Inflation is an interpretation that our mental model makes about a future that perceives negative. But ... what if that mental model changed? Remember that the brain "believes to see" and not "see to believe".
Rivers of ink have been written on the subject of inflation in the last 70 years. They range from the most liberal versions to the most Keynesian, all in some way theorizing about how such a "sustained and generalized rise in prices" would be generated. Undoubtedly, the vast majority of theories give a preponderant place to the exaggerated increase in the amounts of monetary money, that is why the (serious) central banks take care not to fall into these excesses.
However ... this consensus, this matrix, is not necessarily the underlying explanation of inflation, but a resulting one. Result of what the reader will ask? Inflation is the result of our mental models, formed from very young, that support this monetarist explanation of inflation, that is, resulting from our brain being educated to understand the temporary excess of currency as something negative, to which we must react accepting that the prices go up.
However ... this consensus, this matrix, is not necessarily the underlying explanation of inflation, but a resulting one. Result of what the reader will ask? Inflation is the result of our mental models, formed from very young, that support this monetarist explanation of inflation, that is, resulting from our brain being educated to understand the temporary excess of currency as something negative, to which we must react accepting that the prices go up.
But, and here comes the awkward question... what would happen if the brains of the economic agents had been educated differently, in such a way to perceive the temporary excess of currency as positive, useful for business to prosper, so that the credit was more abundant and people could buy more goods and services, and the economy would flow better. The reaction to the increase in the currency would probably change. Recall that Cognitive Neuroscience shows that reality does not exist in itself, but is a recreation and interpretation of the mind, individual, or related groups, which makes the brain "believes to see" and not "see to believe".
In this way, entrepreneurs, trained in the monetarist matrix, are ahead, that is, at the slightest news of real rise in the amount of money by a central bank, prices rise, responding to what dictates its somatic marker, emotional and instantaneous, derived from his mental model (matrix) monetarist. However, if their mental matrix were different, they would probably not do that, but perhaps they would increase the supply of product and hours of work, a phenomenon that has been observed in small communities with local currencies, where their increase has not been neutral, that is to say , has had effects on the product, instead of on prices.
And here I stop because I know that raise these issues is to open an unwanted tap, since it is full of unscrupulous politicians who have always wanted to abuse the management of money supply for issues that have nothing to do with the welfare of people, but for its perpetuation in power, and corruption. But, from the point of view of the Applied Neuroscience to Economics, I can not stop raising the issue of what mental models mean in our behavior and our actions, and that it is proven that the human brain "believes to see" and does not "see to believe", leaving room for another socially shared mental model, the reaction to the handling of the creation of currency could be completely different from what is done today.
In short, the issue raised here is one of those pandora boxes that nobody wants to open, especially by the groups that maintain the control mechanisms of the current matrix (US dollar), which know perfectly that you only need "believe" so that a currency has demand, without needing too much support in gold, hard currency, or anything similar.
And here I stop because I know that raise these issues is to open an unwanted tap, since it is full of unscrupulous politicians who have always wanted to abuse the management of money supply for issues that have nothing to do with the welfare of people, but for its perpetuation in power, and corruption. But, from the point of view of the Applied Neuroscience to Economics, I can not stop raising the issue of what mental models mean in our behavior and our actions, and that it is proven that the human brain "believes to see" and does not "see to believe", leaving room for another socially shared mental model, the reaction to the handling of the creation of currency could be completely different from what is done today.
In short, the issue raised here is one of those pandora boxes that nobody wants to open, especially by the groups that maintain the control mechanisms of the current matrix (US dollar), which know perfectly that you only need "believe" so that a currency has demand, without needing too much support in gold, hard currency, or anything similar.
Author: Sebastián Laza
Sebastián Laza is a Behavioral Economist, specialized in the interrelation between Cognitive Neuroscience and Decision Making.
He also is the Executive Director of the Applied Neurosciences to Management and Economics Program (National University of Cuyo, Argentine) and the Neuroeconomics's Coordinator of the of the Latin American Institute of Applied Neurosciences (http://neurociencias.online/).
Additionally, he is the author of NEUROECONOMICS: THE DISRUPTIVE PATH (2018): https://www.amazon.com/NEUROECONOMICS-DISRUPTIVE-PATH-Sebastian-Laza/dp/1718177844
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