Over the years, the technology has improved by leaps and bounds, making life more cost-effective and efficient. However, according to Richard Beurth, CEO of Diginex, such technological improvements may not save citizens the money they intend to make, due to inflationary efforts.
“The technology is extremely contractionary for many of our products and services,” Beurth told Cointelegraph. Diginex is a company that helps create frameworks for blockchain and crypto solutions.
Beworth remembers purchasing music albums on CDs decades ago that each sold for £ 16, which at the time was about $ 25. Customers can buy the latest albums on iTunes in seconds and pay an average of $ 10 to $ 12, less than half the prices seen nearly twenty years ago, and even cause inflationary damage in recent decades.
Technology has reduced the cost of producing music. Digital delivery eliminated the need for expensive physical products while increasing efficiency.
It is a concept of technology that is applicable to countless other categories. Food, housing, and other goods and services have, over the years, witnessed major technological developments that have essentially brought down production costs.
Years after the 2008 financial crisis, Beurth explained that he entered the cryptocurrency space to protect capital from inflation. Fears of a significant devaluation of funds have intensified in 2020 in line with measures to prevent COVID-19 and the efforts of various authorities to correct the economy that is suffering as a result of these measures. Countries around the world continue to print money as a solution. “It’s getting scary,” said Beurth.
“If you look at the trend line for monetary expansion over the past 40 years, it will be pretty much flat until around 2008. Then the gradient only increases. It gets colder and then suddenly in April. You have a straight line, which is a 25% increase. In total growth over 40 years – I’ve seen it in four months. ”
When the US Federal Reserve estimates inflation targets on its economic balance sheet, it looks at the Consumer Price Index, or CPI. The index basically shows the cost that the average citizen pays for regular purchases based on the number of products and services grouped into one number.
Beworth mentioned that the US Federal Reserve takes into account the CPI when setting inflation targets. However, devaluation differs from the CPI, which is reflected in the cost of CDs. Some products and services have become cheaper due to innovation and efficiency. Then central banks believe that they can increase inflation based on these numbers, when in reality these goods and services are cheaper, and are not the same.
“Meeting this KPI target is really just a distraction,” Beurth explained. He added, “They will never be able to raise the CPI significantly unless they lose control of their money.”
“Basically, these central banks are fighting to get a 2% basket of goods, which is very deflationary.”
In 2020, amid monetary pressure and difficulties with the Corona virus, the public has witnessed a rapid rise in the prices of assets and services that contain a limited quantity, for example, for some real estate. This rise in price is related to the aspects mentioned by Byworth regarding devaluation.
However, inflation benefits governments in the form of debt. “The US government has huge debts, so if the money is worth nothing, the debt is worthless,” said Beurth.
“This is a game everyone is playing, and inflation and the monetary base really mean that the only way to protect your value and wealth is to invest in high-value assets – assets that people will struggle for.”
Diginex CEO explained this as an excuse for the stock market rally in 2020, and also gave a hint of Bitcoin as an option. “This is why Bitcoin will continue to be more complex and in demand,” he said.
In 2020 Bitcoin has amassed several traditional devices that seem to view this asset as a hedge.