At present, Japanese people are under the misconception that wars or civil wars are caused by the existence of armed forces. Wars and civil wars are caused by the collapse of politics and diplomacy. If we regard out-of-control armed forces as a problem, we should regard the politics that would allow such armed forces as a problem. I would like to look into this point in my own way.
A capitalistic economy is built upon accounting, law and mathematics. Therefore, economics is a study to be built upon an integration of accounting, law and mathematics. But, present economics is something rather different from them.
Monetary value is derived from economic value. It is part of economic value, not economic value in its entirety. Monetary value depends on economic value, that is, it is not an independent value.
Economic value and monetary value are not equal. Economic value is a potential value. This value as a necessity to life has existed before the establishment of monetary value. Monetary value is derived when the exchange of economic value becomes necessary. Accordingly, it is a value built upon the exchange value.
Monetary value is not a given value, but rather it is an optional value generated from the needs of exchange, and it is basically expressed as a numeric value, i.e., a potential value.
It is an
illusion, or a consequential recognition, that monetary value exists
independently of wealth. Essentially, monetary value cannot be cons
Monetary value is expressed in a substance called currency. As soon as monetary value is replaced by currency, it becomes a material substance known as currency. Then currency itself takes on material value as wealth. This is how it becomes possible to operate the monetary value. This resembles the materialization of language in written letters or characters as well as the materialization of numeric values as numbers.
When the monetary value is materialized, it becomes possible to possess or hold the monetary value. Then, lending and borrowing of the monetary value becomes possible, which allows currency to have its potential power.
Lending and borrowing of monetary value cause debts and credits. Debts and credits cause liabilities. Liabilities offer the action to amplify the value underlying the wealth. This is the source of potential energy in the economy.
The value of the representative currency is premised on the potential value of the property on hand. Namely, a non-money economy is built without any funds on hand, and it is established assuming there is some portion assigned. Let’s look at card games and mahjong as an example. These games are premised on some sort of portion taken or possessed by the players at the beginning. Anyone without a bet cannot take part in these games. The original point of the money economy depends on the amount of currency on hand. And, the first funds on hand are paid from debts.
Like mahjong and card games, the initial funds on hand are adjusted by converting real property on hand to cash as needed, namely, by converting it to currency. This conversion causes liabilities or debt. Conversely, currency is created through the operation of lending and borrowing. This is creditworthiness. Thus, monetary value is equivalent to creditworthiness.
To sum up, monetary value is established on the premise of the potential position and it possesses an amount of economic value. The amount of money is not fixed in the beginning. The total amount of money is adjusted depending on economic conditions.
Monetary value is ultimately reduced to a natural number. This occurs because currency is a material substance, and because monetary value is a discrete amount. However, economic value is a continuous amount. Therefore, economic value is not always reduced to a natural number.
Income is calculated using a discrete amount, but labor is a continuous amount.
While physical phenomena are measured by such values as length, time and mass, economic phenomena are measured by monetary value (exchange value), time and mass.
While the reference for physical amounts is a unit, the reference for the economy is a unit price. That is to say, a unit is an amount per unit and a unit price is the monetary value per unit.
A problem in accounting is a typical problem of sets, and it is a linear algebraic problem.
Many currently adopted economic policies focus on cash-management related policies such as subsidies or loan guarantees as well as unemployment relief measures like public works. In the long run, however, a full-scale economic upturn cannot be expected unless corporate profits recover. To that end, it is necessary to adopt measures to improve the profit structure.
Declining prices occur in combination with the declining value of collateral, reduced profits, reduced employment and reduced income. The underlying cause for these is the weakened profit earning capacity of the private sector.
Subsidies and loan guarantees are not direct measures to improve periodical profit and loss. It is the same with unemployment relief measures. Public works are measures biased towards specific business sectors. In addition, public investment is meaningless if funds do not circulate. If funds flow only toward repayment of past debts, the funds do not circulate in the market.
Accordingly, rather than sporadic policies such as financial policies and increases in public works, it is necessary to take multiple economy-boosting measures such as measures aimed at profit improvement, employment promotion and change of accounting standards as well as cash-management.
The problem lies in the discipline of the market and the control of the proper operation of the market.