big waves being felt in the cash flow

The biggest problem of today’s economy is that it is supported by change — for example, emergencies, temporary or tentative fluctuations, transformations, or uncertainties or irregular expansion or growth.

Basically the economy is a house of cards. Because it stands on changes, it is unstable, uncertain and insecure, and as such, this is an inevitable condition.

We shouldn’t forget that the basis for stabilizing the economy depends on the state of negative areas, i.e., debt, capital, revenue, that are stronger and more firmly fixed.

One might say that the principle of periodic profit and loss works with the addition of a time axis to the cash basis.


Periodic profit and loss is based on the space formed by adding a time axis to the economic space created by the coordinate axis, i.e., people, commodities and money.

The principle of periodic profit and loss is the concept of figuring out or controlling economic phenomena using the structure in the unit period and the time structure created by the unit period and long-term period.


There are limits, even when seeking a short term balance. For this reason, we should give up the per-annum balance principle of finance.

Economic balance should be adjusted through short- and long-term time structures.

To achieve this it is necessary to investigate finance from both the profit and loss structure in the unit period and the time structure of cash flow in the short- and long-term.


From an accounting point of view, having debts means having acquired assets of the worth of those debts, and having assets means having matching debts or capital.

This is not understood correctly.

What we should be careful to note is that assets and an estate are different things. An asset that does not appear on the accounting books as an asset has no value on the books, even if it is actually of great value.

The value posted on the books indicates the value of the asset. No matter how much higher or even lower the actual value of the asset is than the value recorded on the books, it does not pose a problem for accounting.

A bad debt generally indicates an asset whose value has depreciated from the value recorded on the books. However, this is clearly an error.

Even if the asset has depreciated from the value listed on the books, as long as it is being utilized or contributing to management activities, it does in fact have some kind of value as an asset.

This means that the collateral value has decreased, so it is a bad debt. However, it is wrong to call it a bad debt for this reason.

The term bad debt is used when falling behind in repayment, and stagnated repayment is caused by income problems.

One important point is that repayment of the principal of a loan is not shown in profit and loss. It is important to determine whether a debt is bad or not as a problem of revenue, i.e., from the viewpoint of cash flow. And this judgment should not be based on whether or not the asset in question has decreased in value.

This can be more clearly understood if we consider a residential mortgage. Even if the actual value of the residence drops, as long as you repay the mortgage monthly, nobody can ask you to repay the total amount of the debt in a lump sum.

This is where the viciousness of financial institutions these days becomes clear. Financial institutions are supposed to evaluate business operations, but they just follow the principle of collateral because they do not have the ability to evaluate business operations.

As a result, they replace long-term problems with short term issues and crush companies that are otherwise excellent businesses.


A loan that is not posted on a company’s books is not a debt on the books.

We need to remember that repayment of the principal of a debt is not an expense.

And this means that funds for the repayment of the principal of a debt should be generated from depreciation allowances and appropriation of earned surplus.

This also means that the principal of a debt is not intended to be repaid using any means other than the depreciation allowance as a basic rule.

It is a common misconception that depreciation is an expense that is not associated with spending. But this is an outrageous error, and if you continue to act on the basis of this misconception, you’ll end up with severe cash flow problems.

Moreover, with regard to current Japanese corporate taxes, taxes themselves may not be considered an expense. Therefore, we need to figure out how to pay taxes from our profits.

So people use depreciation allowances and after-tax profits as funds for repaying loans.

The problem is that we must use the appropriation of earned surplus to finance all of the funds to repay a loan taken out to acquire an asset that is not a depreciation asset .

A typical example of an asset that is not subject to depreciation is real estate, i.e., land. When the price of land increases, it is possible to finance funds using unrealized profit from the land as collateral.

However, once the land price starts to drop, it then becomes a burden on the company’s fund management. As a result the company’s investments will decrease.


Is a government bond a debt? If it is a debt, it should be paid back. However, we should not forget that a government bond is a public debt and that it supports the monetary system.

The cause of the exacerbation of financial problems is that long-term fund plans have not been established for each business operation.


There is thinking, something like an unwritten rule, that a nation is not permitted to gain profits. This is wrong. If you are not allowed to gain or borrow, the only thing left is extortion.

Taxes are a kind of extortion. The notion that, “to the winners belonged the spoils,” was the beginning of taxation.

After the establishment of the nation-state, a concept developed that a tax would be an expense used by the nation to serve the people.

However, people somehow think that their hard-earned money is being snatched away under the name of authority.

Besides, if a nation is not permitted to borrow, the only thing it can consider is gaining profits.

A nation should also gain profits. In the private sector one cannot do business if one cannot make a profit. But it doesn’t work that way in the case of a nation.

A nation must take measures crucial to maintaining the safety and everyday life of the public even if it does not make a profit. Moreover, a nation needs to correct any unfairness among its people. And there is no way to achieve this other than by using taxes.

If it is possible to make a profit, you should do so with no reservations.

You should earn wherever you can by, for example, charging for public projects or using a system of beneficiary liability. On that basis, a nation should give up the per-annum balance principle and introduce the principle of term profit and loss.


There are big waves being felt in the cash flow surrounding international markets. These waves of cash flow actually form the international markets and build up the economic structures of individual nations.

Each country needs to change its economic organization along with these waves of cash flow.


Countries that comprise the international markets change their external relations from the current account surplus to current account deficit, or from current account deficit to current account surplus, along with the waves of cash flow in the international markets.

These changes in external relations are reflected in exchange rates and the currency value of one’s own country, and they modify the domestic industrial structure under the flexible exchange rate system.

This sort of cash flow in international society has an impact on the amount of currency being distributed in individual countries, and it forms the state of finance, household budgets and private companies.


The flow of people and commodities and the flow of cash have a two sided relationship, and cash flows in the opposite direction of the flow of people and commodities. In other words, the flow of people and commodities is in the opposite direction of the flow of cash.

The reality of the economy lies in the flow of people and commodities. Cash flow exists to stimulate the flow of people and commodities.

And in the case of a money economy, the premise is that first of all currency is circulated in the market.


There is a large flow of currency in international markets. This flow changes direction according to the global situation at the time.

The flow of currency is basically a circulating movement that generates waves. The waves in the fund flow generate big swells in the economy.

The currency wave appears as a financial excess or shortfall in a family’s or private company’s budget. And the role of adjusting this excess or shortfall is performed behind the scenes by financial institutions.

Therefore, the size of excess savings or excess loans and the loan-deposit ratio become important indexes.


It is wrong to discuss whether a current account surplus or deficit is acceptable or not. The standard for determining whether the balance of a current account is a deficit or surplus is not an absolute.

It is determined by the state of the market and the unique movements of individual countries at the time. And it is adjusted depending on the coordinate axis covering a long-term period, and it is difficult to determine the direction of the currency flow only through trends in the unit period. A unit period is actually an effective way of acknowledging the state of domestic industry.

The overall trend of the economy should be judged by considering the short-term and long-term time structures.


The important thing is not to fight against the currency flow, but to use it proficiently. What policymakers should do is stabilize the economic state of their own countries by utilizing the waves of the currency flow.


The relative virtues of the floating rate system, fixed exchange rate system or currency system are not technical issues, and they do not pose an essential problem.

The floating rate and fixed exchange rate systems have both good points and bad points. They are not absolute systems. The point is that we should select the most suitable system for the time.

However, it is not possible to understand the big wave of cash flow through only shortsighted thinking.


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