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Each buyer, by an act of buying goods, invests money in the further production of the same product. If a person stops buying goods, then this product ceases to be produced.
When a person buys goods produced in his country, he invests money in the production of his own country. When a person buys imported goods, he invests money in the production of a foreign country. When a person buys a foreign currency to travel abroad his country, he exports the country's currency, consuming the "goods" of a foreign country. It is equal, in fact, to investing in someone else's economy, or importing "goods" into one's own country.
When I buy electronics products, I invest money in the development of the electronics industry. When I buy a piece of music, I invest money in the creative activity of a musician. When I buy a book, I invest money in the creative activity of the writer.
If I buy alcohol or drugs, then I invest money in their further production. If I buy a slaughtered animal for food, then I invest money in further killing animals. If I give a bribe to an official, then I invest money in the development of state corruption.
The buyer invests money only in already operating production.
The price structure of the goods.
"Price" is the amount of money the buyer pays to the seller for the goods.
Expenditure on production (creation of goods).
"ЗП" - the salary. Remuneration of labor, hired for the production of goods, people.
"Commodity" is the value of the goods purchased for the production of a new one.
Expenditure on taxes (state budget).
"Rights" means the permission to operate (licenses that control competition).
"Resource" - raw materials, representing the benefit for production (payment for the right).
"%" - payments for the use of a loan (expenses for keeping money).
Expenditure on the motivation of the initiative of the entrepreneur.
"Profit" - the difference between the price and the cost of goods. The additional salary of the entrepreneur. Form of economic exploitation of the buyer.
As can be seen from the product price formula - the buyer pays for everything !!!
The buyer is the one who exchanges the earned money for the goods.
Only the buyer pays profit to the entrepreneur, taxes to the state, wages to the workers. Pays bribes and other losses to the entrepreneur. Without the buyer, the economy is dead. The buyer is the most important subject in the system of "market" relations. When you go into the store and make a purchase in it, you know, you paid the salaries to the sellers. You paid for the construction of the store. The store exists only at your expense. There is no other source of financing for the store. By increasing the tax on profits, the state "picks up the wallet" of the buyer.
Investments of the manufacturer.
To create new types of production or increase the production capacity of existing, money is needed. This money is called money for productive investment. They differ, in fact, from consumer investment. Their honest source is one - not spent money of people. Money put aside for storage.
Their role can fulfill the profits of owners from their industries. This money can be collected from people by banks. This money can be collected from people by entrepreneurs in the form of a loan (share).
The manufacturer invests only in new production.
Source of investment. Entrepreneurs are in need of money for investment. Bank loan is expensive and dangerous. There is a more seductive way to find money for investment - to delay the wages of workers, to pay with increasing delay. The financial resource appears due to the "damping effect".
The effect of the dam. The dam on the river leads to the accumulation of water and the appearance of new properties of large amounts of water. While water accumulates in the reservoir, it ceases to flow into the sea. After accumulation, the sea will receive the same portions of water as before, having grown smaller by the amount of water in the reservoir.
A similar phenomenon exists in finance. Non-payment of salaries leads to the accumulation of funds - for investment. But, the market for the production of goods will not receive this amount of money and "become shallow". An attempt to raise money for investments in one area of production (industrial investment) reduces investment in another area of production (consumer investment).
Such a source of investment disturbs the equilibrium of the economy, as the structure of income and consumption changes. Lacking money in wages, people can not spend it. So, for the amount not spent, the previously existing production is being curtailed. Increases the problem, the effect of "multiplying costs."
"Multiplication of costs." When a person spends money on the purchase of goods, he gives money to the seller. Only now the seller can become a buyer and in turn buy. And so on, along the chain. Lack of money from the buyer at the beginning of the chain breaks the entire chain entirely. The effect is multiplied.
Folding unclaimed markets leads to unemployment, a decline in production, the emergence of a shortage of goods, rising prices, inflation, rising costs of life, social upheavals. The instability of the purchasing power of money leads to an increase in investment risks and to massive bankruptcies. People feel the emergence of problems in the country, spend money more economically. Which leads to an additional decline in production. The resource of labor between production is redistributed. Most of the dismissed, can not find a job. Unemployment continues as long as the investment-frozen money begins to return to the economy. The reverse recovery of frozen production occurs "by hysteresis," with delays and additional costs.
Hysteresis is a technical term. The system, which changed the state under the action of external forces, does not exactly return to its original state, under the same initial conditions.
The source of financial resources for investment is an important economic issue. Must be controlled by the state in principle. Any violations of the investment order must be timely and effectively suppressed. Delay in payment of wages (its "freezing"), delay in payments is a very serious financial violation. It must be brutally suppressed in the beginning and not allowed in a healthy economy. But at the same time, an entrepreneur must have the right to fire the number of people who are not able to pay salaries. An entrepreneur should not be held hostage to two conflicting demands on the part of the state: pay a minimum wage in a timely manner, and not fire workers.
The consequences of investment violations always lead to a decrease in gross domestic product (GDP), impoverish society.
The investment object ("Reinforced concrete cube").
The well-being of people is conditioned by the quality of the banking system. It is important what to spend investment money for. If the financial system will function on the basis of formal rules, an anomaly will become possible in the economy of the state. I will explain the essence of the example "reinforced concrete cube".
"Suppose a loan is issued to any person, for any amount. Preference is given to people who are willing to pay a higher interest for using the loan. Then there may be a person who wants to glorify his name for centuries with a crazy act. He will take on credit all available funds of the state at the highest interest. Bribe some of this money officials, so as not to interfere with the execution of the idea. Will buy all the concrete, and all the iron produced in the state. Hires all builders and will make of this huge material a reinforced concrete cube. "
At first, everyone is happy with: the producers of concrete, metal fittings, extractive industries, producers of electricity and fuel, transport and roads. All people will receive paid work. It seems that the economy has reached its goal - all work. So everyone should be happy. But after a while, the products that people need to live and work will end. And the new ones are not produced, since all the people of the state were busy making the reinforced concrete cube. The resource through which the reinforced concrete cube was built was exhausted, since its restoration was not carried out. The state will decline. There will come a time when the bank will demand repayment of the loan. And at this point the madman will end his life by suicide. There is no one to ask for debt. The bank will get a reinforced concrete cube, which is very expensive and has no consumer value. And the community of people will be remembered by a building, indestructible by the elements of nature in the ages, symbolizing the imperfection of their social organization. The people will understand that they worked for free, as they did not have the money to spend. The work of people is buried in a useless building. Weakened by useless work, the people can easily die either from the elements of nature or from the aggression of another people, not weakened by useless labor.
This example is for demonstrating purposes. The true goal of the economy is to meet the "survival needs" of citizens. Full employment is not a goal, but a means to an end.
The above example seems absurd. Unfortunately, such a phenomenon exists in any society, in less distinct forms. Such madness is the construction of the pyramids in Giza. At present, such insanity is the implementation of expensive projects that do not have consumer value for people: arms costs, untimely programs for studying near space - the Moon and Mars. To the number not less expensive it is possible to carry construction of numerous cult constructions. Facilities for the entertainment of people, luxury goods, life on credit (for someone else's expense) for at least a year.
Inappropriate projects carried out by obsessive and vain people weaken the power of the people, reduce the standard of living of its citizens, and this, slow the full development of people, the pace of evolution.
Therefore, it is necessary to control the expenditure of credit by sensible people, who are responsible for their well-being, for providing loans for various purposes. The central bank decides whether to give a loan to a commercial bank. The commercial bank decides whether to give credit to the consumer. Everyone is responsible for his decision. The central bank is governed by the state in the person of senior officials. Responsible for all is the Emperor.
All the money deferred from consumption (not spent), it is necessary to return to circulation (to spend). If this is not done, a slowdown in production will start, leading to forced unemployment.
Function of banks: to collect from the population not spent money, concentrating control over them. Return money to the economy, through the issuance of loans.
The worker has to give all the money that he does not plan to spend in the near future, to the bank, so that the bank gives them to the entrepreneurs, and they immediately spent on new production.
An entrepreneur should not accumulate his money not spent. He must either spend them immediately on himself, or spend on new production, or give to the bank for the possibility of spending them by other entrepreneurs.
The state should spend budget funds as they come. There should not be no budget money spent (reserve fund). Normally, the state budget should always be empty. By spending money, the state returns to circulation the money collected by the tax. If the state has nowhere to spend extra money, it is necessary to reduce taxes.
In the limit, metabolic processes are the product of labor, must be so effective as to claim all the existing labor resources of the state. Unclaimed labor resource (unemployment among the able-bodied) is a sign of imperfection of the functioning of the monetary system.
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