an economy is made up of debts and expenses.
People treat debts and expenses as bad things, but an economy is made up of debts and expenses. Investment and income are the opposite of debts and expenses.
If you totally exclude debts and expenses from an economy, you will lose investment and income, which will then prevent the circulation of currencies and make a money economy unfeasible.
Energy is generated from distortion. The power that moves the economy is produced from distortion, too. Distortion is difference.
Competition is a phenomenon, but is not a source of energy. It is rather the result of the action produced.
If you stimulate competition too much, the elements of competition may not work well in some cases. What is important is not to cause competition, but how and where to cause the action of competition to be effective.
Distortion is produced from difference. Difference is recognized as a balance between a positive or plus action and a negative or minus action.
Money also has a plus action and a minus action. The plus action of money generates assets, while the minus action of money produces liabilities.
Business activities are moved through the workings of the power trying to correct distortion and the power attempting to maintain distortion. Investment produces distortion in the market.
Assets and liabilities are the products of the distortion generated from investment. The power trying to correct the distortion and the power attempting to maintain the distortion are the sources of the power for circulating currencies.
Investment and debts are what moves an economy. If debts disappear, business activities will lose their momentum. But liabilities are a minus power. You should remember that a minus power works on liabilities. Just as humans succeeded in using fire to their advantage, instead of considering minus power to be negative, you should think about how to get minus power to work effectively for people.
Money will act either positively or negatively for people.
The power to activate an economy is generated from difference. You cannot understand difference unless you combine it with a ratio. The workings of a ratio are hidden in the structure of the denominator and numerator.
You can see the structure in the workings of the denominator and numerator in an addition operation, the basis of the denominator and numerator. Each element composing addition is achieved through multiplication.
The four basic operations of arithmetic are hidden in the foundations of a money economy.
In assets and liabilities, liabilities are regarded as a minus factor, but in cash income and expenditure, liabilities are a type of income. Moreover, in terms of profit and loss, no matter how many debts you amass, none of the debts is posted. In contrast, no matter how much you repay your debts, none of the repayment is posted in terms of profit and loss.
But the lifeblood of a business is its cash flow. To put it in extreme terms, a business can continue if it has income, even when accumulating debts or deceiving others. Likewise, a business can continue if it can secure money or a cash balance, even when failing to pay its debts. But in the case of payments, it is all over if any bill is dishonored. That’s what makes liabilities so frightening.
Liabilities and assets are the long-term movement of funds, and no short-term movement of liabilities and assets appears on the surface.
The long-term movement of funds, such as liabilities and assets, does not appear on the surface of profits and losses. What appears on the surface of profits and losses is short-term movement.
But short-term movement is directly linked to cash income and expenditure. As such, the action of long-term movement is serious although it does not appear on the surface of profits and losses.
Financing is what controls the negative part of an economy. In terms of profits and losses, financing works in the area of assets and liabilities. Financing works indirectly on expenses and earnings via assets, liabilities and capital rather than directly acting on expenses and earnings.
Financing thus works to balance fiscal revenue and expenditure, household revenue and expenditure, business revenue and expenditure and the current balance by appearing on the opposite side of fiscal revenue and expenditure, household revenue and expenditure, business revenue and expenditure and the current balance.
I can’t understand the meaning of deregulation.
Does deregulation mean abolishing regulations, reducing regulations or limiting regulations?
Does deregulation relax regulations? Or does it change regulations into something that is adaptable to changing times and market conditions? The meaning and scope of deregulation change completely depending on how one understands this term.
Is competition possible without regulations? Regulations are rules. Competition occurs because there are rules. Without any rules, competition would simply turn into a battle. If regulations were abolished, only the battlefield would remain. In such a situation, children, young adults, older adults and elderly people would all compete with one another. And a situation could arise in which people might attack armed soldiers and tanks with their bare hands. The response would be nothing but slaughter. The words equality and impartiality would sound empty there. Impartiality and equality would mean that children and elderly people would compete with young adults on equal terms.
What kind of world is imagined by those who try to stir up competition and eliminate regulations? They mention efficiency, but what does that mean? Are they saying that efficiency means using things carefully and saving? Or do they regard efficiency as encouraging people to use things once and then throw them away to promote mass consumption? Without answers to these questions, it is meaningless to simply call for “efficiency.” The basic thing is the idea about what kind of country and society such people intend to create. And that idea will have no meaning unless it is linked to people’s happiness.
The meaning of protectionism is unclear, too. Some use the term protectionism, but it is not clear what they intend to protect and from what they intend to protect it.
Protectionists up to now have tried only to protect industries in their countries by means of customs barriers. As a result, they have brought about the collapse of the market and of people’s lives. After all, protectionism does not help protect people’s lives.
Originally, protectionism meant protecting the market from institutional distortion.
They repeatedly call for competition, but by what means do they intend to encourage competition? It is evident that competition by price alone is meaningless. Moreover, the functions of price are not activated through competition alone. Competition may hinder the functions of price in some cases. The functions of price are relative and change depending on the environment, situation and pre-existing conditions.
Periodic profits and losses are what classifies income and expenditure within a certain period of time into income and expenditure of short-term and long-term functions. You will be able to see the relationships between income and expenditure and between profits and losses if you consider that income is composed of earnings, capital and borrowings, while expenditure consists of expenses and investment.
Profits are an indicator.
If profits increase, borrowings will decrease. The ratio of capital will rise as a result. On the other hand, if negative profits or losses occur, borrowings will increase and the ratio of capital will decrease.
This is the same for public finance and household budgets. But because both public finance and household budgets are cash-based, the relationships between income and expenditure and between profits and losses cannot be seen. In addition, because they adopt a cash-based, single-year balancing method, cash income and expenditure mean everything to them.
The problems of public finance cannot be analyzed unless you look at them from the standpoint of periodic profits and losses while considering the uniformity of the system.
When you turn public finance into periodic profits and losses, you cannot regard it in the same way as a private business. This is because a private business always presupposes a return benefit, while public finance has some parts for which it cannot presuppose any return benefit. In public finance, income can be divided into tax revenues, borrowings and business income. The ratios of these components are the key issue. If the ratio of tax revenues and business income to the total expenditure decreases, borrowings will increase. If there is no room for tax increases, business income will need to be increased. Expenditure should be divided into expenditure from which a return benefit can be expected, and expenditure from which no such benefit can be anticipated and investment. Expenditure from which no return benefit can be expected is expenditure for military affairs and law and order, subsidies and benefits. Investment includes expenditure in social insurance programs as well as in social overhead capital.
There are two types of economic specialists: one of these is economists and the other is specialists in such practical business affairs as accounting, taxation and business administration. Economists completely look down on specialists in practical business affairs and think that they don’t understand economics at all. Those at work in practical business take no notice of economists and have no use for the field of economics. This is why they cannot clearly grasp the essence of the economy.
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