8th June 2020
V-Tech makes gold and other precious metals like copper more valuable.
The options for maintaining price stability being observed here are innovation and technology (e.g. SV-Tech) as opposed to precious metal (e.g. gold). Which is the most useful?
If you have performed the Instruction Set for a Legally Admissible Empirical Test for Split Velocity then you have successfully evaluated Split Velocity by way of empirical test.
Let us now compare SV-Tech (Split Velocity) to Purchasing Gold as a means of maintaining price stability.
The Instruction Set for the Empirical Test revealed a money supply deficit equivalent to GDP [-(B+C)] caused by subtraction. It was further noted that this represented a correction of money supply and not an increase in money supply. Therefore, this enables a correction equivalent in domestic currency value to GDP at constant price.
This means that the empirical test shows that the Split Velocity system is able to support, hold or maintain the Zambian exchange rate, for example US$1 to K5 or US$1 to K1 by the equivalent of GDP per annum or US$25.8 billion in 2018. In essence SV-Tech allows a domestic currency to behave like and gain many of the attributes of a hard currency, a system that has never been possible prior to SV-Tech or achieved before in central banking history. In fact, even in terms of the scalar increase of money supply, an IMF reserve currency cannot be used to increase money supply in this way at constant price (without inflation). Furthermore, the supply of gold cannot be increased on a scalar level, at constant price (because the price of gold would fall as a result of over supply). In this regard a Split Velocity system outperforms both gold and hard currency, a feat currently regarded as impossible or improbable. Consequently, where credibility and currency stability are concerned it even outperforms the Special Drawing Rights (SDR) reserve currency system presently in use by the International Monetary Fund (IMF), which is much weaker than a Split Velocity system.
SV-Tech is at the very cutting edge of the Fintech space. The SDR system was introduced in 1969, a period when emoney, internet banking, debit and credit cards, cryptocurrencies and tech based financial innovations did not exist, therefore it should come as no surprise that innovations in the Fintech space will inevitably evolve that can achieve the same objectives as the SDR and that encourage a more inclusive approach to how currencies are managed and appraised. At the technical level, the fact that it can be demonstrated that where price stability, economic strength and reliability are concerned, a currency managed using a Split Velocity model outperforms a currency in the SDR system should be good news in that it complies with the merits for which the SDR system was created and exists in the first place. This development will allow for less discrimination when it comes to how domestic currencies are viewed.
For any central bank in the world, to be able to back its domestic currency with the same strength as a Split Velocity system it would have to be able to purchase and hold gold per annum equivalent to its annual national GDP. (To add some perspective to this, not even the United States Federal Reserve Bank has the capacity to back the US dollar at this level, to do this, it would have to upgrade to a Split Velocity System).
This means that for the central bank to be able to back the Zambian kwacha and exchange rate with the same capacity as Split Velocity, it would have to purchase and hold US$25.8 billion worth of gold and maintain the equivalent in GDP in gold as a reserve. ZCCM-IH and mines in general in Zambia are unable to produce this much gold, and even if they could produce and supply it, government could simply not afford to buy it all.
In addition to this, depending on market conditions, the price of gold rises and falls forcing a central bank to ride unpredictable trends, whereas a Split Velocity system maintains price stability even while economic conditions rise and fall. A Split Velocity model, when used to manage a national economy, is not subject to economic indicators, rather, economic indicators are subservient to a Split Velocity model. For instance, it does not wait to see what economic growth will be experienced, it sets and guarantees the growth rate.
Frankly, when it comes to price and financial system stability, gold and other precious metals need Split Velocity to maintain and sustain their value by sustaining higher levels of economic growth and maintaining a stable national economy. When it comes to financial system stability, this is one condition in which innovation is the more advantageous option.
Its important to understand that natural resources and mineral wealth are not a panacea for economic growth and national prosperity, the thought and strategy must delve much deeper and move far beyond this obstacle by appreciating that any price stability or grandiose economic benefit that any precious mineral like gold or other natural resource could deliver for the country would have already been delivered by copper, by now. There is a need to push beyond these limitations with the understanding that some countries with no natural resources have industrialized and formulate a strategy that scrutinizes the operational structure of the systems in place by which development objectives are achieved.
To discover minerals such as gold and other precious minerals is always beneficial to a country and its people and should receive as much attention and support as possible. An innovation like split Velocity ensures that gains from discovering and exploiting mineral resources are protected by a stable financial system where the demand for mineral resources being supplied by mining companies is kept robust by healthy levels of guaranteed annual growth. We live in a technical age in which innovations like SV-Tech represent safe hands when it comes to the direction to take towards creating a better life and a better world for the youth, without leaving anyone behind.
Mining and precious minerals are cardinal to development, have their uses and should be invested in, nevertheless, for a central bank, anywhere in the world, purchasing gold as a way of trying to maintain financial system stability, is in no uncertain terms, simply no comparison whatsoever to deploying a Split Velocity system.
The raw power, dynamic capacity for growth and agility of finance in a Split Velocity system means that any country managed on this system can enjoy the benefits of a domestic currency that performs at the same level of stability and reliability as that of a hard currency backed by a fully industrialized economy and with less of the kind of volatility seen in the currencies of developing economies.
The mechanisms it innovates to be able to do this are fairly easy to demonstrate.
When reference is made to a need to advance the knowledge paradigm in economics, finance, accounting and business it should be emphasized that retraining is required to understand the counter-intuitive processes of a Split Velocity system. For instance, if a student graduated today they would still be trained to believe the CFI is efficient and lossless. However, the empirical test for Split Velocity clearly shows that the CFI is dysfunctional and inefficient in a manner anyone, even laypersons, can see and understand, and it is creating monetary and fiscal instability, makes global poverty inherently unmanageable as well as costing governments billions of dollars.
Similarly, the generic tutelage in finance is that an increase in money supply will cause inflation, or the over supply of any product such as gold will cause a drop in price. If a student graduated from university today this is what they would believe. However, we can provide an empirical test to teach and demonstrate, even to laypersons, that a Split Velocity model allows increases in money supply to take place at constant price. Instead of inflation the economy experiences the inverse, that is, economic growth. No currency in the world today, not even that of industrialized nations or even a precious metal can maintain price stability in this way. This is very important for developing countries because it means in a Split Velocity system the domestic currency can technically perform more efficiently than any present day reserve currency belonging to an industrialized nation.
These are just the facts. Developing countries should not believe they are trapped by poverty and circumstance. Prosperity belongs to all nations and all people, not just a select few. The knowledge paradigm is key.
Most importantly, by acting diligently and expediently, this means that it is possible today to guarantee the youth a future without uncertainty, with opportunity and economic independence, not as a lofty or empty promise, but with a working strategy that will deliver within this generation.
Split Velocity Solutions Ltd 