Introduction - The structure of the book

 

     I must state clearly that, not belonging to academic circles -although I do have scientific training-, I was forced, and gladly so, to study the method of establishing scientific truth.
     My studies in philosophy and epistemology (scientific method) led me to conclude that the best way to present a scientific theory is as follows:

  • Present the scientific theory, which involves identifying the problem it wishes to solve and how it is solved, within the realm of ideas.
  • Corroborate the theory, which may or may not be done theoretically. Depending on each case, there will be different approaches to achieving corroboration with the highest possible degree.
  • Then, compare the new theory with others, to see if it adds something new or simplifies existing ideas. A theory replaces others when it says the same things in a simpler way or when it says more, in such a way that current theories become special cases of the new one.

     Even though Popper says that the new theory should clarify in which cases it is not valid, I believe that if a theory completes the process described above, it has advanced science from its current state. Evidently Popper's requisite, called falsifiability because it implies that a theory is useful when it shows in what conditions it is not so, is an excellent definition of man's fallibility. Personally, I underline my opinion that Popper's falsifiability is contained in the concept that man is fallible relative to time, with the implicit idea that all is proven false in the course of time, but since at present we do not realize this is so, we believe we have found truth, which makes truth time-relative and humans fallible beings who need that relative truth.
     What has been said up to here is not a specialized philosophical or epistemological account; therefore, it should be understood as a simple guide for the reader to see the logic presiding over the order of this work.
     Before briefly summarizing the structure of the book, I wish to point out that the reader will find a sequence, going from the most elementary concepts of economics to the most complicated; also that the concepts incorporated in the book are repeated as the text progresses, to make it easy to retain them. This sequence, from simple to complex, and the reiteration of what has been learned is, on the one hand, a result of my didactical spirit. But, on the other, it is also a result of the fact that I have had to start from the very foundations of economics because, according to my ideas, the origins of most of the mistakes I find in current economic theories are to be found there. The didactic aspect is reinforced at the end of each theoretical exposition with a summary; nonetheless, the full text must be read, since more theoretical concepts are incorporated in it. Now I briefly present the different parts of this work.

Part one - SCIENCE: Here I show the elements from other sciences and disciplines I consider essential to the development of my economic theories. There are references to epistemology, set theory and Einstein's theory of relativity, with the degree of simplicity a specialist in economics requires.

Part two - ECONOMIC SCIENCE: Here I present my theories, going from the basic to the more complex elements, including my central theory, which I call the theory of economic relativity. This is central because it is the key that allows us to understand the role of time in the economy, which in turn helps us reveal errors and contradictions in current theory, such as assigning the temporal aspect to money instead of credit, confusing one with the other, relating interest to money and not to credit, insinuating that the economy works with virtual money and/or credit, that there is such a thing as economic equilibrium, and many more things, which will show why economists have stated with complete candor that there is no satisfactory monetary [currency] theory that explains the facts we are referring to, specially when analyzing critical states. In short, my theories lead to the conclusion that there is no virtual monetary [currency] world that must be balanced or harmonized with the real one, instead there is only one monetary [currency] world and it is real. I will show that the monetary [currency] problem is a consequence of the exchanges that bring it about (in this sense current theories are not wrong). So it would not have been wrong to substitute "The solution to exchange crises" for "The solution to monetary [currency] crises" in the title of this book. I did not do so considering the fact that crises which have their origins in money are generally identified as monetary [currency] crisis, because people do not realize that money [currency] owes its existence to interpersonal exchanges. So we shall see that key economic categories in interpersonal exchanges derive from separating cash from credit, and from not confusing money with credit. Economic experts will find in this section a reinterpretation, consistent with the new theories expounded here, of many current economic postulates.

Part three - CORROBORATION OF THE ECONOMIC THEORY -ACCOUNTING: Here we can corroborate the theories and confirm that accounting is the best model for economics. This not only strengthens the role of accounting in economics; it also shows that the roots of the theories presented here can be found in accounting. I believe that forgetting this fundamental test bench is what misled economic theory in two fundamental aspects: working with the partial wealth equation and believing that the fractionary reserve banking system makes banks the generators of credit, sometimes also wrongly calling them money generators.

Part four - SYNTHESIS, EXTENSION, AND COMPARISON OF THE THEORY OF ECONOMIC RELATIVITY: here I will present a short synthesis (not pretending to include everything), so that the reader can follow the rest of the book, and, having a compendium of what the theory explained up to this point, add new theoretical elements on a sounder basis, comparing them with current ideas, which is the fundamental part of this work. As to the specific aspect of comparing my theories with current ones, I wish to alert the reader that the reading will go easier if he or she understands that the three theories I will compare mine with have the same scientific basis relative to their distance from the ideas presented here; I shall only present the formal aspects that distinguish one theory from the other and their main differences with mine. I call current theory "virtual", versus mine that is "relative", in a simple attempt to show visually and allow the reader to grasp quickly the central foci of the differences that will later become more complex, as we examine each topic. I have acquired this style of telling the reader beforehand what he will find in the text from Karl Popper, who stated that the best way to write a theory is presenting the result first, so that the critic can have a better panorama as a basis for his fundamental task of reviewing it.

Part five – A SOLUTION TO MONETARY [CURRENCY] CRISIS: As I have already said, the text concludes with an application of the theories to the problems they seek to solve and to the improvement of other aspects. For easier comprehension, I will use the laboratory of (past) real life to corroborate that the corrections proposed here to current economic theories are useful for avoiding or better enduring the maladies present in the economies of individuals or in the economies of the communities in which they live. We will be able to judge if I have made a contribution to the scientific and social object initially stated: to create greater wealth and equality, each and all better off, within the framework of human perfectibility, that shows us that each instant is the best thing we have. We will have the opportunity to see that my theories imply that human beings can benefit from understanding the rights and wrongs of collectivism and capitalism, creating a compendium of sorts that will allow us to benefit from capitalism's economic progress, avoiding its currency crises, which are the main source of its implicit totalitarianism.

Appendix: as an appendix I add the implications of the theories presented here for current economic institutions, pointing simply to the fact that there is a need to take this path, developing a more in depth analysis. Not withstanding the fact that the economic theories expounded here lead me to say, in short, that there are only two options for a central bank: in an irregular currency system it is impossible for the central bank to be independent from political authorities, and in a regular currency system its existence is unnecessary.

 
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