Monday, April 6, 2020

Axio and Deflation

Economic theory describes deflation as a decrease in the general price level of goods and services, and that it occurs when the inflation rate falls below zero. Then the theory describes causes of deflation and its terrible consequences. However, this theory is only true for the current monetary system. For example, the theory states that the major cause of deflation is when money becomes more expensive because of the scarcity of money. The theory does not consider that money itself can become more expensive since there is no mechanism for it. This is because the current monetary system is an inflationary system based on the decreasing value of money.

The Axio monetary system is a deflationary monetary system in which Axio will accumulate the value of the interest payments within a supply of a fully backed currency. This is because the Axio will be issued as debt and extinguished when it is repaid, while the resulting interest payments would increase the value of the Axio by the amount of the interest. However, deflation makes it difficult to repay loans with money that become more expensive over time. Left as is it would make Axio unusable for business.

The obvious cure for deflation is inflation, however it has to be done in a productive way that would benefit everyone. The solution is to issue additional Axio for the balance between interest payments received and the balance of the bad loans that would cause inflation within the system. This amount can then be used to pay for operating expenses of the Foundation, and the remainder could be distributed as interest payments to all depositors. This would help to stabilize the Axio by diverting excess value to depositors.

This approach would solve the problems of deflation, stabilize the value of the Axio, and would provide interest payments to the depositors without the need for inflation. It would make the Axio monetary system less susceptible to the fluctuations in economic activity that create booms and busts of the Business Cycle associated with the current inflationary monetary system. And given all the other great advantages of the Axio, would allow it to compete effectively against the established fiat currencies.

For more information about the Axio Monetary System, please visit the Axios Foundation website. For an overview please refer to the Pitch Deck, with further information disclosed in the Blog, Whitepaper, Business Plan, Executive Summary and the Axio Token Terms of Sale.

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