Economic System

The Vexim Empire boasts a highly developed and thriving economy, with impressive statistics such as the highest total GDP, highest per capita GDP, and highest wealth per capita in the galaxy. This economic success can be attributed to the nation's laissez-faire economy, which fosters innovation, competition, and growth.

## Overview

One of the key factors contributing to the Vexim Empire's economic prosperity is its rich abundance of natural resources. The nation possesses a diverse range of minerals, metals, and other materials that are mined or cultivated within its borders. This has given Vexim a competitive advantage, as the lack of regulations and modern infrastructure enables the nation to extract resources at a lower cost compared to other nations. As a result, Vexim can offer resources at competitive prices in the galactic market.

In addition to its natural resources, the Vexim Empire's innovative market has also played a crucial role in its economic success. The nation boasts a highly regarded education system, genetically modified births, and a widespread use of artificial intelligence, which have all contributed to fueling innovation and growth in various sectors. Furthermore, the lack of patent and copyright rights, along with other regulations, has encouraged competition and creativity among businesses in Vexim.

The most innovative sectors in Vexim include artificial intelligence and robotics, computers, medicine and pharmaceuticals, aerospace, household appliances, mechanical engineering, automobiles, and military equipment. These industries are known for producing high-quality products that are affordable and reliable, making Vexim a preferred destination for consumers seeking cutting-edge technology and goods.

In terms of currency, the Vexim Empire primarily uses the Vex, a privately operated currency that is based on a gold standard. However, the nation also employs other currencies based on crypto systems or other asset standards. It is not uncommon for individuals in Vexim to pay with precious metals in the form of coins or via a debit card as well.

Furthermore, Vexim has a large industrial sector, with virtually all consumer products manufactured within the empire. The nation's less stringent regulations, superior quality, and lower prices have made it a preferred location for manufacturing. This has resulted in limited imports of consumer goods from other nations, as Vexim's domestic production meets the demand of its population.

Despite its economic success, Vexim also faces challenges in the global market. Its highly competitive products and lower prices pose a threat to foreign economies, leading to high tariffs and trade barriers imposed on Veximic goods. This can make it challenging for the nation to export its products to other nations, creating trade barriers that Vexim has to navigate.

## Private Sector Dominance

The Vexim Empire's private sector dominance, constituting over 99% of the GDP, can be attributed to several key factors that have shaped its economic landscape and cultural values.

### Laissez-Faire Economy

The Vexim Empire operates under a laissez-faire economic system, characterized by limited government intervention and regulation. This hands-off approach allows businesses and industries to operate with greater freedom, fostering innovation, competition, and entrepreneurship. With fewer barriers to entry and a favorable business environment, the private sector has thrived and assumed a central role in driving economic growth.

### Constitutional Regulations

The constitutional regulations implemented in the aftermath of the 2050s economic crisis have further emphasized a limited role for the government in the economy. These regulations were designed to prevent a recurrence of the crisis by limiting the government’s powers significantly, instilling confidence in the private sector and encouraging investment and growth. The government's focus shifted towards maintaining economic stability and ensuring a level playing field rather than direct involvement in industry operations.

### Private Property Culture

The Vexim Empire's culture places a significant emphasis on private property rights. This cultural value, deeply ingrained in its society, has translated into robust support for private enterprise. The recognition and protection of private property rights have fostered a sense of ownership, individual responsibility, and incentives for investment and innovation, driving the growth of the private sector.

### Privatization of Infrastructure

The Vexim Empire has pursued an extensive program of privatizing infrastructure, including roads, boulevards, and other public amenities. This approach allows for efficient management, maintenance, and development of these assets, as private companies are driven by market forces and profit motives. Privatization has also introduced competition and customer-centric approaches, resulting in improved infrastructure services and cost-effectiveness.

### Private Courts & Security Services

The presence of private courts and security services with minimal government regulation has been a significant contributing factor to the private sector's dominance. These private entities, operating parallel to state courts and police, offer efficient dispute resolution mechanisms and security solutions. The flexibility, responsiveness, and reputation of private services have led to a strong preference among individuals and businesses, further bolstering the private sector's influence.

### Private Military Contractors

The Vexim Empire's reliance on private military contractors for trade route protection has further reinforced the private sector's significance. Given the empire's interstellar nature and vast territories, private military contractors offer specialized expertise, swift response capabilities, and cost-effective solutions. This arrangement allows the government to focus on broader security concerns while benefiting from the efficiency and flexibility of private contractors.

## Currency Market

The Vexim Empire has taken a unique approach to currencies in its economy. Unlike traditional economies that rely solely on government-issued currencies, the Vexim Empire recognizes private currencies as a natural result of the free market.

Private currencies, as the name suggests, are not issued by a government, but by private entities such as banks, companies, or individuals. These currencies, such as the Vex, which is owned by the Vex Bank, are typically backed by a commodity like gold or silver. The value of a private currency is determined by market demand and supply, and its exchange rate with other currencies is based on its backing commodity.

For instance, the Vex, which is backed by gold, has a fixed amount of gold per unit, and it is traded on the open market. In a free market, the value of the Vex would be influenced by the demand and supply of the currency. If there is a high demand for Vex, its value would increase, and if there is a low demand for it, its value would decrease. Additionally, the price of gold, which backs the Vex, would also impact its value. If the price of gold increases, the value of the Vex would also increase, and vice versa.

One of the significant advantages of private currencies like the Vex is that they can provide a stable store of value. Since the Vex is backed by gold, its value is less likely to fluctuate compared to a currency that is not backed by any tangible asset. This stability can be particularly attractive to individuals who are looking to protect their wealth from inflation or other economic uncertainties.

Another advantage of private currencies is that they can provide an alternative to government-issued currencies outside the Vexim Empire. Government-issued currencies are often subject to inflation, devaluation, and other economic policies that can erode their value over time. In contrast, private currencies have an economic interest in maintaining stability or even deflationary policies to protect the value of their currency.

The use of private currencies in the Vexim Empire reflects the belief in the power of the free market to determine the value of currencies. In a laissez-faire environment, the market forces of supply and demand play a crucial role in determining the exchange rates and value of currencies. The Vexim Empire acknowledges that private currencies are the most efficient and safest way to provide money to individuals and businesses with more options and flexibility in their financial transactions.

### Index Currencies

In the Vexim Empire, where private currencies are viewed as a natural result of the free market, a new trend has emerged - the use of index currencies. An index is a statistical measure of changes in a specific set of securities or assets, and it provides investors with a benchmark against which they can measure the performance of their investments. In Veximic economics, currencies are typically backed by tangible and valuable assets, such as gold, to ensure stability and protect against government policies or inflation. However, the use of indices as a backup for currencies is gaining traction as a viable option.

One of the key advantages of using an index as a backup for a currency is diversification. An index represents a diverse basket of assets, which can include stocks, bonds, commodities, or other currencies. For example, a stock market index represents a diverse group of companies and industries. If a currency is backed by a stock market index, the value of the currency is tied to the performance of a diverse group of companies and industries. This diversification reduces the risk of the currency being affected by the performance of a single company or industry, which can be particularly appealing in times of economic uncertainty or market volatility.

Transparency and objectivity are also significant benefits of using an index as a backup for a currency. The value of the currency can be determined by the performance of the index, which is a transparent and objective measure of the value of the assets in the index. This reduces the risk of the value of the currency being manipulated or distorted by external factors. In a free market like the Vexim Empire, where market forces are allowed to operate without excessive government intervention, transparency and objectivity are highly valued, and index currencies provide a reliable and trustworthy option.

Furthermore, an index can provide stability to a currency. Due to the diverse nature of assets included in an index, it is less likely to experience extreme volatility or fluctuations in value compared to individual assets. This stability can be attractive to investors who are looking for a reliable store of value. In a rapidly changing economic landscape, stability can be a key factor in attracting investors and promoting economic growth.

Index currencies also offer an alternative to government-issued currencies outside the Vexim Empire. Government-issued currencies are subject to inflation, devaluation, and other economic policies that can erode their value. In contrast, index currencies are backed by a diverse basket of assets, reducing the risk of being affected by the economic policies of a single government or central bank. This makes index currencies an attractive option for individuals and businesses seeking stability and independence from traditional government-issued currencies.

One notable example of an index currency in the Vexim Empire is the "Vexim Index Dollar" (VID), which is backed by a diverse basket of assets including stocks, bonds, commodities, and other currencies. The value of the VID is determined by the performance of the underlying index, which is transparent and objective. The VID is traded on the open market and provides investors with a stable and diversified option for conducting transactions and storing value.

### Interest Market

In the economy of the Vexim Empire, interest rates are determined by the interaction between savings and investment. Savings refer to the portion of income that is not consumed immediately but instead saved for future use, while investment refers to the use of saved resources to create additional wealth. Interest rates are determined by the supply and demand for loanable funds in the market. When there is a high demand for loans, interest rates rise, and when there is a low demand for loans, interest rates fall.

High interest rates in the Veximic economy indicate a higher time preference, meaning that people are more willing to pay more to consume goods in the present rather than wait for future consumption. This reflects a preference for immediate consumption and a lower willingness to save and invest in the future. Conversely, low interest rates reflect a lower time preference, meaning that people are willing to save and invest for future consumption.

The Veximic view of interest rates emphasizes the importance of savings as the foundation of economic growth. Savings lead to investment, which leads to increased productivity and economic growth. This growth creates new opportunities for entrepreneurs, leading to more savings and investment in a virtuous cycle that depends on the coordination of savings and investment through interest rates.

In the Vexim Empire, artificially low interest rates are seen as detrimental to the economy. Central banks artificially lowering interest rates can distort the market signal provided by interest rates, leading to malinvestment. Malinvestment occurs when resources are allocated to projects that are not economically viable in the long run, leading to economic bubbles and eventual crashes. Therefore, the Veximic Constitution prohibits central banks and government control over currency banks since the 2050s great depression, recognizing the negative effects of artificially low interest rates on the economy.

## Economy in Numbers

The Vexim Empire boasts an impressive total Gross Domestic Product (GDP) of 18.040 quintillion Vex (Valued at 44.23 USD per Vex). This thriving economy supports a high per capita GDP of 15,922,627.96 Vex. Examining the composition of the GDP provides valuable insights into the economic activities that contribute to the empire's prosperity and sheds light on its diverse sectors. Notably, the private sector takes center stage, while the public sector plays a relatively small role in the overall economy.

### The Financial Sector (18.6%)

The financial sector plays a pivotal role in the Vexim Empire's economy, contributing a significant portion of the GDP. This sector encompasses banks, insurance companies, investment firms, currency banks and other financial institutions that facilitate monetary transactions and manage investments.

### Construction (15.3%)

The construction sector holds substantial importance in the empire, contributing to the development of infrastructure and the creation of residential, commercial, and industrial spaces. It encompasses activities such as building construction, architectural services, and civil engineering.

### Manufacturing (14.6%)

Manufacturing stands as a crucial pillar of the Vexim Empire's economy. This sector encompasses the production of various goods, ranging from consumer products to machinery, electronics, drugs, and advanced technological equipment.

### Natural Resources (11.6%)

The empire's vast wealth of natural resources, including minerals, ores, and energy sources, contributes significantly to its GDP. Extraction and processing of these resources form the backbone of this sector, attracting both domestic and foreign investments.

### Transportation, Trade & Utilities (9.6%)

The efficient movement of goods, services, and people is facilitated by the transportation, trade, and utilities sector. This encompasses transportation infrastructure, logistics services, wholesale and retail trade, as well as utility providers such as energy and water.

### Professional & Business Services (7.51%)

The provision of professional and business services is a thriving sector within the Vexim Empire. It encompasses a wide range of activities, including legal services, consultancy, advertising, market research, and information technology support, contributing significantly to the GDP.

### Leisure & Hospitality (6.9%)

The leisure and hospitality sector caters to the entertainment, tourism, and hospitality needs of the empire's population and visitors. It includes hotels, restaurants, entertainment venues, travel agencies, and other related services.

### Energy (5.2%)

Energy production and distribution play a crucial role in the Vexim Empire, ensuring the availability of power sources to fuel its industries and meet the needs of its population. This sector comprises a diverse range of energy sources, including fossil fuels, renewable energy, and advanced technologies.

### Information & Telecommunication (4.8%)

The information and telecommunication sector is vital for the functioning of the empire's advanced communication networks, data management systems, and technological infrastructure. It encompasses telecommunications providers, internet services, software development, and information technology companies.

### Education & Healthcare (4.11%)

The Vexim Empire places a strong emphasis on education and healthcare, reflected in this sector's significant contribution to the GDP. It encompasses educational institutions, healthcare providers, research facilities, and related services, ensuring the well-being and development of its population.

### Other (1.72%)

The remaining portion of the private sector GDP is accounted for by various activities not covered explicitly by the aforementioned sectors. This includes smaller industries, niche markets, and emerging sectors that contribute to the overall economic landscape of the empire.

### Public Sector

While the private sector dominates the Vexim Empire's economy, the public sector's contribution is relatively modest, comprising only 0.06% of the total GDP. This indicates a preference for market-oriented policies and a thriving private enterprise environment within the empire.