Both surpluses and deficits, as well as credits and debts, balance to zero. In other words, where there is a surplus, a deficit arises, and where there is a deficit, a surplus arises. When the government is in a financial deficit, households have a financial surplus. Finance, fundamentally, facilitates the circulation of money to maintain a neutral balance.
Surpluses and deficits must balance to zero. For this purpose, there are debts and loans. They compensate for surpluses and deficits, balancing the whole. This is the original utility of debt. In other words, the overall lending and borrowing balance to zero, and the force to maintain this balance drives the economy.
In the early stages of economic development, everything is initially in a financial deficit. Therefore, the state issues government bonds backed by taxes, the issuing bank issues currency, and private companies borrow money to flow funds to households.
In other words, when companies are in a financial deficit, they borrow money and flow funds to households as income. Households then return the money to companies by purchasing production goods. Additionally, households and companies return funds to the government as taxes. Once this system is established, households, companies, and the government cyclically alternate between deficits and surpluses, circulating funds in the market.
If we balance to zero within a single fiscal year, funds will not circulate. Therefore, we distinguish between long-term and short-term loans based on the long-term and short-term functions of funds. This separates total income into short-term and long-term. Additionally, by separating the utility of funds from income and expenditure to profit and loss, short-term profits are used as indicators.
The total economic value does not exceed total income. Total revenue does not exceed total expenditure. Economic fluctuations appear as the difference between the beginning and end of the period. Income drives economic fluctuations because income is a nominal value. Production and consumption, constrained by physical goods, cannot drive fluctuations. However, the essence of the economy lies in production volume and population.
There are also surpluses and deficits between nations. In the global market, surpluses and deficits between nations also balance to zero. Surpluses and deficits between nations are adjusted through lending and borrowing between nations. At that time, the key currency acts as an intermediary. Additionally, the system of balancing credits and debts between nations needs to be established. Since interest works on credits and debts, internal and external systems must have a role-sharing structure that enables balance. If not, the imbalance in the global market will expand, eventually leading to division or stratification. This will fixate poverty and worsen global security. This will not bring good results even for the wealthy. It will become impossible to establish a cooperative system to improve sustainable development and environmental degradation.
It is not permissible to think only of oneself. It seems that God indicates this. However, it is human will that realizes it.
Simply condemning fiscal deficits as bad worsens fiscal deficits. What is important is to evaluate the overall state of surpluses and deficits, the positions and balances between sectors, and the direction of their functions.
Thinking only of one’s own country’s convenience and always trying to maintain a current account surplus might be a form of national egoism.
Prosperity cannot be monopolized.
One cannot achieve anything alone.
The only solution is to help and cooperate with each other.
To me, this seems to be the path to world peace and environmental protection.
God does not speak, only points the way.
It is humans who decide and act upon it.