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REMOVED BY AUTHOR SUPPLEMENT II: Economic Issues for Restructuring Economies Supplement II for One Thought Experiment: TIME is A Quantum System of Clocks & Anti-Clocks von Yecheskel, Eli (eBook)

  • Erscheinungsdatum: 28.04.2011
  • Verlag: BookBaby
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REMOVED BY AUTHOR SUPPLEMENT II: Economic Issues for Restructuring Economies

A country or a state witting to restructure its economy could use this supplement as a blueprint for change to gain more independence and improve the Quality of Life of its citizens.

Produktinformationen

    Format: ePUB
    Kopierschutz: none
    Seitenzahl: 114
    Erscheinungsdatum: 28.04.2011
    Sprache: Englisch
    ISBN: 9781617925610
    Verlag: BookBaby
    Größe: 213kBytes
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REMOVED BY AUTHOR SUPPLEMENT II: Economic Issues for Restructuring Economies

ISSUE I: BRIDGING MICRO AND MACROECONOMICS

There is a widespread agreement at scientific and market levels that micro-economic principles are well founded and realistic and that macro economic principles are not.

Micro-economic decisions are highly decentralized while macro-economic decisions that affect all micro-economic decisions are highly centralized.

Economists have failed to develop a bridge between micro and macroeconomics.

The absence of a bridge between macro and microeconomics:

Made it impossible for the few decision makers at macro-level to understand the true long and short-term consequences of their collective decisions at micro-level:

Was a major source of the significantly high degree of uncertainty and risk at a micro-level:

Made business resort to defensive corporate strategies through aggressive pricing practices that raise inflationary expectations; and,

Made individuals and many old and new businesses rely on inflation-induced income (e.g., real-estate appreciation) and cash management rather than productivity.

For Example

i) Macro-economic decisions in the late 1970's and early 1980's made the cost of money reach 20%. These decisions imposed unrealistic performance requirements on all investors, especially manufacturers, and required them to perform under conditions of time stress. The strategic implications of these requirements could be summarized as saying that for the annual rate of return on investment to exceed cost of capital, a payback period of no longer than 5 years must be realized, regardless of the life cycle of their investment strategy! Many manufacturers could not do so. As a result, many businesses shifted their manufacturing operation overseas and the job market began to deteriorate domestically.

ii) At 20%, different businesses realized that the annual rate of return on investment was significantly higher through cash management than operations management. As a result, for many businesses money became an end rather than a means to an end: they lost focus and failed.

iii) Other businesses resorted to a policy of maximizing their profit through aggressive and inflationary pricing of their products and/or services. This is especially true in industries that focused on medical technologies (e.g., the pharmaceutical industry.)

iv) The Federal Reserve began to believe that high interest rates control inflation. This proved to be the case in the aggregate and after the definition of Consumer Price Index was redefined by the Government. However, this was not the case in specific segments of the economy such as healthcare where inflation rate has been truly uncontrollable. The Federal Reserve does not have the scientific base for having such a belief. Indeed, at present, it appears that the Fed's Discount Rate decisions in the early 1990's had no impact whatsoever on the direction of the economy.

STATEMENT OF NEED FOR ISSUE I

There is an urgent need for:

A scientific base for bridging decisions at macro-economic level to the micro level;

A mechanism, which permits consistent interpretation of macro-economic decisions for purposes of long and short-term corporate strategies;

A capability to gain predictive understanding of changes in economic states at individual, governmental, and institutional levels.

- Structure all forms of debts, for any purpose, as an investment.

SOLUTION FOR ISSUE I

Establish an interdisciplinary commission that would develop or recommend a scheme that satisfies the above needs.

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