Meet the Big Blue Elephant in the room

World today is to a big extent influenced by the wealth pyramid so that 1% of people own 46% wealth in the world. It is known, that the rich become richer and we have got somehow used to it. We don’t question it, we see it almost as normal.

Wealth pyramide
Wealth pyramide

But why is it like this? Why is the wealth in the world distributed so unevenly? How did it come that 3.7 billion people have only 2.7% of the world’s wealth?

One of the main reasons is our current banking system — the fiat money system. It creates the impression that stable money is available in the world, right? But behind the scenes, the amount of money is continuously expanded and the unfortunate side effect is that from the money creation profits rich class and poor class sees only inflation of prices.

Even if the poor class has an impression of stable money, relatively they can buy less and less for their money as profits from the fiat money creation accumulate to the rich class.

Why does it happen so? Key drivers here are the proximity to the money creation (commercial banks do this) and having access to the credit on favorable terms. We can summarize this as follows:

  • Rich class is closer to the credit creation via commercial banks and they have easier access to the credit.
  • The poor on the other side have much less access to the credit or they have access on very challenging terms. Credit is, not always, but very often, the basis for wealth creation.
  • 20% of GDP receives 80% of credit money (corporations and rich individuals) and vice versa in modern economies — i.e. the credit is not equally distributed in the society.

Let’s illustrate the effect of the fiat money system with the following simulation which considers the current wealth pyramid, world annual inflation 3.2% and profit from money creation (seigniorage) 2% annual. The inflation applies here for everyone; the profits from the seigniorage are available only to the rich class.

Simulation of wealth pyramid with fiat-money-system parameters

The effect of the fiat money creation system on the wealth pyramid is clear. Rich become richer and the poor become poorer.

What can we do? Cryptocurrencies created non-government controlled money. It is a big step forward. But it is not enough. We need more. We need to distribute profits from money creation (seigniorage) evenly in the world.

Therefore, we created SmartCredit.io. To make the world a better place, to have more even wealth distribution in the world, to give chance to the non-included people in our world and to reduce inequality in our world!

Join the revolution.

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