By Malik Istifanus
In bringing this article to conclusion, I will like to take the public back to the memory lane. The essence of going back to history here is to remind ourselves that part of what is happening in the global financial system coupled with the arrival of many alternatives was long predicted by the founder of MMM. He made his predictions before bitcoin became tradeable. Later the appearance and rise of cryptocurrency market proved that all the predictions were accurate.
Precisely, in 2011, Mr. Mavrodi founder of MMM worldwide, proclaimed some points of upcoming financial revolution across the globe. Many folks dismissed his ideas. Alas, a lot of those proclamations are coming to reality now.
It is important we go back to some of the points he made then in this discourse. Mavrodi, in his wisdom, did say then that financial guarantees are just a pretext to impose a control over people. And people naturally do not want to be controlled. Like the free bird, they want to fly around without inhibitions.
How can an organization guarantee that it will not go bankrupt? In reality, people prefer those who do not attempt to control them even if they do not guarantee anything. In the last couple of years, the world has witnessed big corporations go under especially during the recent global meltdown in 2008. And what we see the systems which do not offer any guarantees, like MMM, bitcoina and other cryptocurrencies, become very popular and form a grassroot movement.
Aside that, the founder of MMM asserted that for people, the more profitable and more risky assets will be more preferable than less profitable and less risky. It is not something good but it is a part of human psychology. And the financial system exploits this pattern of human behaviour.
Another of his points is that investments in real assets (manufacturing, construction, etc) cannot be so beneficial as assets which are defined only by demand and supply of people. In other words, assets which are on the basis of demand and supply will be more attractive and beneficial to people rather than the ones that are defined by other means. Take for example the basic guiding philosophy of MMM which is about providing help (supply) and receiving help (demand). Another example is bitcoin. Bitcoin is just a piece of programming code. First almost nobody believed that in can be tradeable. But now it’s price is more than 7,000 dollars per one bitcoin.
This paradox was explained by Mr. Mavrodi in a following way. Multiplication of any real asset is constrained by limitations on production more physical goods. If an asset is not pegged to physical goods, it will be determined only by the will of people, and it has unlimited possibilities for growth.
According to Mavrodi, fiat money is a tool to seduce and manipulate people as money is no longer a store of value. How can one measure with the same figures the cost of luxuries for leisure and the cost of medicine for saving lives? It does not make any economic sense nor even common sense.
As attested to by many empirical evidences around different continents of the world, it has been discovered that the fiat money system is not working well today and chances are that it will even get worse in the future. The fiat money system will be trapped by alternative systems which are based on exchange of more liquid and faster growing assets.
Fiat money is a pyramid scheme with segregation of the rich and the poor (new money is created and goes to stock and bond markets which are not affordable to common people); the alternatives of fiat money are pyramid schemes too, but they are affordable for all the people regardless of their income. It does not mean that the latter schemes are better than former (traditional) ones. But these alternative system (MMM and cryptocurrencies) are more competitive and later they will become an irresistable obstacle for fiat money functioning.
Predictably, in the future, Sergey Mavrodi equally asserted that the traditional fiat money system as well as their alternatives (MMM, cryptocurrencies) will decay. Because, according to him, all assets (fiat money, Mavro, crypto coins) are ‘painted’, they are artificial. They will devaluate and it will stipulate an inflation. And later after the decay of fiat money and cryptocureencies, the new system will appear: the exchange of commodities will be based not on financial manipulations, but based on more human and robust priciples. This shift is expected to happen in the 2020s.
Will the hyper inflation, which was predicted by Mavrodi as an outcome of the popularity of alternative systems (crypto currencies, etc), take the globe by storm or not? We will know in a few years. But all other forecasts of Mavrodi have already turned into reality.
Istifanus, an economic analyst, sent this piece from Lagos