“Money” is a means of distribution, but it cannot be denied that “money” is the driving force of the world economy. The financial institutions control this “money.”

“Money” is a means of distribution, but it cannot be denied that “money” is the driving force of the world economy. The financial institutions control this “money.”

It is necessary to understand the role of financial institutions and why they are examined separately from other economic sectors.

Money creates a virtual space. Money exerts its utility by flowing and circulating. Additionally, the function of money is realized through deposits and withdrawals. What is the mechanism that makes money flow? What is the mechanism that circulates money?

A monetary economy is a system that is sustained by the circulation of ‘money,’ meaning it is a circulation system. Therefore, ‘money’ is neither consumed, depleted, nor perishable. Financial institutions are independent of other institutions because the monetary space is a virtual space and a negative space.”

The flow of money is created by the surplus and shortage of money and interest rates. When money is used, the amount of money held decreases. If it runs out, one cannot live. Therefore, one must work to earn money. This surplus and shortage create the flow of money. Another factor is interest rates.

The functions of finance are as follows:

1. Circulation of Money: The primary role of financial institutions is to circulate money. They release money into the market and circulate funds through lending.
2. Liquidation of Physical Assets: Converting physical assets into liquid assets.
3. Conversion and Valuation: Debt is usually established with physical assets as collateral. By using assets as collateral, their value is converted into monetary value, simultaneously liquidating physical assets.
4. Securitization of Money: By securitizing money, it becomes possible to subdivide, lend, trade, liquidate, use as collateral, and redistribute risk.
5. Control of Circulation Volume: Adjusting loans and interest rates to control the volume of money in circulation.
6. Lending and Investment: Providing loans and managing funds.
7. Fund Mediation: Mediating funds from surplus entities to deficit entities.
8. Temporal Adjustment of Surplus and Deficit: Balancing the flow of money by addressing the temporal mismatch between income and expenditure cycles.
9. Intermediation of Loans: Mediating between lenders and borrowers, such as in the case of housing loans.
10. Conversion of Long and Short-Term Funds: Converting and replacing long-term and short-term funds, such as in housing loans.
11. Deposits: One function of deposits is the subdivision of funds.
12. Savings: Savings act as a pool of funds. Deposits are the first step in the securitization of money.
13. Adding Time Value: Adding time value to funds through interest rates.
14. Exchange: Facilitating remote settlements through domestic and foreign exchange.
15. Currency Exchange: Exchanging different denominations of currency.
16. Creation of Credit: Amplifying monetary value by lending deposits.
17. Creation of Value: Creating value through lending and other means.
18. Credit Guarantee: Providing credit guarantees for international trade and promissory notes.
19. Settlement: Handling settlements such as promissory notes. Issuing a dishonored note can halt bank transactions.
20. Monetization of Information: With the advancement of communication and information technology, the monetization of money is progressing.
21. Redistribution of Risk: Redistributing risk through information provision.

Borrowed funds are linked to physical assets. By using physical assets as collateral, claims and debts are established. While claims and debts are nominal values based on contracts, physical assets undergo their own changes. Over time, the value of physical assets and nominal values diverge.

Profit is a value measured in monetary terms. Not only profit, but also capital, sales, purchases, expenses, and assets are nominal values measured in monetary terms.

What must not be overlooked is that all economic values are being converted into monetary terms. This process is driven by financial institutions and the tax system.

Therefore, it is necessary to understand the functions of financial institutions and why they are examined separately from other economic activities.

When land is used as collateral to obtain cash, claims and debts are established. By investing the cash in capital expenditures, income is generated, repayment funds are earned, and tax-saving measures can be implemented.

Simply owning physical assets such as land or money does not generate any income. Borrowing money with land as collateral allows you to obtain cash. At the same time, the lender acquires a claim, and the borrower incurs a debt. Debt must be repaid. Therefore, the cash obtained is directed towards investment, which incurs costs. Simply selling the land results in taxes being levied. Even just owning it incurs inheritance and property taxes. However, using land as collateral is not always based on actual demand and can sometimes be driven by speculative motives, which can lead to bubbles. This is capitalism.

In a capitalist society, asset utilization is encouraged, whether one likes it or not, because simply using land for personal purposes does not generate income.

Depositing cash is also a form of asset utilization.

In this way, money works and creates a flow.

What we must remember now is the spirit of the Antimonopoly Act.

The Antimonopoly Act prohibits excessive oligopoly and monopoly, as well as unfair dumping. This is to maintain fair competition and protect high-quality consumption. Regulations exist for this purpose. Regulations are both moral and legal. Why did pollution and environmental destruction occur?

The spirit of the Antimonopoly Act is to maintain fair prices and fair costs. It is not just about being cheap or simply competing. A conflict without rules is not competition, but merely a struggle.

What is God showing us?

Deregulation is not a panacea. However, it does not mean that everything should be regulated.

What is important is the purpose of regulation.

Regulations are established to protect people’s lives, support the weak, and preserve the environment. However, regulations that have outlived their purpose and no longer fit the times or environment become vested interests, create class disparities, suppress fair competition, hinder growth, and rigidify the market.

Regulations should be adapted to the environmental conditions.

What did people learn from World War I and World War II? What did God show us? If you want to survive, help and share with each other. If you want to perish, then perish.

Industrial products are priced based on quantity, crafts are priced based on quality, and art is priced based on universal value. Each should form its own market. The concept of the market is different.

Cars, watches, meals, and preferences all calculate different markets. Mass retailers, local shops, and long-established stores have coexisted according to their purposes. The diversity of car and watch stores made the market vibrant.

Clothing, like traditional costumes, was part of the culture.

Making the taste of coffee in New York, Tokyo, and Shizuoka the same is not evolution.

Consumers decide what and how much to spend money on. The problem is when they are not given a choice.

By using land as collateral to borrow money, you can build an apartment, find tenants, earn rental income, and repay the loan. However, there is a period of no income between building the apartment and finding tenants. During this time, you need unsecured, interest-free funds with no repayment obligation. This is what capital is.

However, those who invest do not provide money without expecting anything in return. Naturally, they seek compensation. They seek a return on their investment, meaning they invest by securing future profits.

Collateral, debt, cash, investment, expenses, income, profit, capital—these are the keywords.