| Solution of deflation problem
Economic evolution will quiet down at some point. For example, there is
population problem. As population increased rapidly in the 20th century,
economy expanded rapidly. In addition, realization of new scientific knowledge
leads to rapid increase of kinds of products.
But, population may quiet down at some level from now on. Increase of population doesn’t seem to continue. Increase rate of population in the world may decrease.
In addition, as evolution of physics that is center of scientific theory
is stopped, development pace of new products may become slower than that
of the 20th century.
Then, companies will ensure profit by price competition. IT progress urges
worldwide price competition.
If population increase is stopped and newly developed products are scare
and price competition is escalated, it is not strange for scale of economy
to be changed from expansion to reduction. It is occurrence of what is
called “deflation”.
It is insisted that deflation as universal issue should be overcome. Deflation is called as bad factor of economy. Whenever deflation occurs, it is not mysterious for the above reasons.
The problems are both classical economic theory under the premise that
interest rate should be plus and economic system based on it.
Interest rate is economic growth rate itself. Without understanding of
this essence, it is natural to fear deflation that means minus economic
growth rate under the economic system in which interest rate is fixed to
plus.
But, if economic system on the premise of minus interest rate is realized, deflation can be disposed of compatibly. Minus interest rate should be applied to minus growth rate. Then, economy can’t be crashed.
First of all, minus interest should be introduced in Japan as a model
of global economy. Then, the world takes it as a model. Deflation problem
can be solved in this way.
In this sense, economic system on the premise of minus interest rate should be constructed as soon as possible.
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