The flow of money is what moves the mechanisms of the economy.

The flow of money is what moves the mechanisms of the economy.

The mechanisms of the economy are made up by the circulation of money. Circulating money and making profits prevents gaps from widening. When money is no longer circulating, the mechanisms of the economy can not be maintained.
The parts that actually move the economy are the economic entities. Economic entities include government entities, private sector entities and foreign entities.
Private sector entities include private companies and households. Private companies are responsible for production, and households are responsible for consumption.

Transactions are what moves the money in the market. Transactions are set premised on a zero-sum relationship. Therefore, transactions in the overall market have zero-sum relationships. Transactions between economic entities also have zero-sum relationships.
The premise of what is called a zero-sum relationship is this: if there is an entity on the plus side, then there must also be an entity on the minus side.
Transactions are comprised of two sides working together, one buying and the other selling, or one lending and the other borrowing. Buying and selling are integrated parts, and the difference between them arises from the different points of view. In addition, transactions are comprised of things and money.
Lending and borrowing includes the lending and borrowing of money and the lending and borrowing of things.
Buying and selling means exchanging the ownership of things and money.
Buying and selling is premised on money being allocated for the transaction. An entity that has insufficient money needs to borrow it from an entity that has surplus money. Therefore, there needs to be a balance between buying and selling and between lending and borrowing. This means that the cash balance and the capital balance have zero-sum relationships.

From the principle of the equivalent of three aspects, the fact that there is a huge budget deficit is to say that the private sector cash balance has a surplus. The private sector includes households and companies, and there are cases in which company cash balances show a surplus while their periodic profit and loss statements show a deficit. This is because companies are refraining from making investments and are hoarding cash instead. The primary reasons why companies refrain from making investments are that the funds needed for the investment are too difficult to procure or that the companies do not expect the investments to have the desired effects. This is why the trends in land prices are important.
In addition, if the asset-building balance shows a deficit, then it would be strange if the fiscal capital balance did not show a surplus. If you compare the structure of this capital balance with the structure of the fiscal balance, the fiscal structure will come into view.

By clarifying what is equivalent to what, the relationships between the individual elements and their involvement with the whole will become apparent. This becomes the key to elucidating the causes of any problems that might occur and taking action at that time.
On the contrary, if you do not know what is equivalent to what, or why they are equivalent, then you will not be able to clarify the causes and take action.

In a zero-sum relationship, the relationship is easy to understand, and the functioning is also easy to do.
In a zero-sum relationship, a relationship of equivalence gives a two-sided aspect to economic events. For example, a current account surplus and a current account deficit.
Capital transactions and current transactions. Domestic trade and foreign trade. Lending and borrowing. Debits and credits, and income and expenditure. This relationship of two-sided equivalence is the basis for controlling the economy.
Being able to identify where and where, and what and what are equivalent, and whether or not there is a zero-sum relationship, is the basis for formulating economic policy.

Many people try to make use of the numerical values of the national accounts statement, but few try to take advantage of the mechanisms and structure of the national accounts statement.

Private sector profit also includes the financial sector and the non-financial sector. The financial sector is not necessarily directly involved in production. And even if the profits of the financial sector increase, it does not necessarily mean that productivity will improve.

I have posted an analysis of Japan’s current situation on my website. Japan’s current situation is the future situation that the world may find itself in. If this situation is left as is without remedy, I think it may only be able to be resolved through civil disturbance or war.

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