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The Roots of Inflation: a Functionalist Approach


We would like to give access to a research work on currency and inflation that is ongoing at The Unicist Research Institute since 1990. This research is based on the unicist functionalist approach to economics. The objective of the research led to the conclusion that inflation is functional to different disequilibria of an economic system until it becomes chaotic, generating hyperinflation where the agents involved do not consider the functionality of the social system to ensure their own survival.

Based on this point of view of inflation, the present inflation of the world was generated by the disequilibria of the COVID-19 crisis that drove to the need of generating financial resources to compensate for the impossibility of generating value.

The end of the crisis establishes a new starting point for the economic systems that still needs to be assimilated. The war between Russia and Ukraine is another structural disequilibrium because it affected the world-economic system.

Inflation and deflation are equilibrators of the distribution of value in an economic system driven by structural disequilibria in macro- or microeconomics.  Inflation is multiplicated by the expectation of inflation that works as a catalyst to accelerate the speed of changes in prices.

The growth of the inflation rate ends when a new equilibrium is accepted in an economic system. It is recommended accessing the origins of the hyperinflation of Germany in 1923 and Hungary in 1945 which have totally different origins, one related to macroeconomic problems and one driven by structural microeconomic disequilibrium.

At the end, inflation is driven by the macroeconomics agents, but the origin is not necessarily there. For example, now the conflict between Russia and Ukraine is the origin of the inflation in Russia while the inflation of Argentina is generated by the structural disequilibrium of its productive system.

Structurally speaking, different economic systems generate different causes for inflation, which necessarily end in macroeconomic disequilibrium although they have multiple origins. Solving the structural origins of inflation allows rebalancing the economic systems and making inflation unnecessary.

We are now preparing an Open International Conference to expose and debate the functionalist approach to inflation. If you are interested in participating, please contact: n.i.brown@unicist.org  

Peter Belohlavek
The Unicist Research Institute

NOTE: The Unicist Research Institute has been, since 1976, the world-leading research organization that introduced the functionalist approach to science to manage the functionality of the real world. www.unicist.org

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