All the Price Phenomena are Synthesized
The mainstream economics teaches that the balance between supply and demand determines price. Is it so? That's not enough. Demand and supply do not determine the price. Let's take an example. Did the balance of supply and demand determine the price of 200 dollars for a bag of rice, 500 dollars for a suit, and 30 thousand dollars for a medium-sized car in Korea? No, it does not.
Gross domestic product(GDP) of 1.5 trillion dollars(2015 basis, same as below) and currency issue amount of 87 billion dollars in Korea produced the above prices. If the GDP grows to 2 trillion dollars, the prices of almost all goods increase and the exchange rates between goods change. Also, if the amount of money issued increases from 87 billion dollars to 100 billion dollars, the prices and exchange rates will almost all change, and the prices level will also rise. These fluctuations in prices affect income, which will be discussed shortly.
Demand and supply can not determine price like this. If the price means only the value of a certain good, it may be insisted that the demand and supply determine the price, but the price means also the price ratio between goods, that is, the exchange rate. The price of a car is 150 times the value of a bag of rice, and the value of a suit is 2.5 times more expensive than a bag of rice. The exchange rate can not be determined by the balance of demand and supply like above. Furthermore, how the exchange rates fluctuate over time path can not be explained by the 'balance of demand and supply'. Rather, the levels of income and currency have more direct impacts on price levels and exchange rates than demand and supply.
So how is the price determined and how does it fluctuate? To put it mildly, what principle creates the price phenomena? In order to find out this problem, the characteristics of the price phenomena have to be recognized first. As already mentioned, we must first know that the price is not a simple phenomenon but a synthetic phenomenon. From the conclusion, it is the price of reality that each phenomenon produced by three principles such as chaos principle, fluctuation principle and decision principle are synthesized. In a figurative sense, the color produced by the chaos principle, the color produced by the fluctuation principle and the color produced by the decision principle are intermixed with each other, thus creating the natural color of price in reality.
Does it just make the theory harder to understand? Not like that. In order to understand the phenomena of night and day of which length varies each day and the appearance of all four seasons, you must first know that the earth revolves at the same time as it rotates. Similarly, to properly understand and read price phenomena, you need to know how price phenomena are synthesized, what principles work and how each principle interacts with each other. Although to our eyes the price phenomenon seem to be a simple one, but it is actually a synthesis phenomenon, as the movement of the earth is a synthetic of revolution and rotation although it seems to be one phenomenon. If you know this fact, you can be confident that you have gotten a better understanding of the price phenomena than anyone who has ever studied the current economics. Let's look at the three principles from now on.
Before that, we need to redefine the concepts about prices. The changes of prices which are created by the chaos principle, by the fluctuation principle and by the decision principle have to be called differently to avoid confusion. From now on, the change in the price created by the chaos principle will be called the price change, the price fluctuation due to the price fluctuation principle will be called the price fluctuation and the price shift created by price decision principle will be called the price shift.