A critical solution to end chronic inflation in Silicon Valley
I do believe chronic inflation in bay area will inevitably lead Silicon Valley to lose their influential position as “world innovation hub”.
Leisurely and affluent lifestyle is critical for young entrepreneurs to build an innovative idea and startups
In the moment of 1970s, when Steve Jobs and Steve Wozniak found Apple, Silicon Valley was the best place to start tech startup in the world. Why? It’s simply because “the living cost was extremely cheep”. Thus, Steve Jobs could spend much time for him to polish his mind-set as an entrepreneur and to work with Steve Wozniak to build an amazing products in his parent house. But, now in Silicon Valley, young generation has been losing such leisurely and affluent lifestyle because of chronic inflation around there. The crystal clear fact is the real estate price in San Fransisco is more than 6 times higher than the US average.
Another reference is the composite cost of living index in US.
On the other hand, Shanghai in China is great. Their living cost is still extremely cheep. What I was surprised with in my stay in Changhai in July 2018, 30min ride for sharing bicycle is just US$0.4. 1/3 price of Tokyo’s. I’m impressed. And they have also well-developed EV bus system which cost is US$1.5 for one ride. Very cheep. The lunch box in cafe is around US$5. I think central or local government intentionally helps the running cost of these life infrastructure enable to keep lower which deeply encourages young entrepreneurs to start their new projects in Shanghai.
Thus, Silicon Valley is on the edge.
Gesell Money will solve the chronic inflation in Silicon Valley
I have an clear solution in my mind. Let’s start from here – “Equation of Exchange” by Irving Fisher (1867–1947), Novel Prize Economist.
- MV = PT
- M (Money Supply)
- V (Velocity of Circulation)
- P (Price of Goods and Services)
- T (Transaction Volumes)
T (Transaction) represents business climate. To increase T without inflation on P ( Price of Goods and Services) actualizes healthy business climate vitalization. Rise and fall of T depends on M(Money Supply) and V(Velocity of Circulation). Increasing M more than the demand in market economy naturally causes inflation. Thus, the key to maintain healthy business conditions is to increase V along with constricting M in minimum level.
But, our currency is designed to increase for ever. This feature causes permanent inflation in our economic system. The typical bad example Japanese Yen. Take a look at the following graph (Figure 3)- V of Japanese Yen after Bubble Economy in 1980’s.
The above Figure 3 indicated that V of Japanese Yen tended to decrease from 1.18 in 1980 to 0.57 in 2013 inversely proportional to the increase of M. Thus, we can recognize that the oversupply of M never stimulates our real economy.
On the other hand, Chiemgauer, a local digital currency with natural depreciation model (as same as the idea of Gesell Money) in German, achieved 300% faster V than Euro on average. See Figure 4. This is a clear indication for us to realize that we can revive our economic climate without permanent increase of money supply.
Unfortunately, I could not find the comparison stats of inflation rate in Chiemgauer, but, the rate around there must be lower than other cities in Euro.
Thus, if some one who can scarify himself as much to implement the modernized model of Gesell Money on public blockchain in Bay Area, I do believe Silicon Valley can still be “world innovation hub” from now on.
Facebook Libra applies this natural depreciation model, which will leads Mark Zuckerberg to be the legend in the millennium century.
Since Peter Theil is still on the board of directors on Facebook, it might happen with his practical support to Mark Zuckerberg. Libra with natural depreciation model with the over 2billion user base will be the great catalyst to create sustainable economy after post capitalism on Earth.
I designed Orb DLT to build the platform for the modernized model of Gesell Money
I decided to sold Orb to SBI Holdings to start my new project, but, here is my white paper on Orb. You can find more detail here.