Yi and the International Market | Keiichirou Koyano's Website

“When analyzing the world economy and international markets, we use the outer hexagram. Especially with countries that are the opposite hexagram, there is a high possibility of a complementary relationship. To walk in a mutually complementary relationship, economic policies and financial policies work in a complementary manner. It is also necessary to look at the hexagram from the perspective of the other party. On top of that, we confirm the correlation with the inner hexagram. First, finance and financial affairs are compared, and household and exchange rates are the center. The price level is closely related to the household. The household is compared to finance and corporate accounting. The exchange rate is compared to the current account and finance. Finance is compared to finance and exchange rates, and corresponds to companies. Companies are compared to households and correspond to finance. Finance is compared to households and finance, and corresponds to the current account.

We look at the movements of countries in a complementary relationship. When the other party is rising, our country is falling, and when the other party is falling, our country is rising. This is because the economies of the two countries interact through trade. However, even if we try to forcibly push down the other country to raise our own country, the change will only be temporary, and it will destroy the balance and harmony of the world market and economy. This is because the cause of our country’s movement is mainly in our own market and economic conditions.

There is a hidden force in the entire world market that tries to balance living standards, income levels, and price levels.

When our economy is declining, we need to find the cause of the decline in our own circumstances and structure and consider restructuring. That is the law of nature and reason.

The market and economy are always working to balance. That force circulates “money” in the market and distributes wealth evenly. It also works to grow the economies of each country and improve and level the lives of people. When one side expands quantitatively, the other side improves in quality, and when one side grows, the other side matures. When one side goes for mass production, the other side seeks small quantities of various products. When one side saves through income, the other side invests and releases savings, preparing for the next development.

We determine the direction of movement and change, and then decide the state and direction to proceed next. Based on that, we decide the policies to be taken. It is an interaction. Forcing our own convenience on the other country will only provoke confrontation and will not lead to a fundamental solution. This is because the main cause of our economic condition lies in our internal structure. By repeating expansion and contraction periodically, the market grows with balanced mass and quality.

When the market is shrinking, it is an opportunity to shift from quantity to quality, from high quality, high-end, high unit price, mass production to small quantities of various products, and high value-added industries.

The current world economy is deeply connected through trade and is now inseparable and integrated. The key is where and what we import from and where and what we export to. No country can be in a state of isolation.

Just as there are four seasons in a year, spring, summer, autumn, and winter, the economy also has cycles.

The maturity period is like the autumn of harvest. We appreciate the rich harvest, prepare for the coming winter, and wait for spring. If we try to go back to summer or spring just because it is getting cold, we will rot the autumn harvest and lose the seeds to sow even when spring comes. We will not be able to survive the harsh winter.

In autumn, we appreciate autumn, in winter, we become familiar with winter, in spring, we rejoice in spring, and in summer, we enjoy summer.

The world cannot solve its own problems without mutual help and cooperation.

First, observe the relationships and arrangements of the outer hexagrams.

The first line of the outer hexagram represents the increase or decrease in financial balance, the second line represents exchange rates, and the third line represents the increase or decrease in financial balance.

The global market is chaotic.

Key Points of Analysis by I Ching

The number three is important. One becomes two, and two becomes three.

First, determine one origin point. Next, judge the situation with two points of yin and yang. Determine three elements, decide the arrangement of elements based on their functions, and set the relationships. By combining the three key points, derive eight patterns. Extract the characteristics and functions of each pattern.

For example, when analyzing the passage of time, determine the unit period. If the unit period is set to one year, observe three years as points. Judge the situation of each point in time with yin and yang. The first line is the third year, the second line is the second year, and the third line is the first year. I Ching is a reverse number. If the yin and yang of three years ago is the first line, the yin and yang of two years ago is the second line, and the yin and yang of one year ago is the third line, eight patterns of changes in the flow of time will appear.

When grasping the overall picture of the world market, First, broadly classify and position countries with a positive (surplus) current account and countries with a negative (deficit) current account. Next, classify countries with high and low exchange rates, and countries with strong and weak currencies. Then, further divide the financial account.

In this way, position each country in the world market based on the outer hexagram. Then, clarify the roles and functions between countries.

For detailed analysis, For example, in the current account, first determine whether it is a deficit or surplus to know the yin and yang. Then, delve into the details.

The current account consists of the trade balance and the service balance, so we will look at the trends by separating exports and imports into positive and negative. Similarly, we will look at the trends in the financial account by separating them into positive and negative to observe signs of change. At the detailed stage, it is not necessary to be particular about the form, but it is better to think simply by separating into positive and negative.

In viewing the current account, exports are positive, imports are negative, increases are positive, and decreases are negative. When the current account is in surplus and exports are increasing, it can be viewed as positive-positive-positive. In this way, it is also effective to observe the trends of the current account of the country.

The global market is driven by the large circulation of “money.” The large circulation of “money” causes flows through transactions, resulting in ups and downs, increases and decreases, ins and outs, ON and OFF, surpluses and shortages, openings and closings, expansions and contractions, deficits and surpluses. This is the concept of yin and yang. Yin and yang arise from the distinction between self and others, inside and outside. Yin and yang seek balance. Therefore, they generate attraction and repulsion, resulting in action and reaction. The entropy of the market increases.

Moreover, transactions are equivalent exchanges. The economic value within the scope of transactions is zero-sum balanced. Money flows from buyers to sellers. Money flows from sellers to buyers. This bidirectional flow forms transactions. Therefore, the economic value within transactions is preserved as zero-sum.

Interactions between countries arise from action and reaction, relationships. Where there is yin, there is yang. A country’s current account balance maintains equilibrium by periodically repeating deficits and surpluses.

When a country (self) trades with the global market, a current account balance arises. Trading with the global market creates relationships between inside (yin, hidden) and outside (yang, visible). The current account balance results in ins and outs, surpluses and deficits, surpluses and shortages, yin and yang. Deficits and surpluses periodically alternate, causing the circulation of goods and money.

Whether the citizens can produce or procure enough resources to maintain a minimum standard of living. This is a decisive indicator.

This is reflected in the current account balance.

Exchange rate fluctuations (yen appreciation, yen depreciation) arise from the current account balance.

The sun represents a current account surplus and yen appreciation. Lesser yin represents a current account surplus and yen depreciation. Lesser yang represents a current account deficit and yen appreciation. Greater yin represents a current account deficit and yen depreciation.

Exchange rate fluctuations result in lending and borrowing. Lending and borrowing result in changes in the financial balance.

Qian represents an increase in the current account balance, yen appreciation, and an increase in the financial balance. Dui represents a decrease in the current account balance, yen appreciation, and an increase in the financial balance. Li represents an increase in the current account balance, yen depreciation, and an increase in the financial balance. Zhen represents a decrease in the current account balance, yen depreciation, and an increase in the financial balance. Xun represents an increase in the current account balance, yen appreciation, and a decrease in the financial balance. Kan represents a decrease in the current account balance, yen appreciation, and a decrease in the financial balance. Gen represents an increase in the current account balance, yen depreciation, and a decrease in the financial balance. Kun represents a decrease in the current account balance, yen depreciation, and a decrease in the financial balance.

The hexagrams that form opposites are Qian and Kun, Dui and Gen, Li and Kan, Zhen and Xun.

The current account balance responds to fiscal policy. Additionally, exchange rates are influenced by the current account balance and finance, and households respond accordingly. Finance is influenced by fiscal policy and exchange rates, and businesses respond accordingly.

The fluctuations in exchange rates, yin and yang, affect trade and influence the current account balance. The yin and yang of the current account balance influence exchange rates. Furthermore, the yin and yang of exchange rates influence monetary policy and, in turn, affect government bonds. The yin and yang of government bonds influence fiscal policy. Additionally, the yin and yang of exchange rates affect prices and influence households. Moreover, the impact of the yin and yang of the current account balance and exchange rates is reflected in corporate performance. By quantifying the impact on each part, future predictions and appropriate policies can be clarified.

Post-war, Japan and the United States had a complementary relationship, as shown in the outer hexagrams. High economic growth, the bubble, and the burst of the bubble were all influenced by the relationship with the United States and the complementary relationship. The misfortune of both countries lies in the fact that they prioritized their own convenience without taking policies that would improve the situation for both countries based on this premise. Especially after the Plaza Accord and the burst of the bubble, the imbalance between fiscal policy and finance was a significant blow to both countries.

During the high economic growth period, the inner hexagrams were Xun or Kan. During the high economic growth period, fiscal policy and finance were balanced, but after the Plaza Accord, the influence of fiscal policy and finance expanded.

During the fixed exchange rate era, the price of gold was the standard. However, the fixed exchange rate fundamentally undervalued the yen, making it yin.

After the burst of the bubble, China began to cast a shadow between Japan and the United States. The relationship between the United States, Japan, and China is a triangular relationship.

Now, if the relationship between the United States and China is severed, the relationship between the United States, China, and Japan will fall into a conflicting relationship. The global market will return to chaos and the state of Taiji.

Income is expenditure, and expenditure is income. Therefore, no matter how much you suppress expenditure through discounts, if income decreases accordingly, the net effect is zero. Sales are costs, and costs are sales. If you endlessly cut costs, sales will also decrease. Prices have meaning, and costs have meaning. Prices are the result, and the meaning lies in the content. It is the process.

Prices are the result, the phenomenon that appears on the surface. The substance works behind the scenes. The content is in the middle, in the intermediate. In other words, what moves the market is the process. Water, in the process of flowing, moistens the soil, nurtures plants (trees), and sustains people. Money is the same. In the process of flowing, it creates employment and nurtures businesses.

What is important in the result is how it worked in the process. If you simply reduce costs and pass everything on to prices to seek cheapness, the market will dry up, and the market will become desolate. In the end, people will not be able to live.

What is required of prices is appropriateness, not cheapness. It means increasing savings after covering costs.

The sky is high, and the earth is low.

When the heavens and the earth are blocked, people cannot live in confinement.

The sky is high, and the earth is low, nourishing all things. Water circulates evenly across the earth, nurturing plants and quenching the thirst of living beings. Those who go against the heavenly principles and monopolize profits will be cursed by all things.

The heavenly principles lie in the harmony between heaven, earth, and humanity. Eventually, the heavenly mandate will descend.

The heavenly principles exist for those who nourish all things.

What is required in the economy is the harmony and balance of heaven, earth, and humanity. Heaven is gold. Earth is goods. Humanity is people.

If one is only obsessed with heaven, the earth will not receive the blessings of heaven, and people will not be able to live.

Just as human labor compensates for the excesses and deficiencies of goods, money circulates through the market. If heaven is separated from the earth and humanity, heaven will return to chaos. The earth can produce blessings by receiving the light of heaven. Humanity cannot control heaven and earth. Only by understanding the principles of heaven and following wisdom can humanity sustain itself.

Heaven, earth, and humanity.

The small hexagram and the large hexagram are arranged according to the characteristics of heaven, earth, and humanity.

In the small hexagram, the first line represents the earth, the second line represents humanity, and the third line represents heaven.
In the large hexagram, the first and second lines represent the earth, the third and fourth lines represent humanity, and the fifth and top lines represent heaven.

In the small hexagram, the inner hexagram consists of the first line as enterprise (earth), the second line as accounting (humanity), and the third line as finance (heaven).
The outer hexagram consists of the first line as finance (earth), the second line as exchange rates (humanity), and the third line as the current account balance (heaven).

In other words, enterprises and households form the earth, fiscal policy and finance form humanity, and exchange rates and the current account balance form heaven.
Enterprises and households, fiscal policy and finance, and exchange rates and the current account balance can be analyzed by considering enterprises and households from the perspective of the real economy.
Fiscal policy and finance can be viewed as an internal whole, while exchange rates and the current account balance can be analyzed as external functions.

Exchange rates and the current account balance are, so to speak, interfaces.
They connect the domestic market with the global market.

Attention should be paid to the fluctuations in exchange rates.

A strong dollar means a weak yen, and a strong yen means a weak dollar. When one rises, the other falls.
They are in a paired relationship.
In other words, international transactions cause currencies to move in tandem, resulting in fluctuations.
However, the actual international market involves multiple countries trading simultaneously, so it is not determined solely by bilateral transactions.

Exchange rates are also influenced by the overall balance and harmony of the market.
Fluctuations are determined by the direction of money flow.
The direction of money flow is determined by buying and selling, and borrowing and lending.
In other words, it is determined by the direction of the flow of money and goods.
Borrowing and lending, which do not involve the flow of goods, are extensions of capital transactions.
Borrowing and lending create an equal amount of claims and debts in the vertical direction of the money flow.
Claims and debts work in opposite directions.

Why do exchange rates fluctuate? It is due to the effects of trade between countries.
Trade is the connection of money between countries.
Domestic transactions use the currency of that country.
Trade compensates for the surplus and shortage of goods through market transactions between countries.
The surplus or shortage of goods arises from the needs of the citizens’ lives.

Thus, the current account balance and exchange rates interact with each other, and exchange rates respond to households.
The flow of money and goods due to trade, and the borrowing and lending to compensate for the surplus and shortage of money, cause fluctuations in currency values.
The surplus and shortage arising from the buying and selling of goods are compensated by borrowing and lending, resulting in a balanced zero-sum.

The international market formed by exchange rates and trade creates opposites, yin and yang, due to the characteristics of exchange rates and trade.
In other words, if there is a country where exchange rates rise, there will be a country where they fall in opposition.
And the total sum of the market as a whole balances to zero-sum.
If there is a country with a current account surplus, there will inevitably be a country with a deficit, and the total sum balances to zero-sum.
From a single transaction, positive and negative, in and out, front and back, up and down, yin and yang arise.

There are relationships of mutual generation and mutual overcoming between countries, and if each country correctly understands its own circumstances and its role in the global market, and harmonizes with other countries, the global market will balance and harmonize.

The origin of this lies in the harmony and balance of heaven, earth, and humanity, and of gold, goods, and people.

Yuan Heng Li Zhen.

Yuan is the beginning of all things. It corresponds to spring and benevolence. Set your aspirations at the beginning.
Heng is the growth of all things. It corresponds to summer and propriety. Correct your conduct.
Li is the nurturing of all things. It corresponds to autumn and righteousness. Do not neglect cultivation, self-discipline, and training.
Zhen is the completion of all things. It corresponds to winter and wisdom. Study and refine your knowledge.

The phases of each country’s economy continuously change and circulate while complementing each other.

Benevolence, righteousness, propriety, and wisdom.

Tariffs, regulations, and interest rates all have their meanings, functions, and roles. It is simplistic to blindly label them as bad. However, if used incorrectly without understanding their meanings, functions, and roles, they can become harmful, just like medicine. Medicine must be prescribed according to the illness and symptoms. Just as there is no universal medicine, the same applies here. Depending on how they are used, they can become either poison or medicine.

We must not forget that the economy exists because there are counterparts. It is a transaction. Because it is a transaction, there are two sides, yin and yang. If there is a rising country, there is a falling country. No country can continue to rise forever.

Everything has its pros and cons. There are good aspects and bad aspects. The key is balance. Depending on how you view and interpret things, weaknesses can become strengths, and strengths can become weaknesses. Fortune and misfortune are intertwined like a rope. A crisis can be an opportunity, and an opportunity can turn into a crisis if one becomes complacent. Growth contains signs of decline, and decline hides the seeds of growth.

When you notice bad aspects, look for the good ones. When you see good aspects, do not turn a blind eye to the ugly ones.

In good times, prepare for bad times. In bad times, place hope in the future.

Balance is achieved through mutual support.

When in distress, change; when you change, you will find a way; when you find a way, you will endure.

Harmony and balance are maintained through mutual support and assistance.

The mystical elements of divination should be eliminated as much as possible, and efforts should be made to make it a scientific method. For this purpose, it is important to design the major and minor hexagrams.

When designing the major and minor hexagrams, focus on the composition, assembly, positioning, function, relationships between the elements, and their interactions.

They are composed of the current account balance, exchange rates, and financial balance. They are assembled by elements that connect the domestic and international markets. The positioning is as follows: the first line is the current account balance, the second line is the exchange rate, and the third line is the financial balance. The current account balance is the contact point between the international and domestic markets. The function of the exchange rate is the exchange of currencies. The financial balance backs up the current account balance.

The relationship between the exchange rate and the current account balance is key to how the movements of the exchange rate and the current account balance are linked. Bilateral exchange transactions have a front-and-back relationship. A strong dollar and a weak yen hide the counteracting movements of a strong dollar and a weak yen. Therefore, the domestic function is a weak yen. When the financial balance is in surplus, it is in surplus. The current account balance and the financial balance are complementary, having a front-and-back and mutually exclusive relationship. Additionally, the trend of the exchange rate has a positive effect on households through prices.

A strong yen pushes up the external prices of export goods, suppressing exports, while conversely lowering the prices of import goods, promoting imports. When interest rates are lower than overseas levels, there is a movement to raise funds domestically and operate them overseas.

If you sell yen and try to operate overseas, the yen will become cheaper.

Using Japan’s bubble as an example, consider the mechanisms working behind the scenes in exchange rates, current account balance, finance, fiscal policy, land prices, stock prices, and prices, as well as overseas, finance, fiscal policy, households, and companies.

The trigger for the bubble was the appreciation of the yen due to the Plaza Accord. The domestic market had reached saturation and was transitioning from a period of high growth to low growth. The part that could no longer be earned from the main business was earned from non-core businesses, resulting in funds flowing into stocks and land, leading to asset inflation, or a bubble. However, during this period, prices remained relatively stable. Additionally, when the economy overheated, Black Monday occurred in the United States, and financial tightening measures could not be taken. This resulted in the promotion of the bubble. Ironically, during the bubble period, fiscal conditions improved. The bubble left behind excess facilities, excess employment, and excess debt as aftereffects. These became non-performing loans. Non-performing loans are also non-performing debts on the opposite side.

Using the bubble as an excuse, the forced lowering of land and stock prices resulted in the market bottoming out and still not recovering.

After the Plaza Accord in September 1985, the yen appreciated significantly, and initially, the J-curve effect increased the surplus (the peak of the surplus was $94.1 billion in 1986, 4.4% of GNP), but the surplus steadily decreased, shrinking to $33.7 billion (1.1% of GNP) in 1990.

However, the current account surplus turned to increase again, rapidly increasing to $90.2 billion (2.6% of GNP) in 1991, and further reaching a record high of $125.9 billion (3.3% of GNP) in 1992.

The trade balance contributed the most to the expansion of the current account surplus since 1991. Between 1990 and 1992, the current account surplus increased by $92.2 billion, and during this period, the trade balance surplus increased by $66.2 billion.

The export amount is decomposed into quantity factors and price factors.

The increase in export amounts in 1991-1992 was mainly due to (1) a small contribution from export quantities, (2) an increase in export prices in dollar terms, and (3) the progress of high value-added exports in the form of “upgrading of export items.”

The overall export quantity remained almost flat because (1) exports to the United States remained flat, (2) exports to the EC were on a declining trend, but (3) exports to NIEs and ASEAN increased. Although not included in this estimate, exports to China and Latin America also increased in 1992 (Cabinet Office website).

From 1988 to 1992, the fiscal balance was in surplus (World Data Book).

It is important to note that during the bubble period, both export and import volumes did not change much.

Based on these premises, let’s design the hexagrams. First line: companies Second line: households Third line: fiscal policy Fourth line: finance Fifth line: exchange rate Top line: current account balance First line: stock prices Second line: prices Third line: growth rate Fourth line: interest rates Fifth line: exchange rate Top line: crude oil prices.

Divination should also eliminate as many mystical elements as possible and strive to make it a scientific method. To achieve this, it is important to design the major and minor hexagrams.

When designing the major and minor hexagrams, consider the composition, assembly, positioning, function, relationships between the elements, and their interactions.

The relationship between the exchange rate and the current account balance is key to how the movements of the exchange rate and the current account balance are linked. Bilateral exchange transactions are in a complementary relationship. A strong dollar and a weak yen hide the counteracting movements of a strong dollar and a weak yen. Therefore, the domestic function of a weak yen When the financial balance is in surplus, it is in surplus. The current account balance and the financial balance are in a complementary relationship, and they are in a complementary and antagonistic relationship. Moreover, the trend of the exchange rate has a positive effect on households through prices.

A strong yen has the effect of raising the external prices of export goods, suppressing exports, and conversely, lowering the prices of imported goods, promoting imports. When interest rates are lower than overseas levels, there is a movement to raise funds domestically and operate them overseas.

If you sell yen and try to operate it overseas, the yen will become cheaper.

The trigger for the bubble was the appreciation of the yen due to the Plaza Accord. The domestic market had reached saturation and was transitioning from a period of high growth to low growth. The part that could not be earned in the main business was earned outside the main business, resulting in funds flowing into stocks and land, leading to asset inflation, or the bubble. However, during this period, prices remained relatively stable. Also, when the economy overheated, Black Monday occurred in the United States, and financial tightening measures could not be taken. This resulted in promoting the bubble. Ironically, during the bubble period, the fiscal situation improved. The bubble left behind excess equipment, excess employment, and excess debt as aftereffects. These became non-performing loans. Non-performing loans are also non-performing debts on the opposite side.

Using the bubble as an excuse, forcibly lowering land and stock prices resulted in the market bottoming out and still not recovering.

However, the current account surplus turned to increase again, rapidly increasing to $90.2 billion (2.6% of GNP) in 1991, and further reaching a record high of $125.9 billion (3.3% of GNP) in 1992.

The trade balance contributed the most to the expansion of the current account surplus after 1991. Between 1990 and 1992, the current account surplus increased by $92.2 billion, and during this period, the trade balance surplus increased by $66.2 billion.

The export amount is decomposed into quantity factors and price factors by definition.

The increase in export amounts in 1991-1992 was mainly due to (i) a small contribution from export quantities, (ii) an increase in export prices in dollar terms, and (iii) the progress of high value-added exports in the form of “upgrading export items.”

The overall export quantity remained almost flat because (i) exports to the United States remained flat, (ii) exports to the EC were on a declining trend, but (iii) exports to NIEs and ASEAN increased. Although not included in this estimate, exports to China and Latin America also increased in 1992 (Cabinet Office website).

From 1988 to 1992, the fiscal balance was in surplus (World Data Book).

It is important to note that during the bubble period, both export and import volumes did not change much.

Based on these premises, let’s design the hexagrams. First line: companies, second line: households, third line: fiscal policy, fourth line: finance, fifth line: exchange rate, top line: current account balance First line: stock prices, second line: prices, third line: growth rate, fourth line: interest rates, fifth line: exchange rate, top line: crude oil prices

The problem with exchange rates is that there are currency transactions unrelated to trade. So, what determines the yin and yang of exchange rates? This can also be said for other lines.

The problem with foreign exchange is that currency transactions occur in areas unrelated to trade. So, how do we determine the yin and yang in foreign exchange? This can be said for other lines as well.

What determines yin and yang?

If there are winners, there are also losers. Winning and losing are common in the world, but the fundamental match is one. From one match, victory and defeat, yin and yang arise.

There are listeners and speakers. However, the story is one. Although yin and yang arise from listening and speaking, the essence of the story is one.

When the yen rises against the dollar, it means the dollar falls against the yen. A strong yen and a weak dollar mean a weak dollar and a strong yen.

If a strong dollar and a weak yen are considered yang, then a weak yen becomes yang. If we consider Japan and the United States separately and regard the high value of one’s own currency as yang, when the dollar is yang, the yen becomes yin.

The key is whether the effect is positive or negative. Originally, if a strong yen reduces the current account surplus, that is correct. If the surplus does not decrease but increases, that is incorrect. In that case, it is optional to consider a strong yen as yang and the reduction of the current account surplus as yin. It should be set based on the effect.

Since yin and yang are determined by the initial setting, they should be defined by their function rather than their appearance or form. Especially for exchange rates. Also, it is sometimes more appropriate to use increases and decreases as the basis rather than raw numbers.

It is not a matter of whether a surplus or deficit, or a strong or weak yen, is right or wrong, or which is beneficial or harmful. It is about clarifying, based on data, how and where a surplus or deficit, or a strong or weak yen, affects and what results it brings. In conclusion, what is bad is when there are decisive impacts on people’s lives, such as rapid inflation, chronically high unemployment rates, shortages of goods, disruptions in logistics, rising bankruptcy rates, widening income disparities, and an increase in homeless people.

In economics, what you want to know must be set as the initial problem. Discussing economics meaninglessly and aimlessly leads to nothing.

What is a bad state, and what must be avoided? Since economics is an activity for living, economic collapse means that people’s lives cannot be sustained.

A state where life cannot be sustained. Phenomena or situations where life becomes extremely difficult.

It appears in places such as an increase in crime, the occurrence of starvation, and an increase in homeless people.

The balance of people, goods, and money is broken. There is an extreme shortage of necessities for living, or there is no work to earn living expenses. Many people are unemployed. The minimum income necessary for living cannot be obtained. The gap between rich and poor widens, hindering fair distribution. Also, prevent situations where excessive “money” flows into the market, making it impossible to control prices.

For that purpose, indicators such as economic conditions, prices, interest rates, exchange rates, stock prices, land prices, and income are used.

To keep the economy healthy and functioning normally, yin and yang should be defined to monitor market trends. Yin and yang should be determined to fulfill this purpose.

For example, if a strong yen reduces the current account surplus, which is the normal state, then based on that premise, the positioning of the current account balance and exchange rate should be set, and what to consider as yin and yang should be determined.

In short, it is about clarifying whether heaven, earth, and people are in harmony.

Determine the purpose. Without being bound by theory.

The Structure and Function of the Current Account Balance.

Yi is a means of analysis.

What are the principles for designing Yi as a scientific model?

Yi analysis clarifies the structure and mechanisms of the economy, and the details are refined through mathematical formulas. Once the structural movements are understood, the details of the causal relationships are clarified through mathematical formulas.

Examine the correlations and causal relationships between indicators. If based on the same data, link them.

During the high-growth era, indicators that had strong correlations may lose their correlations entirely or even become inversely correlated during the low-growth era. Therefore, it is important to remember that relationships are not absolute and can change depending on the environment, situation, stage, and assumptions. It is necessary to constantly confirm the power relationships and the direction of forces acting on the structure.

There are internal and external forces, forces of entry and exit, forces of upward and downward movement, forces of increase and decrease, parallel forces, and forces of front and back.

Phenomena that appear on the surface are influenced by the underlying structure. Behind the current account balance, the financial balance is at work.

Yi has a complete binary tree structure with six levels. Edit objects at the three levels.

Analyze the structure of the current account balance, what acts on which parts, and what moves them. Then clarify the workings between the indicators.

First, the surpluses and deficits of the current account balance, financial balance, fiscal balance, household balance, and corporate balance are zero-sum balanced and consistent. Therefore, add the exchange rate to these and edit the grand hexagram.

The current account balance, exchange rate, and capital balance work to adjust internal and external disparities and balance the world market. Therefore, the three indicators of the current account balance, exchange rate, and financial balance form a minor hexagram.

The current account balance connects the domestic market with the world market, thus it is considered the sky. The exchange rate adjusts and balances the levels of the domestic market and the world market, thus it is considered human. The financial market works behind the current account balance.

Fiscal, household, and corporate sectors realize production, distribution, and consumption, making the economy work. Fiscal policy balances the national economy, thus it is considered the sky. The household sector supports people’s lives, thus it is considered human. The corporate sector procures and produces the goods necessary for people to live and distributes “money” through work, thus it is considered the earth.

Behind the current account balance, the financial balance works and controls the surface current account balance. The essence of the financial balance is debt.

What functions does debt have? Debt is also a loan. In other words, borrowing and lending are two sides of the same coin. Those who borrow take on debt in exchange for cash. Borrowing is a liability and a debt. Debt is a claim. A claim is a savings. In other words, borrowing generates cash, debt, and claims. Cash, debt, and claims are equivalent. Claims are assets. Cash, debt, and claims have quantity and direction. This is the basis of their function. In other words, debt generates cash, liabilities, assets, debt, and claims, and debt and claims have functions with direction and value.

The current account balance consists of the trade balance and the service balance. The trade balance means the difference between the import and export of goods. The import of goods means the entry of goods and the exit of “money.” Export means the opposite. The service balance works similarly.

Since the balance is the positive and negative of “money,” the profit and loss, increase and decrease of the balance are determined by entry and exit. The financial balance (capital balance) working behind the scenes is determined by the entry and exit of funds based on financial transactions. This leads to the increase and decrease of foreign exchange reserves.

The function of the current account balance affects the upper limit of the exchange rate. The upper limit of the exchange rate affects the increase and decrease of the volume of imports and exports through the prices of goods and services. It also affects import prices and is reflected in prices. Furthermore, it influences the economy and is reflected in the unemployment rate.

Such a structure is tested through the hexagram model.

The Structure and Function of Foreign Exchange

What drives foreign exchange?

What are yen appreciation and yen depreciation? In many cases, it refers to the yen becoming stronger or weaker against the key currency. Foreign exchange is relative; if the yen rises, the counterpart currency falls. If the yen falls, the counterpart currency rises.

Currently, the key currency is the dollar, so yen appreciation means yen appreciation and dollar depreciation, and yen depreciation means yen depreciation and dollar appreciation.

The foreign exchange rate system refers to the system that determines the exchange rate, i.e., the exchange ratio between currencies, in foreign exchange transactions.

Foreign exchange systems are broadly divided into three categories: the “fixed exchange rate system,” which fixes the exchange rate at a certain value, the “floating exchange rate system,” which allows the rate to fluctuate according to market supply and demand, and the “intermediate exchange rate system,” which is positioned between the two. There are also cases where they are broadly divided into three categories: the “hard peg system,” the “soft peg system,” and the “free float.” The “peg system” refers to the fixed exchange rate system.

The fixed exchange rate system includes the currency union (hard peg system), the currency board system (hard peg system), and the single currency fixed rate system (soft peg system). The intermediate exchange rate system includes the currency basket system (soft peg system), the crawling peg system (soft peg system), and the exchange band system (soft peg system). The floating exchange rate system includes the managed floating rate system (soft peg system) and the free floating rate system (free float).

Japan adopts the managed floating exchange rate system.

What are the factors that cause foreign exchange to rise and fall? Factors that move foreign exchange include the current account (trade), interest rate differentials between domestic and foreign markets, monetary policy, exchange rate policy, speculation, prices (purchasing power parity), crude oil prices, stock prices, and foreign exchange intervention. The basic principle is to correct domestic and foreign disparities.

Factors that move foreign exchange are:

Current account (trade balance, service balance).
Capital movement.
Speculation.
Intervention.
Arbitrage, etc.

Generally, foreign exchange is influenced by the trade balance, capital movement, and speculation, but foreign exchange intervention plays an important role at decisive moments in determining the direction of the economy.

Famous foreign exchange policies include the Nixon Shock and the Plaza Accord.

Foreign exchange, in conjunction with household (prices), influences the current account and financial account to determine the direction of the economy. The financial account controls companies through lending and interest rates. Fiscal policy controls the market through tariffs, subsidies, income redistribution, and easing or tightening of regulations.

Foreign exchange reserves are funds used by monetary authorities for foreign exchange intervention. They are reserve assets used in cases such as currency crises, where it becomes difficult to repay foreign currency-denominated debts to other countries. (Bank of Japan)

Foreign exchange is a driver of the economy.

Furthermore, as the idea of purchasing power parity suggests, foreign exchange is said to have a function of equalizing the global market. However, this is greatly constrained by the nature of each country’s market and its political and economic system.

If a country imposes its policies solely for its own convenience without considering the circumstances of the counterpart country, it may lead to the export of poverty and poor working conditions.

From the perspective of the international market, the external hexagram turns into the internal hexagram. Reading Japan’s economic data in dollar terms results in the overall hexagram, while the reverse hexagram is the opposite. Understanding a country’s position, function, and role in the global market cannot be achieved from a domestic perspective alone.

The appearance rate of hexagrams holds significant meaning.

Structure and Function of the Financial Account

The financial account refers to the income and expenditure from borrowing and lending money.

The financial account operates behind economic entities such as households, businesses, government finances, and the current account.

The functions of finance are:

Supplying and circulating money through markets via businesses, households, and government finances.
Controlling the circulation of money.
Facilitating the transfer of funds from entities with a surplus to those with a deficit.
Maintaining the balance between stock (long-term function of money) and flow (short-term function of money).
Pooling funds (savings and reserves).
Adding time value to money.

Economic indicators include prices, stock prices, land prices, income, and exchange rates.

Among economic indicators, interest rates and tax rates are manageable indicators.

The financial account operating behind the current account includes:

Direct investment.
Securities investment.
Financial derivatives.
Other investments.
Foreign exchange reserves.

International financial crises are often triggered by sudden fluctuations in exchange rates, leading to many instances where financial crises are seen as currency crises. The typical example is the Asian financial crisis.

A currency crisis refers to a situation where the external value of a country’s currency rapidly declines due to concerns about debt repayment ability, significantly impacting economic activities.

In the 1990s, crises occurred in emerging countries like Mexico, Thailand, Indonesia, South Korea, Russia, and Brazil, which had effectively pegged their exchange rates to the US dollar. These crises were triggered by unsustainable current account deficits under the liberalization of capital movements and active capital transactions.

The causes of the Asian financial crisis in 1997 are considered to be the structural vulnerabilities of Asia, such as the mismatch in currency and duration in financial institutions’ funding and the excessive reliance on bank loans for corporate funding.

At that time, Asian financial institutions were raising short-term foreign currency funds, converting them into local currency, and making long-term loans. As a result, the significant depreciation of local currencies increased the burden of repaying foreign currency-denominated debts, leading to a series of bankruptcies in both the corporate and banking sectors as foreign investors refrained from reinvesting (Bank of Japan).

Currency crises are often interconnected and linked because currencies are closely tied to finance.

The Plaza Accord, the bubble, the Asian financial crisis, and the Lehman shock may appear as independent phenomena on the surface, but they are connected behind the scenes. Moreover, various signs were already appearing behind the scenes before they became apparent on the surface.

The inner hexagram represents the domestic economic state.

Total income signifies the sky. Total expenditure signifies people. Total production signifies the earth.

The first line represents corporate balance, the second line represents household balance, and the third line represents finance. The sky represents the political system, economic system, military power, production capacity, and growth stage. People represent the total population, labor force, income, living standards, and unemployment rate. The earth represents resources, major industries, and location conditions.

Structure and Function of Finance

The core function of finance is the redistribution of income. The redistribution of income varies significantly depending on the tax system.

Generally, the current account refers to the balance arising from a country’s transactions with overseas. However, the current account exists not only for the country but also for government finances, households, businesses, and finance. The current account refers to the function of flow, but behind the flow function, an equivalent financial account (capital account) operates. Financial transactions refer to borrowing and lending money, while the current account refers to buying and selling.

Behind the current account, an equivalent financial account operates.

The current account is positive, and the financial account is negative. Goods are positive, and money is negative. The current account appears as a surplus or deficit of goods, while the financial account appears as a surplus or deficit of money.

The financial account operates behind the current account because money circulates, which is a natural result. Money can be used because it is possessed, and without money, it cannot be used. The question is how to obtain money. To obtain money, one must sell goods or borrow money. By repeating borrowing and lending, buying and selling, money circulates.

Money is different from water or air. It is an artificial creation. To utilize money in the market, it must be distributed and obtained in advance. The direct means of obtaining money are selling goods or working. If there are no goods to sell or one cannot work, borrowing is an indirect means.

If there is no certain amount of money in the market, buying and selling cannot occur, so initially, funds are supplied to the market through borrowing and lending. Borrowing and lending form payment reserves and stock, while direct means such as buying and selling and labor form the flow.

A fiscal deficit is the result of the fiscal balance, that is, the flow. If the flow is the visible function of money, the stock operates equally behind the scenes. Stock includes investment and savings.

When considering the causes of a fiscal deficit, it is necessary to consider the balance between investment and savings. The balance between investment and savings is called the IS balance.

Simplifying the definition of GNI from the expenditure side:

GNI = Consumption + Investment + Government + Exports – Imports

Here, government includes both government final consumption expenditure and government investment expenditure. Exports minus imports include net factor income from abroad. The above equation can be written in symbols as follows:

Y = C + I + G + EX – IM (1)

From the perspective of income disposition:

Income = Consumption + Taxes + Savings Y = C + T + S (2)

From equations (1) and (2):

S – I = (G – T) + (EX – IM) (3) Private sector savings surplus = Government fiscal deficit + Current account surplus

Equation (3) is the savings-investment balance equation (IS balance equation).

Total supply is consumption + private savings (households, businesses) + taxes + imports Total demand is consumption + private investment (households, businesses) + government expenditure + exports

By analyzing the differences between private savings and investment, taxes and government expenditure, and imports and exports from both the monetary and goods perspectives, the economic state can be clarified.

Since the high-growth era, Japan’s economy has experienced an excess of private savings. The excess savings in the private sector have led to an excess of money and goods. Since the 1990s, government finances have experienced fiscal expenditure exceeding tax revenue, resulting in fiscal deficits. The deficit leads to a shortage of goods, meaning a state of money and goods shortage. In overseas transactions, until the current account deficit in 2011, Japan had maintained a current account surplus since the second oil shock. The current account surplus was accompanied by an equivalent financial account surplus (capital outflow). This means that goods and money flowed overseas in proportion to the surplus (goods shortage, money shortage).

In the latter half of economic growth, the market became saturated, leading to a plateau in corporate profits, resulting in an imbalance between investment and savings. Even before that, excess household savings were being channeled into corporate investment funds, but after the bubble burst, corporate savings also tended to increase, contributing to the fiscal deficit.

Japan has long experienced an excess of private savings, particularly in households. As a result, there has been a tendency for an excess of goods and money, leading to higher unemployment rates.

One of the factors behind the fiscal deficit is the end of high growth. It is a matter of timing.

Private investment in macroeconomics can be broadly categorized into capital investment, housing investment, and inventory investment.

Structure and Function of Households. Price Fluctuations and Functions.

The Structure and Function of Households. Price Fluctuations and Their Impact.

Households are the core of consumption and, in response to exchange rates, form prices. Consumption is also the final stage of the economy. It is the goal of the economy. Households provide labor to companies and earn income (living expenses). Households pay taxes, forming the fiscal revenue.

The essence of households is living expenses, with the basics being food, clothing, and shelter. In recent years, energy and information have been added to this.

Households borrow from financial institutions to invest in housing.

If the core of households is living expenses, then households are the main factor in creating prices and are also the entities most affected by price fluctuations.

Households form consumption, and companies handle production. Households create demand, and companies handle supply. Household investment is in housing. Company investments are in equipment and inventory.

Price fluctuations include inflation (positive) and deflation (negative). Underlying these are the positive and negative aspects of people, the surplus and shortage of goods (positive and negative), inflows and outflows (positive and negative), and the surplus and shortage of money (positive and negative).

From living, income (negative) and expenditure (positive) arise, creating a balance.

Prices are formed by the relationship between people, goods, and money.

There are prerequisites for price formation.

Firstly, the causes of price fluctuations lie in people, goods, and money. For example, the causes of inflation include employment conditions, wages, psychology, shortages of goods, excess money, and exchange rate fluctuations.

Secondly, as can be seen from the fact that modern economies are based on debt, with currency formed under promissory notes, receipts, and government bonds, debt is fundamental. Debt exists because of interest, which forms the time value of money. Prices are influenced by the time value of money. When interest is at work, prices continuously rise in accordance with interest.

Thirdly, in the global market, there is a force that tries to balance prices. This is called purchasing power parity, and in the long term, the global market converges to a certain level. This is referred to as market entropy. Exchange rates have a role in controlling global market prices.

It is said that purchasing power parity influences prices and has a significant impact on exchange rates. The idea is that the price levels in international markets converge to a certain level in the long term.

These are the fundamental premises when considering prices.

It is difficult to predict prices using only formulas. The difficulty in prediction is caused by human intentions and desires. Human intentions and desires are influenced by individual subjectivity, and there is a tendency to outsmart others, making it even more troublesome.

Whether it is prices, exchange rates, or stock prices, multiple factors are intricately intertwined. Therefore, it is difficult to make short-term predictions.

However, distinguishing between changeable and unchangeable factors can simplify relationships.

The determinants of prices include income and unemployment rate (people), supply and demand relationships, surplus and shortage of goods, disasters (goods), speculation (money, people), crude oil prices (energy prices) (goods), the circulation of money (money), monetary policy, interest rates (money), economic conditions (money, people, goods), fiscal policy, taxes, economic policy (money), asset values, land prices, stock (goods, money), and exchange rates (money).

The troublesome aspect of prices is that while people and goods are finite, money is not and can expand infinitely. This is why prices can sometimes run out of control due to the open-ended nature of currency value.

When the money supply cannot be controlled, prices run out of control.

The causes of inflation include imbalances in supply and demand, rising prices of raw materials such as oil and fresh food, exchange rate fluctuations, wars, accidents, natural disasters, cartels like OPEC, hoarding, tariffs, and policy changes such as tax reforms.

Imbalances in supply and demand can be seen from the demand side as demand-pull inflation and from the supply side as cost-push inflation.

As for the major factors of household formation, initial factors include prices, income, changes in government bonds, or unemployment rates, interest rates, exchange rates, and growth rates.

Structure and Function of Corporate Balance.

Corporations are the centers of production.

Corporations have two roles: production activities and distribution activities.

Corporations produce materials, apply them to the market, and earn sales and revenue. Corporations create employment and distribute income.

Balance and profit and loss are different. Balance refers to the difference between income and expenditure of money, meaning the balance. Profit and loss refer to the function of money within a unit period.

From the profit and loss statement, the flow of money is not visible. To understand the flow of money, it is necessary to look at the cash flow. This point requires attention.

Looking at the cash flow of all industries, it can be seen that financial cash flow rapidly declined due to the bursting of the bubble. Financial cash flow hit bottom in 2004 and once recovered, but declined again due to the Lehman shock.

When considering the impact of corporations on the economy, it is necessary to understand the long-term and short-term functions of money. The short-term function of money forms the flow, and the long-term function forms the stock.

The flow affects households through prices and income.

The stock becomes savings and investment.

The balance between savings and investment also affects prices. Savings are the money or goods that were not used for consumption out of what was produced or earned this year. Investment refers to the money or goods used for future supply expansion out of what was produced or earned this year. Both savings and investment can be considered long-term functions of money.

Supply is based on production, and demand is based on consumption. Income is provided by being involved in production, and expenditure occurs through consumption. Surplus income becomes savings, and savings are turned into investment, so it should be a three-sided equivalence, but in reality, it is not always balanced. Therefore, investment is expenditure to prepare for future production and supply, and savings are income that was not spent. If investment exceeds savings, there will be an excess of money, leading to inflation. If investment is less than savings, there will be an excess of goods, leading to a recession and an increase in unemployment.

The economy is sustained by the cycle of production, distribution, and consumption. Production, distribution, and consumption are essentially the same and should coincide, which is the three-sided equivalence. However, production, distribution, and consumption do not occur simultaneously. Production, distribution, and consumption occur with a time lag. When this wave is disrupted, it causes inflation or recession.

Disruptions in the flow of production, distribution, and consumption cause inflation or deflation.

The changes in the surplus and shortage of people, goods, and money are undulating. Finance and fiscal policy work to adjust these waves. How to smooth out the waves caused by production, distribution, and consumption is an important role of the economy.

Corporations work to streamline the waves caused by production and distribution. In other words, they stabilize uncertain and unstable sales as monthly salaries and fixed salaries. At that time, finance is working behind the scenes.

Such a structure is tested using the hexagram model.

For example, it is difficult to predict even a single movement in the exchange rate. Even interest rates and tax rates, which should be artificially controllable, cannot have their effects predicted in advance. Therefore, it is necessary to statistically analyze economic movements from data.

Many people confuse freedom with randomness. They believe that being free means being inactive by eliminating artificial actions. However, that is merely losing oneself. If one does not express their opinion, they do not contradict anyone’s thoughts. This does not mean denying others’ opinions, but simply not having one’s own thoughts. Human society is built on intentional actions. Some people are preoccupied with the pros and cons of conspiracies. The difference is whether it appears on the surface or not. This world is driven by human will. The important thing is the fundamental issue of what kind of will one is based on. It is about what one considers right and wrong.

Why do we analyze the economy?

It is because we must make our own judgments and live our lives according to our respective positions at any given time. To live, we need to clarify our current situation and environment, predict the future, and make planned decisions. This is where the significance and meaning of economic analysis lie. Conversely, economic analysis that does not lead to concrete measures is merely self-satisfaction and remains a hobby.

So, what are economic measures? I want to clarify what economic measures are. Before that, there is something that needs to be confirmed. It is about politics and the economy. The political system and the economy need to be distinguished. This is because politics involves ideals such as human rights, rights and obligations, the nature of the state, and the way people live. The economy is the reality of life. Even if the political system collapses or becomes dysfunctional due to war or disaster, the economy must be maintained. People must live under any system or environment. Even if the political or economic system collapses, the mechanisms of production, distribution, and consumption must be maintained for life to continue. Therefore, even if political and economic issues are closely related, politics and the economy must be distinguished.

There are three economic measures in a nation: systems, regulations, and policies. Systems have hierarchies. At the top is the system that creates the framework for the global market and trade. The second level is the system that creates the framework for the political and economic systems of individual countries. The third level is the system for controlling the internal sectors such as finance, households, and businesses. The fourth level is the system for further subdividing individual sectors and managing and controlling them by industry. The fifth level is the system for controlling the actions of individual individuals.

The first level includes the foreign exchange and overseas trade system. The second level includes the political system, legal system, fiscal system, and monetary system. The third level includes the market, economic system, tax system, financial system, accounting system, and securities system. The fourth level includes the securities trading system and the Liquefied Petroleum Gas Law. The fifth level includes labor laws, pension systems, and social welfare systems.

It is necessary to formulate measures for each level. It is important to discern the unchanging, the changing, and the simple. Therefore, the method of divination is effective.

There are measures for systems, measures for regulations, and measures for policies. The main differences between systems, regulations, and policies are their functions and the time required for implementation. It takes at least four to five years for a system, two to three years for regulations, and one to two years for policies. The functions differ: systems are the foundation and literacy, regulations are laws and rules, and policies are operations.

Based on the hierarchy, if we construct the hexagram of the system, the first line is the fifth level, the second line is the fourth level, the third line is the third level, the fourth line is the second level, the fifth line is the national ideology, and the top line is the first level. Then, it is necessary to formulate policies in order from the top line.

There are inherent cyclical waves in people, goods, and money. Similarly, production, distribution, and consumption also have their own cyclical waves. Furthermore, each of these waves has both long-term and short-term cycles, and their effects differ depending on the duration. The inherent waves of people, goods, and money overlap with the waves of production, distribution, and consumption, creating large surges. Economic measures are designed to adjust and level these surges.

Waves are suppressed by systems, controlled by regulations, and directed by policies. To claim that competition is the principle and deregulation is a panacea without understanding these relationships is akin to a quack doctor prescribing aspirin for everything. Economic phenomena are relative, and there is no absolute cure-all. Prescriptions should be determined according to the symptoms.

Systems represent the framework and organs of the body, regulations adjust the circulation such as blood and respiration, and policies address the symptoms.

There is no absolute economic system; each system, whether it be a controlled economy, a free economy, or a planned economy, has its pros and cons. It is necessary to adopt the measures that are deemed optimal according to the system, environment, and preconditions.

The basic requirement lies in life and survival, and the minimum requirement is that all people can lead a minimum standard of living. Even if the national system or monetary economy ceases to function, the economy must continue to operate. Politics is an ideal, while the economy is reality. The problem arises when one becomes rigidly fixated on ideals and loses sight of the primary purpose of the economy, which is to sustain human life. What is required in the economy is a pragmatic and flexible mindset.

If we compare it to driving a car, the system refers to the body of the car, regulations refer to traffic laws, and policies refer to the actual driving.

There is no absolute economic or political system yet. Every political and economic system has its flaws. This is a given. The issue is not the system itself, but the purpose and the desired state. Political systems fundamentally lead to ideological philosophy.

In the entire market transaction, the amount of income and expenditure always match. This is because income is expenditure and expenditure is income, with the only difference being the giver and the receiver. The money and goods being exchanged are the same money and the same goods. If they were different money or different goods, it would be fraud or crime. This is the basis that establishes the three-sided equivalence.

Since the money required for transactions is fixed, the total amount of currency is determined by the balance of payments and the turnover rate.

Imports and exports are different matters. Just because you import does not mean you can export. However, money is necessary. Without money, you cannot import. The money needed for imports is earned through exports. If there are no goods to export, you have no choice but to borrow.

The function of creating a flow of money in the market and circulating money in the market is due to the surplus and shortage of money. When money is used, it is lost, and the amount of money on hand decreases. If left as it is, money will become scarce. The shortage of money must be constantly replenished by working. This work creates the flow of money and makes people work. The force that balances the surplus and shortage of money between economic entities, sectors, and countries circulates money in the market. Surplus and shortage are two sides of the same coin; if there is a surplus, there is an equal shortage. Therefore, if surplus is considered good and shortage is considered bad, money will not circulate in the market. Instead, it is a matter of the degree of shortage and the degree of surplus. Shortage (yin) becomes negative (yin), and surplus (yang) becomes positive (yang). The problem lies with entities that continue to be in a state of one-sided shortage or surplus. If an entity continues to be in a state of one-sided shortage or surplus, the market will split and cease to function. Both positive and negative accumulate. It is necessary for surplus and shortage to alternate in a certain cycle. In other words, there are good positives and bad positives, good negatives and bad negatives.

Furthermore, the flow of money is also formed by time value. Time value is formed by interest and profit. Time value tends to grow exponentially. Therefore, if money stops circulating, it will rise geometrically at a certain point.

The function of money has long-term and short-term functions. The long-term function is due to long-term equilibrium, and the short-term function is due to short-term equilibrium. These long-term and short-term functions create long-term and short-term waves.

The accounting system and financial statements measure these short-term and long-term functions.

Since the overall market transaction is zero-sum balanced, the function of transactions is exerted by amplitude and wavelength.

The utility of money is balanced in the long-term and short-term, so profits converge and compress.

The short-term balance of money appears in working capital, and the long-term balance appears in investments, forming claims and debts.

One of the roles of companies is to streamline unstable and uncertain production, sales, and revenue, and convert them into stable income. They also create employment and distribute money to consumers. They make debt possible through business.

The economy is based on the balance of positives and negatives, and positives and negatives arise from surpluses and shortages. Surpluses and shortages create assets and liabilities, claims and debts. This form appears in the I Ching.

The balance of positives and negatives is based on debt. Whether production, distribution, and consumption function normally depends on how debt and shortages are positioned and utilized.

If debt and shortages are considered bad, wasteful, or unnecessary, the economy will not function. The important thing is balance. The idea of a necessary evil is also wrong. What is necessary is not evil.

Modern society is built on debt, and what sustains that debt is stable income, that is, stable employment and wages.

When constructing a system hexagram based on hierarchy, the first line is the fifth level, the second line is the fourth level, the third line is the third level, the fourth line is the second level, the fifth line is the national ideology, and the top line is the first level. Policies need to be established in order from the top line.

It is a grave misunderstanding to consider the economy as a means of making money. The economy is a means of living.