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Advances in Social Sciences Research Journal – Vol. 8, No. 12
Publication Date: December 25, 2021
DOI:10.14738/assrj.812.11319. Cossiga, G. A. (2021). Between the World of Economics and the World of Physical Sciences There Would be a Link That is Anything
but Hypothetical. Advances in Social Sciences Research Journal, 8(12). 1-22.
Services for Science and Education – United Kingdom
Between the World of Economics and the World of Physical
Sciences There Would be a Link That is Anything but
Hypothetical
Dott. Giovanni Antonio COSSIGA
Ex Presidente Collegio sindaci Policlinico Umberto 1
Università Sapienza – ROMA
ABSTRACT
The compatibility between humanity and nature should be related to a trend that
would lead us hopefully in a short time to the full neutrality between man and the
planet we all live on. Along this trend, essentially due to the cooperation and help
of science and knowledge, the humankind is able to collect news and information
on the level of pollution we produce, not to be exceeded. Individually, the
information on the pollution degree received from nature comes to us through the
monetary system. Therefore, the community is warned that we are approaching a
limit not to be exceeded in creating pollution inside the environment and the
warning comes through the nominal price system, that is through inflation and
deflation. These two are nothing more than messages, like ectoplasms, that is a sort
of symbols taking shape due to the economic instability and, once inside the
economic environment, they lose contact with the economic entourage. Nor could it
be otherwise, because their task is for information purposes only, and they must
create within the community the loss of confidence in the economic outlook. Due to
this loss of trust, the economy slows down and takes a pause in favor of the
environment quality, which improves thanks to the reduced economic activity. It’s
a sort of alert system with the same message function both for inflation and
deflation. However, their fate is anyway different not for a natural reason but for
the different response given by monetary policy upon arrival of inflation or
deflation. In the case of inflation, the monetary policy response is the symmetry
between nominal price increases and interest rates. This increase in rates is
producing a cycle retreat that is consistent with the request for a pause of the
natural system. While in the case of deflation, the symmetry between the decline in
nominal prices and interest rates is in contrast with the economic system
demanding for a pause. This potential opposition can cause some anomalies in the
wealth and income distribution.
Keyword: conjunctural cycle, basic value of inflation, instability underworld, monetary
messages
INTRODUCTION
The most interesting feature concerning the emergence of inflation and deflation in the
economic world, it’s not so much their rationality or the singular indifference that essentially
separates the two monetary phenomena from the events of the economy. Nor the apparent
opposition between inflation and deflation, which induces the less careful observer to ask to
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contrast one with the other, as if it were possible for the governments or communities to use or
abuse of these monetary anomalies.
In practice, their singular anomaly lies only in the monetary character of the emergence of two
phenomena, which are similar for this element, but instead are dissimilar for all the others.
The choice of a monetary characterization for the two phenomena may appear almost obvious,
due to the general nature and the widespread and broad understanding of inflation and
deflation meaning by the community. It’s obvious to everyone that the presence of a recurring
inflation means that the economic management is not going well and therefore the situation is
somewhat critical regarding the economic management leaders. The same can be said when the
monetary phenomenon becomes deflation.
Yet, despite the obviousness of the impact of the two phenomena on the monetary channel, we
must say that this doesn’t seem to be the basic motivation. Because the two monetary
phenomena have their own characteristics in time and space that cannot be justified otherwise
than for the autonomous determination of the economy itself. In the sense that phenomena
such excess credit or disharmony between the economy and the natural path of our planet, can
fuel the development of the inflation mechanism.
Basically, the phenomenon is repeated unchanged in its development mechanisms in time and
space without someone to blame for its birth and development.
On the other hand, the inflation phenomenon repeats and evolves according to a constant
procedure that links the state of the sick economy to the nominal price trend. The inflation is
always an accelerated nominal phenomenon, with an acceleration varying in relation to the
state of the sick economy. Until reaching the extreme limit experienced in Germany during the
first post-World War: that is especially at the beginning, the phenomenon should be limited for
some time to a minimum motion but always with a potential acceleration charge.
At this point it appears clear that the special feature of inflation is exactly the acceleration (or
deceleration) of nominal prices, and this is also providing the detachment degree of the
economic system from the stable economy course. The more accelerated (or decelerated), the
greater will be the disharmony of the economic system.
PRESENTATION AND DISCUSSION
The universal constant number close to 2%
Looking the nominal but not symbolic inflation as also deflation movements, it seems evident
that this representation offered by the movement of prices has a factor that shapes and
increases the monetary message. Yes, because it is only a message, and nothing else as we will
clarify later.
In the meantime, let's focus on the engine that is driving these monetary messages. Well, it
seems acceptable that the complex mechanism of deflation and inflation is guided and evolves
thanks to the guidance offered by a constant universal law. A law affecting economics and its
progress just like all the other great constants of the world and physics. In other words, it’s
unacceptable to think about a repetitive motion in time and space without identifying a
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Cossiga, G. A. (2021). Between the World of Economics and the World of Physical Sciences There Would be a Link That is Anything but Hypothetical.
Advances in Social Sciences Research Journal, 8(12). 1-22.
URL: http://dx.doi.org/10.14738/assrj.812.11319
constant and universal law which should protect the economy as much as possible from the
deviations of the stable condition from the correct relationship with our planet natural course.
Following this line of thinking, we could identify the constant of the balanced economic
development in the special number identified by the Central Banks as the sign of a balanced and
equilibrated economic state. With this number close to 2%, the Central Banks believe they can
define an economy as balanced with stable prices and in line with the planet evolution.
In other words, a theoretical condition, nevertheless identifiable with the indefinite number
close to 2%: throughout this condition, the price movement is fully balanced and therefore
prices are essentially stationary. An ideal condition that cannot be found in the world of
economics that uses this constant just as a trend point. In other words, it’s a goal to be pursued
through corrections that are nominally represented by the price movement.
But let's now try to be as accurate as possible on the subject of the relationship between the
constant (stable and durable condition) and the normal situation of economic systems, more or
less subject to continuous course adjustments in order to adapt to the theoretical balanced
motion of the economic development.
How do economic systems adapt or keep the course? In other words, how can the constant of
the economy act to make its messages as accurate as possible about the state of the economy?
To answer this question, first of all it’s necessary to give a comprehensive character to the value
and meaning of the constant close to 2%.
Well, we can admit that when an economic system is placed near the constant value, the price
movement shall be zero. But we must be careful, because the absence of price movement does
not mean that the economy wouldn’t produce a “background noise” due to its inexorable and
continuous activity. This background noise can be identified precisely in the constant number
of the balanced economy. In other words, the background noise of the economy is not equal to
zero but is placed instead near the 2% value.
In fact, if the background noise were zero, not only would the constant disappear but a null
value of this number couldn’t carry out any action related to the change of nominal values
linked to inflation and deflation. Because it would be this basic value - theoretical symbol of the
stability and adherence of economic development to the economic system path - that calibrates
and gives substance to the accelerated regularity of inflation, that is to the calibrated deflation
decrease.
To be as accurate as possible, the background noise would be altered in the event of direction
uncertainty of the economy and its trend will become the rational engine of the development
and evolution of the price movement for both inflation and deflation.
Hence, the underlying basic value in the condition of systems not aligned according to the
natural equilibrium, which should be the common condition of the economy, will be altered and
will grow directly related to the alteration degree suffered by the economic system deviating
from the state of natural balance.
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Based on this relationship between a constant number close to 2% and the process driving the
nominal monetary system in case of inflation (or deflation), we can assume thatthe acceleration
or deceleration driving the nominal monetary system would be moving and changing.
Now, as we stated, the constant number close to 2% cannot be zero so as not to compromise
the relationship between this value and the messages offered by the deflation and inflation
motion. Equally, we must argue that the constant number in its sequence is hiding the basic
information for the inflation or deflation development and evolution. In the sense that the
regularity moving the acceleration of inflation, relating to the alteration of the economy motion,
should find its permanent rules in time and space inside a segment of mathematical law. A
portion of mathematical law hidden in the background noise of the economic system or, to say
better, in the folds of the universal constant number that modulates the nominal motion of
prices.
In other words, the constant number close to 2% would have the function to point out the
balance of the economic system and the compatibility with the evolutionary path of the planet.
But this messenger function is not enough. Because it’s not difficult to admit that this space
reserved to the background noise of the system, under the instability action inside the economic
systems, will be modified by expanding or narrowing in order to carry out its messenger task.
In other words, to communicate to the community that the economy is not proceeding along
the path of natural balance, that is in fact gradually altering.
Obviously, all this through the price curve drawn by the different inflation level marked by each
economic system and by the economy as a whole. Once made this clarification, we must try to
clarify - as far as possible - the reasons for the inflation rhythmicity that continuously evolves
as shown by nominal prices, according to an acceleration related to the instability degree of the
economy.
The main reason is the messenger character of inflation towards the community; but il remains
to be explained the way of shaping inflation to ensure that it would be a neutral witness of the
economic state for the community.
It seems correct to believe that the message transmitted through inflation is modulated by a
constant acceleration that essentially would guarantee its progression over time in relation to
the duration of the instability state of the economic system. On the other hand, we shouldn’t
forget that inflation arises with an acceleration potential that could grow over time so showing
an ever-increasing nominal price curve. It’s quite clear that the increasing character of inflation
over time is a necessary character because the message that is given to the community is thus
strengthened and creates the right concern of most about the state of the economy.
It should also be considered that when inflation has reached a nominal price speed of more than
20 - 30% per year and is therefore approaching the stage of hyperinflation, the same rapidity
of nominal price development seems able to create new fuel for further increase of the rated
speed.
In fact, the generalized increase in nominal prices creates a liquidity shortage that is filled with
new issues of paper currency and with the increase of credit and electronic money. It can
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Cossiga, G. A. (2021). Between the World of Economics and the World of Physical Sciences There Would be a Link That is Anything but Hypothetical.
Advances in Social Sciences Research Journal, 8(12). 1-22.
URL: http://dx.doi.org/10.14738/assrj.812.11319
therefore be said that in case of inflation the Fisher's law applies, according to which the
increased circulating currency helps to accelerate the nominal price speed, though with some
non-marginal differences.
According to the classical theory, circulation velocity of money V and quantity of goods
produced are invariable and therefore the variation of M (money quantity) is reflected on prices
(P). According to the relationship that links MV = PT in fact, in hyperinflation case the growth
of price speed accelerates also according to the same level reached by the speed of nominal
prices, as well as the new availability of liquidity that the system is creating and the velocity of
money circulation which depends on the growing trust or mistrust in the monetary medium.
In the case of deflation, instead, nominal prices are slowly falling, and the value reduction of
goods is the signal that also in this case the economy management deserves to be criticized.
Now, it appears evident that if the credit mass expansion driven by the near-to-zero reduction
of the interest rate (to follow the downward fate of deflated prices) would create the conditions
for a general rise of prices, the messenger mission of deflation would be nullified.
The relationship between currency and its circulating quantity is therefore even marginally
invalid in the case of deflation, as it will be clear when we will talk later about the decreasing
nominal prices.
We should believe that the natural skills of intelligent beings interact with the
environment
In the summer and autumn of 2021, the prices of many raw materials and intermediate
products were affected by a significant increase. After the long and protracted stop of economic
activity during the previous year due to the pandemic and the long battle against the virus
development, a generalized revival of the economy started in the main industrialized countries.
The sudden increase in demand for raw materials and semi-finished products in various
sectors, particularly in the automotive sector, was reflected over an offer that was unable to
fully satisfy the requests. This resulted in a generalized price increase of raw materials and
many semi-finished products. Facing this sudden and partly unexpected recovery of the world
economy, many operators spoke of the inflation danger in the 2000s. Or rather, of a return of
the economic systems to the inflation phase after the deflation period.
So how are things really?
To clarify the differences between inflation and movement of the international prices, it’s worth
using an easy-to-read example. Well, let us compare inflation to the wave caused by a stone
thrown into the quiet water of a pond. With a substantial difference, indeed, because the
inflation wave never loses speed and acceleration but continues without end, or at least until
the situation of the economic entourage is changed.
In the case of price movements triggered by the international prices, instead, the “wave in the
pond” is transitory and after a while it’s absorbed and disappears.
In addition, inflation follows an accelerated and continuously expanding course due to a typical
own character of the movement which, once started, no longer seems to have any direct and
continuous relationship with the economic trend. Economic trend which was the engine that
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started the phenomenon of rising prices without, however, a functional link remaining after the
initial boost.
The transitory movement of international prices is also different, because not only the
phenomenon arising under the pressure of the economic world is quickly exhausted but it’s
furthermore intimately linked to the state of economic systems from which it takes strength,
until dissolving when the price movement is exhausted.
As already said, the inflation mechanism, due to its character as a messenger for the community,
is favored because the run of nominal prices is going on and then is tending to widen over time.
The purpose of this movement, unstoppable if things within the economy do not improve, is
purely informative and tends to warn the community that the direction taken by the country's
economy is leading the economic system towards instability.
For this reason, namely the messenger character of the inflation phenomenon for the
community, it is neither necessary nor appropriate that during the inflation development, the
whole mechanism is connected to the unstable economy. In fact, if the alteration of the system
continues, the alarm raised inside the community is amplified because over time the inflation
speed tends to increase concurrently.
On the other hand, we said that it’s to be believed that the acceleration of the inflation motion
depends on a mathematical order hidden inside the constant number close to 2%, which signals
the achieved economic stability. Furthermore, once a speed of more than 10 - 20% has been
reached, it will be the debasement itself of the monetary means that will create the conditions
for the increase of currency mass in circulation together with its circulation speed.
We should also consider that if we admit the hypothesis of a link between the monetary medium
acceleration and the economy, we should ask ourselves: to what end? For which reason indeed
- in a context of relations between the community and the economic world - should we believe
that the two phenomena are mutually dependent? We could thus hypothetically argue that the
inflation motion could have some purpose favorable to an evolution of the altered economic
system towards a greater stability and compatibility with the environment. Well, it’s easy to
admit that this hypothesis is false and that the nominal movement of prices would in no way
contribute to improve the altered performance of the economy. Indeed, we can admit the
opposite hypothesis because the development of the phenomenon creates some damage to the
value of wages and rents that will suffer a cut in their value in relation to the speed of nominal
prices. Making it necessary, therefore, to use the indexing systems to limit the damage and
inequalities created by the monetary phenomenon.
However, if we admit a relationship between the economic system and the nominal price
movements during inflation, we should in any case ask ourselves again to what end, in a context
of relations between the economy and the movement of inflated prices. To answer this question,
it’s firstly necessary to assume that there is some constant force connecting the economic state
and the inflated motion conduct. Nevertheless, it’s quite difficult to follow this hypothesis due
to the excessive complexity connected to this ongoing relationship. Therefore, this dead-end
scheme must be abandoned.
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Cossiga, G. A. (2021). Between the World of Economics and the World of Physical Sciences There Would be a Link That is Anything but Hypothetical.
Advances in Social Sciences Research Journal, 8(12). 1-22.
URL: http://dx.doi.org/10.14738/assrj.812.11319
As already mentioned, the lack of liquidity created by an accelerating inflation becomes the
primary cause for fueling, with new paper money and the expansion of credit, the same
development speed in the phenomenon of accelerating nominal prices. In other words, it is the
community itself that for its own needs in commercial relations becomes the engine for a new
and greater acceleration of nominal prices when the hyperinflation is approaching.
So, that said, why not admit that it’s the community itself – I mean, all of us - that creates the
functional link between the economic state and the environment on our planet. To be even
clearer, we can admit that the message, which is reaching the community through the
accelerating nominal prices, is a signal deeply felt by everybody and, moreover, easily
understood. An explicit and clear signal that things in the economy are not going well and that
the orientation of most must change about how to judge the conduct of economic management.
At the end, a critical judgment should arise within the community about the conduct of the
economy by the government leading the country. Not only that, however, because within the
community there are people who are able to assess the state of the economy and who are also
able to formulate different and more consistent hypotheses for the government management.
Obviously, this power of synthesis existing within the community - which is favored by the
collective knowledge and culture - is largely independent of the power management model
(democratic or not). In the sense that we can admit that this faculty exists in all communities,
regardless of the degree of cultural and social development of the various groups. This
statement shouldn’t be surprising, because we are examining intrinsic and autonomous
qualities of each community that are specific to human beings: that is, intelligent beings in
continuous cultural and social development. This is just to say that this faculty of a collective
tension must be considered proper to any kind of community: those living with advanced forms
of democracy, but also the more backward and problematic ones that are instead subject to
authoritarian regimes or even to tribal or clan rules.
From our point of view, in fact, we are not analyzing the cultural, social, and scientific evolution
of communities, because these are goals that humankind achieved over time with the cultural,
scientific and social development of all the groups of human family. We are examining, instead,
the issues dealing with the leadership formation and the aggregation of consensus or dissent at
a collective level, which we must believe to be all natural skills of every intelligent being
interacting with the environment in which humanity lives and progresses.
According to the above, it must be admitted that this ability to select leaderships and to agree
on points of common consensus is present inside the communities regardless of their
civilization and social organization level. Just to say that it cannot be excluded that even in
backward societies in terms of civil rights and social organization development, there is this
collective capacity to criticize the established power, if the economic system tends towards
instability thus increasing inflation and arousing criticism from the majority.
Ergo it’s true that in democratic regimes, citizens have the collective power to make or break
the leaderships that periodically take on the governance of society. And the citizens exercise
this power by using tools - such as the inflation rate - to decide whether to reward or criticize
the leadership that runs the economy at that time. However, this intrinsic and autonomous
faculty of the community can and must be working even in the case of undemocratic regimes.
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In the sense that sooner or later no dictator or potentate can remain in government when
dealing with a growing and majority dissent from the community.
In short, the alarm system for the deviation of the economy from balance and compatibility
relies on the primary and general innate characteristics of intelligent beings: that is, on the
intrinsic and natural capacity of a community to select a leadership and to manifest a consensus
or a dissent regarding the existing power system. In this way, the advances in social
organization, which are acquired with the progress of sciences and social and political culture,
can improve the efficiency of the mechanism which is anyway working and is able to work even
in less civilized realities.
Because it should be clear that the relationship between humanity and the environment
around us must be conceived as a primary relationship, so becoming essentially a parameter of
this relationship. Therefore, should be avoided those abstruse and somewhat
incomprehensible natural rules to monitor this relationship, which over time must anyway
become optimal. But it’s the humanity itself that, with the expression of trust or distrust in an
economic management model, becomes the holder of the function of safeguarding his
relationship with the external environment.
The alarm system and the relationship between humanity and environment
With the premises set out above, we can make now a picture of the alarm system and the
relationship between humanity and the environment around us. As we have already said, the
universal constant close to 2%, mentioned by Central Banks as objective of a good management,
describes the non-transitory but stable state of the economy balanced with the environment.
An ideal and at present unattainable condition, requiring a compatibility with the planet
conditions, well beyond the ‘Carbon neutrality’. An ideal condition requiring the availability for
humankind of unlimited energy and therefore of a far more advanced level of civilization than
the present one. Therefore, at a statistical level, when the economic systems are reaching a price
level close to 2% doesn’t mean they have reached a compatibility ideal degree but more simply
that the system is travelling in conditions close to deflation.
We must in fact believe that the civilization progress, intended as the development of social
organization and knowledge in the widest possible sense, moves in accordance with the planet
evolution. However, humanity is pursuing the knowledge ("nati non foste a viver come bruti" 1), then is pursuing also (and not only) the full compatibility of its presence on the planet.
This doesn’t mean that approaching the universal constant number couldn’t mean an
improvement in the economy management; nevertheless, the goal of the human compatibility
with the planet will not be reached. A goal that can be represented as a trend line to be followed
until the complete compatibility, reachable only when we will dispose of a much higher level of
civilization and of energy unlimited availability.
We now have the opportunity to take a closer look at the compatibility warning system moving
on the ideal line that will lead the humanity to neutrality and complete compatibility with the
planet. It’s evident now that this ideal line moves in sequence with the civilization development
1
"You were not made to live like brutes": Dante Alighieri – Inferno, Canto XXVI
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new speculative event, like those we experienced in the first decade of the 2000s, is anything
but unlikely. In fact, the conditions leading in the recent past to the bubble and then to its burst
may arise again. The condition making possible this new adverse event, depends on the
discontinuity between the speculative evolution of the financial market anomalous cycle and
the downward trend of the real economy which is instead affected by the ongoing deflation. The
real economy, therefore, remains weak even if the speculative rise of assets and capital goods
continues, because the deflationary situation does not change and therefore doesn’t change the
possibility of using cheap or zero-cost credit that feeds the parasitic cycle. Hence, if this
condition of imbalance continues, the conditions that originated the speculative crises of the
first decade can be recreated again.
The problem is the relative independence of the two markets, the financial and the real
economy. In addition, the wealth effect generated by the growing value of the financial markets
is not reflected on the community. Most of which, on the other hand, is affected by the weak
trend of economy and employment, while is increasing the wealth of the privileged classes that
profit from differentials produced in the value of speculative goods. We should also add that, at
the financial crisis outbreak, the rapid turnaround of the stock exchanges creates serious
liquidity problems which are reflected on banks and credit. Thus, the final damage will once
again fall on the real economy, with the employment cut and the deterioration of prospects.
Figure n. 3 - Wealthiest Americans increasing share of wealth 1989 – 2016
At this point it seems very appropriate to point out that the financial crises like those of the
2000s, but also the speculative increases in stock exchanges and assets followed by a more or
less rapidly declining prices, contribute to creating the conditions to widen the gap in the
wealth and income availability. It’s then reasonable to admit that within an economic
environment relatively balanced, the income and wealth distribution in the community tends
to a greater equity due to the increase in job opportunities and the offer of good wages. On the
risk ratings provided by the rating agencies. While elements of the crisis first became more visible during 2007, several
major financial institutions collapsed in September 2008, with significant disruption in the credit flow to businesses and
consumers and the onset of a severe global recession.
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Cossiga, G. A. (2021). Between the World of Economics and the World of Physical Sciences There Would be a Link That is Anything but Hypothetical.
Advances in Social Sciences Research Journal, 8(12). 1-22.
URL: http://dx.doi.org/10.14738/assrj.812.11319
other hand, in a context of healthy economy, the value of assets and stock market prices remain
anchored to the market values and especially to the actual utility they produce.
An economic system almost balanced does not generate and does not accentuate the wealth
unequal gap damaging most of the community. Quite the opposite, an economy that develops
in relative compatibility with the environment tends to favor the development of knowledge
and sciences that have the advantage of making the economy converge towards a balanced
growth, compatible with the environment.
Therefore, the unfortunately widespread phenomenon of the growing and disproportionate
wealth gap within a community is a serious alteration of the correct relationships in the income
production and also in the wealth accumulation. This phenomenon negatively affects the real
economy and causes alterations in the social and political relations.
As already said, the formation of speculative bubbles is to be included among the prevalent
causes of the negative phenomenon of wealth and income concentration in a few hands. Now,
since the formation of speculative bubbles is linked to the low-cost credit availability, it’s clear
that “all evil comes from the top”.
The hypothesis to be analyzed is if it’s useful for the real economy to adapt interest rates to the
prices decreasing due to deflation. This hypothesis - which then acts as a driver during the
formation of speculative bubbles - is wrong. And not only because the assumption is not
realized, with the real economy remaining weak during the rise of speculative bubbles.
Weakness that is coming from the attraction of investors to the speculative market, to seize the
opportunity of available and low-cost credit. Moreover, the distorted effervescence of the
financial market should not be mistaken for an aspect of the real economy, because instead it’s
an antagonist. That is, the distorted effervescence of the markets becomes a competitor that
takes resources away from the real economy that remains weak.
Therefore, the speculation not only takes resources away from the real economy so slowing
down its momentum, but it also diverts the income and wealth distribution with increasing
political and social damage.
As we have said, all evil comes from the top, that is the response of monetary policy to the slow
decline in nominal prices appears to be in contrast with the natural trend of the economy. In a
deflationary environment, the natural trend is in any case a slowdown or a reversal of the
economic cycle. That is, with both deflation and inflation, the message that the community
receives is the declining confidence in the economy management. Confidence decline in the
prospects that leads to a slowdown in the economy. Now, in the case of inflation the decision of
monetary authorities to move interest rates upwards, in symmetry with the movement of
nominal prices, essentially follows the line of a trend reversal of the economic cycle. In the case
of deflation, instead, the choice is to favor the reduction of rates in symmetry with the
movement of nominal prices: in this case, then, the decision of monetary authorities moves
against the natural trend that favors the inversion of the economic situation. The attempt is to
support the economy on the assumption that by doing so it would be possible to contrast the
downward motion of nominal prices. Hypothesis, however, not confirmed by the facts.
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As in the case of inflation, there will be a cost relating to a setback of the economic situation but
really much less painful and expensive than what affects the economy due to the speculative
overvaluation of stock exchanges and real estate values. Values that sooner or later must return
to the real market prices, with serious consequences on the condition of the economy that is
bearing all the burden of credit crisis, too abused and outside the logic of market balance.
On the other hand, the damage is not limited to the repercussions on the economic condition
but also and above all invades the social and political areas, because - as has been noted - they
create a distortion in the income distribution that increases in favor of the privileged social
areas.
The most serious fact - I would say - is that the speculative tensions periodically developed,
create the conditions for this unstoppable concentration of wealth and income, thus marking
over time a continuous retreat of real resources available for wages and working incomes. Well,
this motion apparently for now unstoppable is not touched or demolished even during the more
or less violent crises, which usually tend to bring the values of assets and stock exchanges closer
to reality. As stated in the table of Figure n. 4 on the distribution of wealth, the phenomenon of
concentration does not stop even during the serious financial crises of the 2000s. Obviously,
the excess debt created during the formation of speculative bubbles then falls on the economy,
which is severely marked by these periodic and necessary returns to reality. In short, the
damage to the economy is enormous.
Figure n. 4 – Worldwide value of private wealth 2013-2020
Therefore, adverse circumstances arise during which we can talk about inconsistency between
real economy and patrimonial values: these values are driven by the speculation towards an
undifferentiated rise, while the economic systems struggling with the formation of bubbles are
generally weak. Then, when the speculative wave is reversed, the weight of the credit not
honored falls almost entirely to the detriment of economic activities and then to the detriment
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Cossiga, G. A. (2021). Between the World of Economics and the World of Physical Sciences There Would be a Link That is Anything but Hypothetical.
Advances in Social Sciences Research Journal, 8(12). 1-22.
URL: http://dx.doi.org/10.14738/assrj.812.11319
of money reserve needed for wages, which is therefore reduced. On the other hand, the social
and political damage of the unstoppable trend of wealth and income concentration in a few
hands doesn’t seem to be remediable if we don’t find a way to end the formation of speculative
bubbles which are the most responsible for that unequal concentration.
Therefore, we should leave the idea that when the Stock Market flies high, the real economy
flies high as well. Simply because this is not true. For the obvious reason that since the 2000s
there have been recurring waves interesting assets and stock exchanges which in most cases
were started for speculative motivations, in an economic climate generally characterized by
deflation. All of this, with the mentioned negative and antisocial effects.
To avoid these serious inconveniences, it’s necessary to follow the guidelines of nature which
requires some pauses to contain and eventually to process whenever possible the recurrent
incompatibilities that humanity creates; of course, the required sacrifice will be returned by
putting the economy on hold to favor a new season of more balanced and compatible growth.
Certainly, this kind of action is requiring courageous decisions aimed at the common good. But
the community in its majority is to be considered a sensitive terminal regarding the natural
choices in terms of compatibility and therefore we should expect this majority to take the side
of natural choices, without prejudice but with determination.
We must never forget that humanity and nature move in unison, seeking ever greater well- being for the whole humankind, and this development is required for the knowledge increase
and the scientific diffusion. Precisely because it is on this ideal development line, that is the
greater knowledge and understanding of creation, that humankind will be able to finally find
the complex and somewhat daring path of compatibility with the natural environment all
around us.
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