No.309 Suggestions for overcoming the current recession. ・・・First, the conclusion. Government creates new industries. Central bank print the money and pay it as is.
Suggestions for overcoming the current recession. part 1
・・・First, the conclusion. Government creates new industries. Central bank print the money and pay it as is.
Economists have blind spot. I will explain later.
When a new industry is born, new demand is created for new products. Demand for goods in existing industries remains unchanged.
This new industry should be done by government. Countermeasures for corona pandemics and space development are government tasks.
Specifically, it is order to private company, but it is inappropriate to pay price by tax or debt. Inappropriate for this to sell gov bonds to Property owner.
It is appropriate that central bank print money and give it to gov, gov then pays for it.
Industrial production is creation of monetary value from scratch. Money needs to be printed for amount of monetary value created. Central bank prints money for added value produced and gives it to producer.
No problem unless hyperinflation occurs.
Government consumption causes economic growth like private consumption. Purchased vaccine is consumed by gov. That is, give it to people for free.
For NASA project, print as much money as need and order it to private company.
Suggestions for overcoming the current recession. Part 2
・・・Economists did not understand principles of economy. Point out their blind spots.
Do economists consider microeconomics and macroeconomics to be completely independent?
Economists may still not consider macro economy from actual economic behavior of individuals and companies. Here is their blind spot.
Economic policies based on economics that do not notice blind spots are useless. We cannot solve the current recession. I suggest a solution, at part 1.
Relationship between microeconomics and macroeconomics corresponds to the relationship between particle mechanics and statistical mechanics in physics. If logic is same, theory is similar.
Behavior of individual components in microeconomics is integrated in whole economy to a quantity of macroeconomics.
Integrating is a statistical process. Statistically processed quantity is abstracted. At this time, element expressing the actual reality is rejected. Macroeconomics does not include elements that represent the reality.
Economists said realities of macro economy have no effect. Actual situation has a decisive influence on macro economy. However, in macroeconomics, it become invisible.
Suggestions for overcoming the current recession. Part 3
・・・Fundamental change in social structure is necessary. This is not visible from a macroeconomic point of view.
Essences of macroeconomics that I learned.
“Added value produced is supplied to people's income.
GDP = total investment + total consumption
Total investment is total value added of investment goods. Total consumption is total value added of consumer goods. "
Value added of products is the created monetary value. When producing a product, new value is created from zero and added to product.
Different types of products have different types of added value.But, in economics, all added value is expressed in monetary, so distinguish between differences in value due to differences in products is impossible.
If new kind of product is born, new demand is created. New demand will be added to existing demand. If mobile phones are born, exsited demand for cars will unchange.
If corona pandemic requires structural changes in society, creaing new industries is necessary. This becomes economic policy as it is.
Since value-added production is creation of monetary value from zero, new money should be supplied to there. This currency can be issued by central bank.
Suggestions for overcoming the current recession. part 4
・・・Reason for blind spot of economists.
Reason seems to be historical background of the birth of Keynesian economics.
Physics and economics will be same theory if they follow same logic.
In physics, dynamics of individual mass points were developed into "Statistical mechanics" through logical thinking.
In economics, genius Keynes suddenly created Keynesian economics in the days of classical economics. Process of development by logical thinking did not exist. Until now, misunderstood of disconnection between micro and macroeconomics occurred.
The terms supply and demand would be different concept in microeconomics and macroeconomics. Economists will not understand this.
Gross demand in macroeconomics is close to the concept of potential.
If one of economists got an explanation from a classmate who majored in physics, they might have easily understood.
"Fallacy of composition" is a feature of vectors. Movement of individual gas particles is determined by their size and direction. If directions different, you cannot simply add. Motion is decomposed in three directions of XYZ and added for each axis.
They can only suggest monetary easing.