INTRODUCTION
This summary of economic thought emerges from the TET, which can be considered like a gap between Carl Menger and our current days, and presents here a brief introduction of the implications derived from this new theory.
This new economic theory not only overthrows foundations and concepts accepted until today but also replaces them by others with greater theoretical support that shed light over the dark scenario that characterizes the present reality of economics. Let’s see some of the new paradigms of the TET as opposed to the current ones:
The Theory of Economic Relativity (TER) tells us that the economic time is the only economic good that does not have life in itself; it is always materialized in another present economic good. The current theories tried to apply this category (TER) to the concepts of money, interest, prices, etc., a task doomed to failure for not having noticed: 1st) its existence and, 2nd) that it was an exclusive property of the economic time. Currency can be money or credit and is different from the current theories for the fact that they only support the existence of the entity money. We frequently add the confusing and indefinite category of monetary substitutes that gives origin to the also confusing and indefinite concepts M1, M2,… Mn. The origin of currency is always the market, be it money (Menger) or credit (Bondone), never the State. This is a completely different concept from the one we are used to because in the TET money refers to present economic goods (gold, silver, salt, cattle) and credit to future economic goods (currency paper). The TET presents a new concept of credit and its price: credit is the inter-personal exchange of economic time; that is why its price is the interest. Concepts and causality different from the all ready expressed current theories. The origin of credit derived from currency paper (CP) and bank note (BN: fractional banking system) is always the market, never the State or the financial system. So, neither the monetary authority nor the financial system expand or reduce credit as current theories support. The TET warns us about the danger of confusing the market where credit is traded with the market where credit is originated-canceled. This confusion derives into unfortunate currency-financial policies that end up being useless (“liquidity trap”) or counterproductive (inequitable redistribution of wealth that generates social tension). Interest is the price of economic time, not of money or physical/value productivity. There is no economic good without owner and no owner without economic good. There is no economic good without price and no price that does not refer to an economic good. From this we derive the axiom of positivity of prices. Axiom of positivity of prices: always i > 0 that implies the inconsistency of talking about negative prices supported by current theories. Axiom i > 0 that implies the impossibility that i ≤ 0, as current theories admit. Theorem of permanent disequilibrium (S ≠ I), that rejected the already known equation S (saving) = I (investment). New fundamental economic equation different from the one supported in Y = C + I. The axiom of equivalence im ≡ p m implies the inconsistency of the current theories and econometric models, because both consider them independent variables. Utopia of independence of the Central Bank (FED). In irregular currency-financial systems the independence of the Central Bank (FED) from the political power is impossible, and in regular currency-financial systems its existence is not necessary. The TET shows us the mistake of assigning the recurrent currency-financial crisis to capitalism (free markets), mistake clearly and firmly expressed in other /i>currency-economic theories. The TET shows us the CP as an instrument of general control of prices, aspect that previous theories did not notice because they did not realize the axiom of equivalence im ≡ p m. The Banks are icons of anti-capitalism and not of capitalism as the popular feeling, derived from current theories, expresses. Rejection of certain current assumptions as: Regression theorem of Mises (inconsistent and unnecessary) – Current theory of cycles (Keynesian, Monetarist and Austrian) – Interest theories: Austrian (founded in time preference), of productivity (physical or value), Monetarist and Keynesian, as they all define interest as the price of money, or do not define it as price – Phillips’ curve – 45 degree curve of Samuelson – Quantity theory of money – Garrison’s graphs – Locke’s problem – Say’s law – Gresham’s law – Neutrality of money – Gibson’s paradox – Keynes’ “barbarous relic” – Indirect mechanism of transmission – Under consumption or deficiency of demand theories – Price dichotomy of Patinkin – Real versus monetary economy (interest rate) – Economic equilibrium theory – IS/LM curves – Liquidity trap – Zero or negative interest – etc. New theories of currency, money and credit; economic cycles; political foundations of currency and financial current systems; offer and demand; etc. Summary of economic thought that the TET presents, different from the current theories in this following terms:
a) Factors of production: work, capital (natural and created by the man), and economic time.
b) Theory of distribution. The remuneration of the three factors of production are: wage, rent and interest. The interest, by TER, is always represented in another economic good, particularity that makes it systematically dependent on another factor of production. This implies that all mathematical-economic models must consider that situation to offer a unique solution, condition that current theories do not notice.
It is not exaggerated to say that the new theoretical foundations emerged from the TET present a new more promising economic future, both to the human being in particular and society in general. It would not be wrong to say that the TET allows us to express the following:
“The essence of capitalism is to satisfy your neighbor as yourself”
Maxim that today basically is not fulfilled due to the totalitarianism that underlies in the current currency-financial system supported by the theories accepted so far.
Brief philosophical foundations of the TET
"Encouraged
by the idea that:
There is no
dishonor in the fact of not knowing when there is the virtue of wanting to
learn".
"... it all started due to the dissatisfaction I felt with the current
theory of currency (also declared by Hayek), which led me to deeply investigate
the subject and conclude with a new theory of currency. But the most important
event happened later with the discovery of the Theory of Economic Time (TET) –
an extension of the first finding, the Theory of Economic Relativity (TER) – and
the final development of the reconsideration of many of the primitive terms,
concepts, axioms, hypothesis, and theorems of the economic theory in general that
could be seen as a summary of the economic theory."
"General
relativity of time: the study of time is equivalent to the study of the
changes in the entities. All the space-temporal events imply variations in the
entities that make up the space, not the time. Time does not change, what
changes are the entities that make up the space – to talk about changes implies
referring to the variations of space (entities) in time. I consider that this
concept implicitly took Einstein to consider time (implicit in the component
speed of light) as a constant feature."
"Special relativity of economic time: in economics the entities that change, besides man, are the
economic goods as well as in physics, mass and energy. This way, we make the
space-time economic cell universal. The study of time is relative to the
changes in space which is made up of entities – economic goods – that change
with the passing of time; this way the study of the changes in the entities
implies the study of time."
"Axiom of
change: with time everything changes. If
there is time there is change, if there is change there is time. So, in
economics we cannot talk of the same good at different times – conclusion that
becomes very relevant when analyzing in depth the economic theory. With time
everything is different."
"Axiom of
the necessary participation of time: from
the axiom of change we deduce that all change implies the necessary
participation of time. Then, we ratify that the study of the changes in the
entities (space) implies the study of time."
"Summary
of the economic thought: it is not exaggerated to say that the TET, with its incorporations and
theoretical redefinitions, could be seen like a kind of summary of the economic
thought. This is why it takes up again the classical questions with its factors
of production (with its incorporation of economic time), continues with the
theory of subjective value, the marginalism, the theory of prices (according
to Menger’s order of economic goods), and the theory of imputation,
incorporating the TET which allows us to close the theories of interest,
capital and prices, presenting a scientific frame to the dilemma of
distribution apart from “ideologies” and mysticism (added value, etc.)."
Carlos A. Bondone
Content of the section ECONOMIC THEORY
Central concepts of the Theory of Economic Time (TET)
Economic
Time
Special relativity of the economic time (indirect or improper
materialization)
Permanent scarcity of the economic time ( i > 0)
Necessary participation of the economic time (necessary factor of
production)
Interest (i)
Interest as the price of currency (money)
Indirect materialization of interest
Theory of temporal preference
Existence of interest
Theoretical causalities derived from interest
Permanent positivity of interest
Approach of the value or physical productivity
Bhöm-Bawerk, Fetter and Hausmann approach
Summary CreditRegular credit
Irregular credit
Currency
Menger and the TET
Mises’ regression theorem
Currency as an owner’s stock
Interest as the price of currency (money)
Currency and money
Purchasing power of currency (money)
Currency, prices and interest -
|
