
At the same time, this transformation of the market structure will cause a hardship for the citizens who are already accustomed with their traditional way of living by being employed by a private company, public sector, or any structured organisation. The market becomes far more capital intensive owing to the technological development and the popularlised entrepreneurship owing to the information technology and networks. Then, the number of labour employed will become far smaller than it has been. Therefore, unless they find any new means of living such as starting their own business or any alternative way of sustaining their life, they will struggle to find their means of living. This may result in an increasing social problem of anomie (Normlessness or Meaninglessness) predicted by Emile Durkheim.
Overall, owing capital will become less important meanwhile people will be employed less and market competition becomes more competitive. Because owing (physical and financial capital) will become far less significant to become successful in the market competition, the name called capitalism may be going to be old fashioned. This newly emerging era should no longer be called capitalism although the market competition becomes much complex and intense and the social stratification still remains (It is far from the utopia for all individuals).
- 3. Diversified Education System
As the market becomes far more competitive as well as diverse, the skill sets required for succeeding in this market competition frequently change all the time. In this situation, there is no definitive skill guaranteeing individuals' job security. Then, the compulsory education will be more diversified unlike the current homogeneous plane style of education. As the change of the required skill sets becomes more frequent, individuals will rather prefer learning multiple skills in various methods to spending several years for obtaining one degree.
These organised educational institutes used to be valuable for children to gain an access to the basic educational information and the social skill with the others. By contrast, the primary education system is diversified nowadays and the remarkable development of the information technology enables anyone to gain the access to the education, the essential information required for life, and various diverse social networks. Therefore, compulsory education is no longer essential for individuals to obtain.
Nonetheless, education and nurturing will still be the key critical factors for succeeding to become the dominant class more than it has been. Those who can access to the flexible choice of education and nurturing and be brought up in an emotional stable environment while their childhood are more likely to succeed in the survival in this new era. Then, the family background, the chance to have a right mentor, the relationship with friends and acquaintances, and the living environment endowing individuals with innate abilities will become unavoidable variables to acquire the higher social status.
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