Introduction of Minus Interest Rate
Kagayaki-No-Kai
Entry Information
User Registration
Login

What's New
Career and Activities

Doctrine
Survey and Relation among
 Religion / Science / Economy
Problems of traditional
 Scientific / Economic theory

Religion-Science-Economy
 integration

Religion Science Economy

Life-prolonging /
  Longevity Service

Magnetic Field Energy
 Treatment 
Detail explanation
Cancer Treatment
Schizophrenia Improvement
Application Method

Better Fortune by Virtue
 Accumulation
Better Fortune Method
Effect   Example
Application Method

Spiritual Rank Up of Ancestors
Application Method

Measurement of Spiritual Rank
Certification of Spiritual Rank
Measurement of Spiritual Rank of  Ancestors

Visit The Shrine
Tutelary Gods of Kagayaki-No-Kai
Amulet Service

Spiritual Rank /
 Virtue Accumulation flash

Writing

Five Dimension Theory
 Vol.1 Vol.2 Vol.3 Vol.4

About Five Dimension Theory
Fractal Economic Theory
Restructuring of Foreign  Exchange Theory
Introduction of Option  Concept to Money
About Introduction of Minus
 Interest

Introduction of Minus Interest
 
Rate

About The Day To Surpass
 Buddha
The Day to Surpass Buddha  

Electronic Book
Kagayaki-No-Kai(brochure)

Five Dimension Theory
 Vol.1 Vol.2 Vol.3 Vol.4

Fractal Economic Theory
Restructuring of Foreign
 Exchange Theory
Introduction of Option  Concept to Money

Introduction of Minus Interest
 
Rate

The Day to Surpass Buddha

Site Map
Mail
Blog
Longevity Cancer / Schizophrenia Treatment Better Fortune Spiritual Rank Up
 Home > Introduction of Minus Interest Rate
Decision method of interest rate

  Interest rate is defined as [Change ratio of value of currency]. Then, what should the change ratio be decided by? Interest rate is limited to plus in traditional financial / economic theory. (In this book, plus interest rate includes 0%.) Plus interest rate means that value of currency increases constantly. [Currency has store function of value.] [We should repay full amount of money we borrowed. We should also pay interest.] These common sense ways of thinking might be reasons for interest rate to be limited to plus. But, are these ways of thinking really true? Let’s look into how to determine interest rate by explaining simple sample of economic transaction. Currency doesn’t exist before economic transaction. Currency occurs with economic transaction. Currency is credits. It is right to buy something. Debts and credits always occur equivalently at the same time. Rights (credits) and obligations (debts) always occur in pairs. Suppose there are three people who make deals. These three people are named A, B, C.. A makes a deal with B, and C plays a role of bank. A produces commodity and sells it to B. Price of it is ¥100. C occurs ¥100 and lends it to B. B buys the commodity from A with the money. A gets ¥100 and deposits it to bank C. B is in debt to the amount of ¥100. Suppose these flows of currency arise at the same time, because value of money occurs at the moment of economic transaction.

 After that B produces commodity and sells it to A. Price of it is ¥110.
 Suppose both interests on deposit and loan from previous transaction of ¥100 to transaction of ¥110 is ¥10. A withdraws both ¥100 of deposit and ¥10 of interest from C. B repays ¥100 in debt and ¥10 of interest to C. If Transaction of ¥110, withdrawals of A and repayments of B are done at the same time, the transaction of ¥110 is realized.
 In these two transactions, values of economic transactions are increased from ¥100 to ¥110. This means expansion of scale of economic transaction. Change ratio of values produced in economic transactions is called economic growth rate. Suppose period of two transactions is one year, economic growth rate is (110-100) / 100=0.1 (10% per year).
 Interest on a loan of the same period is ¥10, so it can be converted to 10% in interest rate.
 As described above, if interest rate corresponds to economic growth completely, debts and repayments are compatible completely. Therefore

 [Interest rate must correspond to economic growth rate completely.]

 Otherwise, economic transactions can’t be realized.
 Interest rate of deposit is usually different from that of loan in banks. Banks get profit for interest rate of loan to be higher than that of deposit.

 Suppose previous transaction of ¥110 is changed to transaction of ¥120. Suppose interest of deposit is ¥10 and interest of loan is ¥20. Then, the transaction can’t be realized because of lack of funds of A. A has only ¥110.
 Suppose A buys commodities of ¥110 and C buys commodities of ¥10. Then transactions can be realized completely.

 In this case, economic growth rate is 20%. Because interest rate on loan is also 20%, interest rate on loan corresponds to economic growth rate perfectly. On the other hand, because interest rate of deposit is 10%, it is different from economic growth rate. As described above, the conclusion is

 [Interest rate on loans must correspond to economic growth rate completely.]

 This is very simple example of transaction, but it is necessary to eliminate money out of relation to the transaction in order to understand essence of economy. Then it becomes very easy to understand essence of economy.

 As many economic entities transact in real economic activities, it is difficult to grasp whole image of transactions. As there are two kinds of products, [Intermediate product] [Final product], it is complicate to understand the whole image.
 [Intermediate product] is a part of car and [Final product] is car in car productivity. As parts are intermediate products to product car, it is called as [Intermediate product].
 As price of [Final product] includes price of [Intermediate product], whole amount of transactions can be summed up to sum up whole amount of transactions of only [Final product]. Therefore, only [Final product] is target to sum up in order to simple the whole image. (If [Intermediate product] is summed up, amount of additional value is summed up excessively.).
 To grasp amount of daily transactions means amount of currency occurred daily. As it is amount of daily transactions, it escalates naturally. Then, change ratio of amount of transactions is daily interest rate. Thinking in the same way, change ratio of transactions for a year can almost substitute for average interest rate for a year. (Error is observed by when and how much deals are made.).
 Amount of value of final product that is produced within the specific period is called gross domestic product (GDP). GDP is released periodically as economic index. Change ratio of GDP is called economic growth rate. (The word “economic growth rate” is used in example of transaction, but general meaning is change ratio of GDP.).

 As discussed above,

 [Economic growth rate as economic index should correspond to interest rate on loans naturally.]

 is easily understood.

 There are two kinds of economic growth rate, nominal economic growth rate that means amount itself and real economic growth rate that takes change ratio of price into consideration. Economic growth in this book is nominal economic growth rate that doesn’t take price fluctuation into consideration.
 (Because GDP doesn’t include all economic transactions, it doesn’t correspond to economic growth rate in this book perfectly. Economic index that resembles economic growth rate in this book in meaning is nominal economic growth rate.)

 The reason why essence of interest rate can’t be defined in classical economic theory is that money without economic transaction has economic value in classical economic theory. Too much money is distributed in present economic system in that cash is used mainly. Economic value is given to all the money and interest rate is applied to the money, the essence of interest rate can’t be understood easily. Value of currency is occurred at the moment of economic transaction, and another money is not needed essentially. If cash basis is abolished and IT technology is used in currency, as currency without transaction is not needed, economic transaction may be able to be operated theoretically compatibly. As a result, management of the economy can be done without extreme difficulty of today.

 That interest rate corresponds to economic growth rate means if economic scale is changed in a curved line described on the figure, interest rate is changed in a curved line described below.
 If economic growth is plus, interest rate is plus. But if economic growth is minus, interest rate is minus naturally.

 It is defined that scale of economy at time of t is X(t), interest rate is r(t).

      
 Interest rate is defined in calculating formula described above. dX/dt means change amount of scale of economy. By dividing it by scale of economy X, change ratio of scale of economy can be calculated. And it is converted to percent by being multiplied by 100.
 As discussed above, it is understood there is fatal default in classical economic / financial theory. The condition of plus interest rate has no theoretical root. Minus interest rate exists naturally. Reduction of scale of economy means the decrease of amount of money. The decrease can be realized by applying minus interest rate.

 It is concluded in classical economic theory that interest rate should be raised in booming economy and interest rate should be lowered in depression.
 The conclusion is derived from discussion other than explanation of this book, but the way of thinking in this book may be simpler and easier to understand. In short, basis interest rate is economic growth rate itself. If interest rate is higher than it, debtors are burdened excessively. In reverse case, debtees (depositors) are burdened excessively. Do you understand?

 It may be easily understandable to regard introduction of minus interest rate as introduction of market principle. Assessed value of equity is evaluated by market value, not by purchase price. If market price rises, equity increases. If market price lowers, equity decreases. Purchase price has no relation.
 Amount of currency is decided by scale of market economy itself. Currency occurs with economic transaction. If scale expands, currency increases. If scale diminishes, currency decreases. Without economic transaction, there is no value of currency.
 As discussed above, amount of currency should be decreased when scale of economy diminishes. It is interest rate that changes the amount of currency. Therefore, amount of currency should be decreased by applying minus interest rate, when scale of economy diminishes.

    
  

                                          --> Japanese
   Introduction of Minus Interest Rate (PDF)
Contents
   Preface
   The meaning of currency
   What is Interest rate?
   Decision method of interest rate
   Difference between interest rate and economic growth rate
   The influence of government activity to interest rate
   Calculation of basic interest rate
   Currency is fractal structure
   Deflation occurrence rule
   Occurrence status of bad debts by difference between interest rate
      on loans and economic growth rate
   Mechanism of Japanese recession
   Necessity for minus interest rate
   Effect of introduction of minus interest rate
   Improvement of banking system
   Change of interest rate decision rule
   Increase of assets caused by minus interest rate
   Reconstruction of economic theory
   Solution of deflation problem
   What is real richness

Longevity Cancer / Schizophrenia Treatment Better Fortune Spiritual Rank Up
Kagayaki-No-Kai | Privacy Policy | Personal data handling policy
Copyright © Akira Takizawa all rights reserved.