Money Creation and the Potential Impact on the Value of JAX Coins
At its core, inflation is caused by too much money in circulation compared to aggregate demand in any given economy. A rise in the amount of money in circulation is only necessary when there is an increase in productivity gains at par with the new amount injected into the economy. Similarly, the value of the fiat currency decreases if the aforementioned conditions are not met. For example, if a nation owes its creditors lots of money, it can simply print more money. The original debt is paid off, but the currency received has less value. If there is inflation of a fiat currency, it costs more to purchase the same goods and services that could have been bought with less money before inflation. Why？ Before inflation, a fiat currency had more value. In some countries where populations suffer from hyperinflation (e.g. Venezuela, Argentina), people tend to invest in cryptocurrencies such as Bitcoin. However, most well-known cryptocurrencies are highly volatile and are not really fit for day-to-day payments. Users then turn to what is known as stablecoins. These cryptocurrencies are pegged, mostly, to the USD. However, most of them are centralized. Worse, people suffering from high inflation still have problems using them since