воскресенье, 26 августа 2012 г.

I know how to stop the global crisis


 This article  is the first article in the world, which is written in the meta-language. *

 

The main part

 

The world does not know how to save the economy from the ongoing crisis, because people identify economics and money. But monetary measures do not bring the desired result, and no one knows what to do.

 

Economic science has no logic theory of value so far. Existing theories state that people are sharing something equal, but this is absurd. Why do people have to share something equal with each other!? People think that price and value are identical, because there is no  theory of value  as it is . But money has some- conventional character, so no one knows what is the real value and the real value. That is why economists act  blindly.

 

Money - a convention, but the economic processes are assessed only in monetary terms. What does it lead to? Imagine that the cars go down the street and cast shadows on the wall. Imagine that passersby catch those shadows on the wall to stop the car. Have you imagined? Economists who use monetary measures to stop the crisis, are similar to those passersby.

 

It is true that monetary measures can have some effect, because people identify economics and money. But the effect will be transitory. If you pretend  to throw a stick, a dog will rush to it , but soon return. Economy reacts in a similar way to the monetary measures. The economy always «comes back», if only to use the monetary measures. Therefore, they can only be used to diminish or increase the regular business cycles. Monetary measures can not  lead out of crisis, and can be successfully used only in conjunction with other measures.

 

We have to find the real purpose of development - an absolute value. I believe that this value is freedom. Freedom is defined by the number of opportunities and their probability. More opportunities – more freedom. If all the states have the same probability, the freedom  is -  maximum. Freedom is the entropy. Therefore, the purpose of development and progress - increasing freedom and entropy. Many people believe that  entropy is a measure of chaos, but it is not true (Appendix).

 

Now let us create our own  theory of value. Imagine that a  person is in a forest during a drought. The more he is thirsty  the more energy will be spend in  search for water. The more he will be focusing on the search for water, the less will be his freedom. And when he finds or gets water, his entropy will increase. The magnitude of this increase of entropy, which will be caused by obtaining water  is the cost and value of water for the man at that time. The more  a man wants something, the greater the entropy increases when  he receives the desired.

 

 

 

Imagine the water exchange for bread. One man wanted the water and the other - the bread before. Both increase their entropy by the exchange. Thus, the result of fair exchange - an increase of entropy of all parties involved. Consequently, the exchange is an increase of entropy. And entropy and freedom  are absolute value.

 

 

Schedule of supply and demand is the standard way of the process of exchange. Sale and purchase are the exchange, too. Economists believe that the ideal point of the market is the equilibrium point located at the intersection of lines of supply and demand. But what is that point? It means that the seller would not sell for less, and the buyer would not have to buy more expensive. Balance point - the point of least satisfaction from the transaction for the seller and the buyer. The point of equilibrium is the lowest point of the entropy, which is obtained by  participants in the transaction. The point of equilibrium  is the worst point of the market.

 

 

 

The market moves to its equilibrium point gradually. It is below the line and above the demand and the supply line during the movement. And buyers and sellers are more satisfied than at the equilibrium point. Entropy is greater. So young and dynamic markets generate more entropy. And the old markets, which  are at the equilibrium point - generate the minimum amount of entropy and, in fact, are problematic.

 

If a market participant has sold the goods to another party, and then bought anything for the money, then the deal can be considered identical exchange. But it can take a lot of time between the acquisition of money and goods for them. Therefore, a person can get the wrong item, but not  which he had hoped for. This situation is a major problem of currency circulation. This situation can be described as a normal exchange, but one participant completed the agreed parameters, and the other – did  not.. This situation leads to a redistribution of wealth, resentment and breaking business relations.

 

Such a situation arises because of overestimation of the value of money and securities. People think that money and securities have independent value and therefore are likely to be overestimated. Therefore, a high concentration and the mobility of capital will inevitably lead to crises. Amazingly, economists are struggling with these crises through monetary measures. They  try to cure the disease by the same disease.

 

Such treatment is based on the theory of the multiplier. I will illustrate two examples of the work of the multiplier. The first example. All manufacturers have  high demand products, but no one can     sell because no one has money. You buy something from the first one for $ 100, he buys something from the second, the second - from the third and so on. As a result, all the people  solve their problems and give thanks to you for $ 100. All people possessed marketable products, but no one had any money to be exchanged. This situation is a fantasy in today's economy.

 

A second example. The producers have not demanded products. Demand for these products has disappeared. But manufacturers are not looking for new markets, they are waiting for customers. Their suppliers are not looking for new markets, suppliers and vendors are not looking for new markets. No one is looking for new markets, no one is selling. Crisis. You buy a  not claimed product for $ 100. Producers pay their suppliers, suppliers are paying their suppliers. Your $ 100 helped all again. But you have to pay all the time, for the crisis not to return. But you are not helping producers to find new markets. Your help is painrelief, but not a cure. After all, you will stop paying, and  the producers will turn out to have lagged behind the competitors despairingly . You gave them a disservice when bought unclaimed goods. But many states do so during the crisis. A state places orders or pays subsidies to enterprises for them to be able to work and not be reconstructed. The state creates the appearance of victory over the crisis, but the crisis is not defeated. The crisis becomes stronger, but monetary policy prevents to see this. Monetary measures do not contribute to an increase in entropy, because manufacturers are not looking for new markets.

 

Monetary measures impede  to see a crisis, so they can be used to mask the crisis. But the disguise is only useful if the state applies the measures that increase entropy. The state should always contribute to the growth of entropy. But the state has one more task - to save democracy, save democracy from democracy. This problem is a major problem in the crisis. People vote for the dictatorship, when they are paid less. Paradox. Democracy is killing democracy in the crisis. Plato described in detail the transition from democracy to tyranny. He believed this transition inevitable.

 

The state should mask the crisis to save democracy from the people. First, the issue of money and inflation mask declining incomes. Rising prices cause discontent, and loss of wages - the revolution. Therefore, inflation reduces discontent. Therefore,  it is very hard for Greece now Greece can not reduce public dissatisfaction by inflation. Because Greece is in the eurozone.

 

Money issue can imperceptibly redistribute income. The government can print a lot of money to pay  it for some enterprises. Inflation will increase. The real incomes of other businesses will decrease. Income  will be distributed among enterprises, but it will happen  imperceptibly, and no one will express dissatisfaction by redistribution.

 

What should  the state  do to overcome the crisis? The state should take steps to increase the entropy and to preserve democracy. Entropy increases when new markets are created. The state should support companies that create new, successful markets, which enjoy higher profits. Paradox. The state should support profitable companies. Old markets  should die. The state should redistribute income from the old markets to new markets and  should do it imperceptibly. The state must soften people's discontent. Therefore, the state should implement monetary creation and transfer money to the most profitable and innovative enterprises.

 

The state should do what investors do in good times. Investors  invest in the most profitable businesses and new industries. But investors are afraid to do it in a crisis. Investors either invest in the company of another country, or buy real estate. State must act as an investor and invest in the most cost-effective and innovative enterprises. But the state does not have sufficient cash resources during the crisis and there is the need to reduce the people's discontent. Therefore, the state should fund the best companies by printing money. Money issue will disguise transfers of unprofitable businesses to profitable businesses.

 

Profitable companies will expand their production and increase the entropy. However, companies that will receive money from the state, can reduce their effectiveness. Government grants can spoil enterprises. Enterprises can  "eataway"  or steal money. How to resist it? State may use different types of control, but they can be ineffective.

 

It must be remembered that the basic purpose of development is entropy. The entropy of the economy is higher, the more new markets, new services and new products are. People need to re-learn all the time  new skills, working principles for the entropy to increase. So the state can pay for the education and training of new staff at cost-effective and innovative enterprises. Company will be able to hire and retrain them for free. The state will compensate  these costs through money creation. Such compensation should be very ambitious to re-educate more people and to create inflation, which will smooth out the difficulties of this period.

 

It's simple. First, you need to help viable businesses to expand. To do this, the state should arrange financial assistance to the most cost-effective and innovative enterprises. Second, you must destroy unprofitable enterprises. To do this, the state should not help the unprofitable enterprises. Third, it is necessary to organise  a mass retraining   of people. To do this, the state should pay for training of new employees in the most cost-effective and innovative enterprises. Fourth, it is necessary to reduce the population's discontent and find the money to help cost-effective and innovative enterprises and for retraining people. To do this, the state  should issue money.

 

It's very simple, but all countries do the opposite. States  issue money, but do not increase the entropy. States help  unprofitable  enterprises and help  to reduce incomes  of profitable enterprises. States postpone the struggle with crisis and  aggravate it .

 

 

Appendix

 

People think that the growth of entropy inevitably leads to chaos. This i s false. This view is valid only in thermodynamics. But entropy in thermodynamics is  very specific. This entropy characterizes the growth of  possible states of the atoms, if the entropy of the entire system is not increasing. Therefore, the maximum thermodynamic entropy is characterized by the freedom and independence of each atom and a minimum of freedom of the system. It's chaos. The system is fixed, if there is chaos in it, but each atom  has the freedom of movement. The entire system can be in only one state, so the entropy of the system is zero. But the entropy of each atom is high. It's chaos. This condition is called heat death. Death is - entropy, which is zero. High entropy  is the freedom and welfare, low entropy - death. The progress has the goal, this goal  is an increase of entropy at all levels.

 

It is necessary  to separate  different levels of the system, when we analyze the entropy. Elements of the system can have higher entropy and the system - low, and vice versa. There is a tendency in the inorganic world: the entropy increases at low levels and decreases at a higher level. But the goal of progress - an increase of entropy at all levels. Therefore evolution has transmission mechanism of entropy from low level to a higher level. This mechanism  is life.

 

The behavior of a living mouse is more varied and unpredictable than the "behavior" of a handful of molecules, which is a mouse. One molecule can change the mouse behavior and changes at the macro-level, if the molecule is changed and if it is in the nervous system of the mouse. Life moves entropy at the macro level and transforms the  earth.

 

Another "thermodynamic" misconcept is that new connections and new structures  obligatory decrease the entropy of the elements, but it is not so. If  new connections create new opportunities, the entropy increases. A  modern man is tied up by  a large number of links, but he gets a lot of new oppotunities. Therefore, the entropy of a modern man is greater than the entropy of  a savage.

 

 

* Meta-language is - a special structure of the text, which is translated by an automatic translator without loss of meaning.

 

 

P.S. This article is a very small part of my new economic theory. But this part should be enough to end up with the economic crisis. J

1 комментарий:

  1. I think you have left out power and influence from your idea. Especially the power and influence which successful business brings. There is a massive competition to beat everyone else and patent a growing opportunity. Being a shareholder is highly prized, of one of these companies. Finance very precisely calculates the value that has to be paid for partaking in investment. You have to go in early to actually invest at a discount and make a profit.
    Governments are too far behind the entrepreneurs to take advantage, by which time the profits have already been made, and all investors are left with is the option to buy inflated stocks.

    You idea completely leaves out a way of getting around this most important pressure. How can you get governments to beat the entrepreneurs, or beat the ownership rights out of them?

    Good luck

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