One of our politician’s greatest fears has been inflation, but recently economists are examining the deflationary pressure technology places on assets. According to the author of “Janet Yellen Eats The World”, Faisal Khan, this has been achieved through efficiency and transparency.
Technology companies create products that makes your assets better. However, the more interesting way Khan argues technology promotes efficient is through better asset utilization. Companies like Uber help the average consumer turn their assets into another source of revenue, and puts downward pressure on the price of that asset. In a shared economy there is a decreased the demand for assets, which has caused an overall fall in the price of assets.
Technology also makes prices more transparent. The most typical example of this has been Amazon, and the ease at which consumers can discover prices. But according to Khan, big data solutions have moved into almost every industry. For example, even in the food industry, leaders like Tyson Foods are creating smart farms to stay ahead of their competitors.
This deflationary pressure has caused many questions about monetary policy. Khan argues now the government can raise interest rates or minimum wage with the expectation that the deflationary pressure of technology will fight inflation.