Inflation is not another buzzword in the financial terminology — this is a real problem for the world economy which causes serious damage. What to do to decrease that damage? Build a stable financial platform — here’s the answer.
Seeing that our specialists at zoolatech.com, among other things, are passionate about transforming financial services through innovations and building software solutions for fintech enterprise, we couldn’t pass this by. So, in this post, we’ll share some techniques intending to help with creating a stable financial platform. Let’s get started.
KFPP Platform: What is it?
KFPP stands for Keynes’ Floating Prices Platform and is based on Keynes’ concept which proves that if prices and income rise at the same pace, people would not be affected by the crisis.
This certain concept makes inflation self-canceling: platform rise will pull prices increase, where the latter will cause the need for more money to pay for higher prices. With money creation ceased, inflation will soon stop as well. Whereas, with the KFPP platform implemented, people could become more confident about cost savings, the price of the currency, lending, investing, and other financial operations.
The Distortion of the Platform We Use Today
Although the KFPP platform can bring much value, there are still many distortions in the way we use it today.
Regular changes in mortgage costs make people lose finances, destroy the building sector and banks. Debt-based funding arrangement has a price higher above normal. Mortgage security and estate investments are not safe, whereas banks and investments are regularly endangered.
Solution: create brand-new mortgage agreements to disburse wealth units, change the building sector, and make the value of property stable.
Bonds of Wealth
Among other things, lending also comprises cost savings and investments, as well as a pension plan. At present, the redemption value of interest-bearing bonds remains unchanged. Because they are closely bound, this leads to platform rise.
Solution: issue bonds of wealth and link interest charges and equity to NAE. The government can issue bonds of wealth in exchange for fixed treasury bonds and link interest charges and equity to NAE. By doing this, the government will block borrowed funds related to investments on the platform.
Another step the government could take is to pay 1% on bonds of wealth to cover the institutional administrative expenses on retirement funds, rent, and claim reserves. This would dramatically reduce the cost of servicing the national debt, as it would eliminate tremendous risks for investors.
The price of currency leaps up and down which leads to destroying import/export businesses together with those spending huge amounts of money on FDI.
Solution: bear in mind that a single price can’t keep trading and investment markets balanced. Given that the international prices partly depend on currency, these two markets are worth being separated.
As you can see, in the form in which we use the platform, many distortions don’t allow creating a stable financial system. Good news, there are already a few solutions meant to change the existing platform and build a sustainable one instead.