A fundamental basis for government decisions when attempting to manage the economy is the consideration of production. Unfortunately, it appears that the typical definitions have contributed to poor decisions particularly in relation to money and debt.

The real factors are:

• Land
  Land is the raw elements of nature.
• Labour (including entrepreneurship),
  All human work and input from ideas to knowledge, skills and sweat. Typical economists differentiate entrepreneurship however that only serves in relation to the allocation of financial reward and to promote ideology - capitalism.
• Capital (all forms, from machines to finance & money),
  Reality in modern economy is that tools and productive capacity are a function of money: equipment can be rented for instance. Money is needed to bring in the other factors of production.
• Energy
  Often left out of many economics theories, it is an important dimension especially in consideration of the nature of its supply (cost of extraction, availability, etc) and the energy required for production.
• Time
  Always omitted from economic theory, time is a perishable resource and a key variable for all production decisions determining when, how and where production will be undertaken.
  

Together these support a complete supply chain for all goods and services starting with labour extracting resources from the land using capital and energy over time. Goods, including tools, are then made with more labour, capital and energy over time.

Why are the factors of production interesting?

Because they can be partly substituted for each other.
As you can a partially replace one factor with another then the availability and price of one affects the demand of another. Let’s see some examples:

• If energy is cheap then demand for labour will reduce as machines will be more economical to run (compared to people) and design for more efficient machines will not be required.

• If land or its resources are rare, hence expensive, more of the other factors of production will be used: more people to manage and optimise agriculture, build more advanced mining equipment and use that equipment that can do more such as mining equipment that can dig deeper.

• If capital is cheap, meaning money is cheap (low interest rates) then investments and production will shift to favour that type of capital. Thus, low interest rates lead to lower wages and less innovation – as more problems will be solved by money rather than new approaches. Consequently, lower wages reduce aggregate demand and reduces production output. With infinite fiat money, government intervention will focus on use of more money to improve demand leading to a cycle of lower interest rates and more money.