|
(Bill Ryan
wrote, in reply to Per Almgren:-) If now we take the flux to represent
income, and the
reflux as representing spending from income, there
is
always a residuum represented by the gray shaded area.
At any
point in time the statistical recipient of
income will have spent something
less than the income
he has received.
-
The economy is a physical
process. It takes time for
action to be accomplished.
Homework
assignment: Let the flux represent the rate
of spending by the
statistical entrepreneur, and the
reflux represent receipts over his sales
counter.
Inasmuch as he is always receiving back less than he
is
spending, how is it possible for him to record a
profit?
-
------------------------------------------------------------------------------------
(Joe replies:-) I think that the flux, as the
'rate of spending' by the individual statistical entrepreneur, would have to be
broken down into the type of spending he is doing. Some of his spending
will be on 'capital' assets which will enable him to carry on his business, and
will be for things likely to last many, many years. Other spending
will be for his ongoing operating expenses and items that are his 'stock in
trade', so to speak. Items he hopes to work up and /or mark up and sell
over whatever accounting period he is using to compute 'profit and loss'.
His 'capital assets' spending will therefore be 'expensed' against his sales,
not over just one 'profit and loss' accounting period (fiscal year), but over
many. |
Reply to this message
