The basic flow of big money works like this.
The basic flow of big money works like this. Borrowing money to buy something, or to invest the money is one flow. Lending money to sell something, or to make an investment is another way. These are the two main forms.
In addition to this, there is giving money free of charge and selling goods or services or promoting investment, or another way is receiving money at no charge, and either buying goods or services or in some cases investing, but that is an extremely rare case.
Therefore, basically, the flow of money is to borrow and buy things or invest. Or sell things to lend money, which, while it is promoting investment, the relationship is a two-sided one with a front side and a back side.
Receivables and liabilities are generated by the flow of lending and borrowing. A loan relationship is established. When currency is flowing, the same amount of receivables and debt are derived in the currency flow. Receivables form the assets, and liabilities form the debt and capital. The amount of receivables and liabilities constrains the flow of currency.
Receivables and debt are always in equilibrium, and this is the premise of double-entry bookkeeping.
Selling goods and services to lend money, or to promote investment is one flow. And borrowing money to buy goods and services, or to make an investment is another flow. Their relationship is a two-sided one with a front side and back side and the amount of these flows in equilibrium. This is because the premise is that individual transactions are equivalent.
And this relationship is such that the sum of the monetary value of the overall market that is caused by these transactions is meant to be zero. And this is the basic premise of today’s market economy.
The act of handing over the money for free is a gift. Examples of national “gifts” are disaster reconstruction funds, including war reparations and war, and official development assistance (ODA).
The excessive compensation for war reparations that was thrust upon the Germans after World War I triggered the hyperinflation of Germany, and in turn allowed the Nazi rise, and is said to have led to the Second World War.
As reconstruction assistance funds, the European Recovery Program, known as the Marshall Plan, is famous, and unlike the war reparations against Germany after the World War I, it laid the foundations for post-war European reconstruction.
As long as it is directed at consumption, even such free-of-charge funding can have a temporary effect on the economic growth of the partner country, it rarely makes a long-lasting contribution.
By directing the funding towards investment for means of production, it is capable of triggering continued economic expansion.
The transfer of funds, unlike the opposite benefits such as of gifts, cannot cause the recirculation of the funds. It must be some sort of investment in a means of production.
But giving money at no charge or receiving it is extremely rare. Normally, the way big money flows in the economy, you can either borrow the money and buy, or lend the money and sell.
This relationship forms a two-sided front and back situation. And it creates a relationship between the deficits and the surpluses between economic entities. If there is an economic entity with a deficit, it means that there are economic entities with surpluses.
The normal flow is that you can either lend the money to sell, or borrow the money to buy.
The mechanism of the economy is in a word: simple.
Work is what drives the economy, not buying and selling or lending and borrowing.
When principal funds become insufficient through buying and selling, it is necessary to borrow money from the principal obtained from surplus funds gained through buying and selling. This is because both cannot hold true otherwise.
Therefore, in the cash flow and on balance sheets this is referred to as a zero-sum, and structurally somewhere there is a piggyback deficit. But it cannot be structurally possible to say that all of the principal becomes surplus.
The problem is, whatever the deficit, whatever the surplus, it is a unilaterally cumulative situation. And this is what causes a deviation in the economy.
Profit is a reference, and we should not forget that it is an indicator. If we forget this, a trend of the purpose of profit will come out. When profit is made for the purpose, we lose sight of the original workings of profit. The key is the workings of cash.
In order to be able to recognize the workings of the economy, depreciation and amortization, profit appropriation, and the repayment of principal are to have a material impact on cash flow.
In particular, the appropriation of earnings, taxes, dividends, and allocation of directors’ bonuses are important, but after-tax profit should not be overlooked for appropriation as a funding source for repayment of principle. When the portion from the pre-tax profit allocated to taxes increases the cash flow is compressed by that amount, and debt increases.
In some cases, it is no longer necessary to make tax payments above the cash flow, and sometimes this leads to an outflow of income more than cash sales. And this leads to an increase in liabilities.
The current account balance, fiscal balance, private balance are linked. And the capital account and the current account balance are at the front and back sides of the relationship. When economic entities have insufficient cash they must borrow from the current account, which has a surplus of funds. This is because the balance of the cash flow must always be kept positive. If the balance is not kept to be a positive value, settlement cannot be done.
Between countries based on a common currency such as the Euro, there is a need to integrate finances. If this is not possible, it becomes necessary to adjust the excess or shortage through supranational institutions.
Otherwise, the circulation of funds becomes stagnant, and debt is accumulated by the imbalance of the current account.
This is because the ability to adjust the current account through fluctuations in foreign exchange does not work on the currency within the currency zone.
As a means to correct the currency zone regional imbalances, to establish an international division of labor between countries, the balance of payments and the lending and borrowing between nations is to be balanced. In addition, as supranational business is funded in areas where cash is insufficient, creating employment is conceivable.
For a country with a fiscal deficit, it has get into the red because it lends money to buy things, or invests money. In addition, for the current account deficit countries, rather than lending money to sell things, many more are borrowing money to buy things. The functions of work and the budget deficit of the current account deficit cannot be understood if you do not take this point into account.
To become a reserve currency country, because it is necessary to have a currency of their own as a reserve to other countries, these countries inevitably borrow money to buy things. In other words, they are forced to become current account deficit countries.
When deficit chronically continues, debt accumulates.
When a business gets larger, it is forced to become multinational, because if it does not swing deficit and surplus between countries, balance cannot be maintained.
An idea for refinancing is to stimulate large-scale private investment. On the cash balance, put the surplus on finance and the deficit on the private sector. In the short term, income in the private sector is set to be in surplus. Through these measures deficit is transferred to the private sector from finance.
The source of the power obtained through scientific and technological innovations is the power of God.
There is nothing at all like this power that is created by humans.
Even if humans were able to get the power of God, they would not become God.
God is not a force.
God is a presence.
Even if humans were able to get the power of God, without the power to control it, they would only destroy themselves.
A person who thinks that he/she gets the power of God is such a fool.
It would be disastrous if one continued not to understand the will of God and got something like the power of God into their possession.
Humans cannot be God.
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