Till and the economy Part3

Hi together,

The third part of my series is still about the economy, but no longer about the abstract economy, but this time we turn to concrete instructions from the quantity equation for companies. As a reminder, the quantity equation is one of the highest equations of the economy it is: money supply M = price P * Real production Y / circulation speed of money U.

So for days I have been wondering how corporate bubbles can be created. And the concept of inflation is becoming clearer to me. On the one hand, a bloated amount of money M as a bloated price P certainly lead to bubbles.

In Germany, for example, costs have been reduced for years, especially as my generation is painfully involved in the cost of personnel. And here we have proof that this is not going well for a long time.

Remember my note that the ruble has to roll. He just doesn't do that when wages are low. In fact, this reduces the rate of circulation of money in the company.

Now let's reshape the equation to make the consequences clearer. M * U = P * Y.

As a result, the circulation speed of money must, of course, increase the money supply with the same price P and with the same production Y. Companies are happy about this when the company's money supply, capitalization, profits, return on sales increase.

Unfortunately, this is a fallacy, as we know from the economy that too much increase in the money supply is definitely inflation, definitely leads to bubbles, and definitely that these bubbles burst and leave nothing as destruction.

I always consider the commercial bill as it used to be a healthy balance. At his expense, the good merchant proposes 20% action costs and on this amount then 20% profit. Nobody wants to take that away from the businessmen.

This means that I am able to return on sales of approx. 17%, which is already very much nowadays. I consider all the returns on sales that are higher to be inflationary, the companies concerned are bubbles and the associated markets are extremely threatened.

Back to the equation M * U = P * Y. De facto, the low wages lead to far too high turnover returns of the companies (Huch, there is a locust ;-)). If this were not the case, real production would have to decline.

But then again our demand – supply principle comes into play, which I already presented in the first part as outdated. If production falls, the price of goods rises again. If the price rises, demand and production decreases.

I am therefore on significantly higher wages than they are currently paid. I am in the process of increasing the price of a company that is the third root of increasing production. I am also entrepreneurial in pricing, which only raises prices at the third root of the increase in production. All other pricing policies lead to bursting bubbles.

To support my thesis again physics: M is the cover, for example a ceiling with the unit kg * m3. Orbital velocity u I leave constant and in order not to complicate it unnecessarily, I leave the units away after the equivalence of space and time to Einstein. Then I am at a real production Y, which is to be measured in kg. Consequently, the price is m3.

Now I said, in order to maintain real production, the money supply must grow square in relation to prices, gladly taking into account the percentages. Gross domestic product is the product of real production and price. Until now, governments have always guided the increase in the money supply with the increase in gross domestic product.

This raises the price, but real production remains the same, according to the theory so far. And as I pointed out in the last article, kg per volume is density and decreasing density is a sign of a bubble. When Y/P is getting smaller and smaller, which we have de facto for decades, we as a state and society form a bubble. We have this bubble, people are getting poorer and poorer. To keep the bubble constant, production would have to rise with prices. There I am at Y / P = 1. I'm also at M = P2. So the money supply would have to rise squarely at prices to at least keep the bubble constant. I am at M = P3 to have the bubble contracted again. However, since we do not want to let M rise so blatantly, I am in favour of very moderate price increases, as I said 3. Root of the increase in production in order to increase the density again.

It is also soristic when, after the euphoria of the bull, as we currently have it, the depression of the bearish comes. I know the feeling now from 1999. Everyone thinks the stock market records go so further ad infinitum. We feel that way again. And again, only a few will benefit from the stock market crash, and the majority of the population will lose their sour savings again because of their greed. Then we have another depression of the peoples.

I see many wise measures around the world against the stock market crash from the political side and from central banks. Unfortunately, this time it is the returns that lead to bubbles, which are then unfortunately fed politically by the retention of the Hartz IV laws in times of bullion, so that we have arrived in the valleys of stock market prices and in the valleys of human moods in 2 to 3 years at the latest.

But I think we all don't give up thinking about these connections and if even a stock market crash and the associated depression of the markets and the population can be cushioned by smart, learnable minds, then we should not stop working on it as human beings.

Dear greetings

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