From Cambridge to Eternity: “Macroeconomics for the Heavens”
When
macroeconomists refer to “empirical science,” they might unwittingly think of
Eternity. Take the “Cambridge Quantity equation” M= k∙I (John
R. Hicks, 1937) of liquidity preference (Md
for “money demand” in macroeconomics) for example. Then, we juxtapose for the
sake of comparison the same with to the popular proposition “The money supply
M is an exogenous policy variable
chosen by a central bank, such as the Federal Reserve” (Gregory Mankiw, Macroeconomics); “money supply” is often
denoted as Ms. By
definition, both demand and supply are as at a moment (T0 in the
time dimension).
Let us step into the so-called “money
market.” What if the market is not in “equilibrium,” or Ms≠ Md=
k∙I? Oh, that’s a peanut:
The “I” (for the “nominal” GDP) as the
only “endogenous free variable”
momentarily varies so as to push the money market back in equilibrium. Got
that?
The Truth. Wittingly or otherwise, macroeconomists
virtually fall in the “blind spots” of
the real visionary system of Homo sapiens. First of all, they take mathematical
variations for economic changes. To be true, mathematics is by nature for the
sake of imaginary calculations only.
For instance, the simplest equation 1+
1= 2 is never true as is in the reality because no two things are
precisely the same. When we add one apple to another, we presume they are
identical while propinquity to the reality
of such a presumption depends. The base line: Scientists are not supposed to
rely on mathematics for other purposes than calculation.
Economic life in Here is of six
dimensions, namely L for length to the third order (3), T for time in the unitary
order (1), M for mass (1), and U for utility value (1). Alas, all macroeconomic
theories including the Solow growth model is only of two dimensions (L2).
For instance, all changes (T-1) are cross-sectional (L-1)
so as to grow the economy as if in Eternity along the line of real distance. Well, mathematics disregards
the metric and is naturally silent to dimensions.
Blindsiding
dimensions is limitlessly convenient and enticing, but the Siren Song is
nearby. Watch out!
We
travel some territories as listed below of macroeconomics. The purpose is to bring it down to Here from Eternity.
|
1)
No such thing as equilibrium 2)
No such thing as the market 3)
Allegory of the cave 4)
Variation is not change 5)
The time of Robinson Crusoe 6)
Stock to a flow to a stock 7)
The problem of metric 8)
Dimension algebra 9)
Mathematics is no science 10)
Saving is “spending” |
11)
It’s the demand side, stupid 12)
Production due to power-hours 13)
Potentiality to actuality 14)
Marginal propensity to consume 15)
Law of diminishing returns 16)
Life is home 17)
AI and leisure 18)
Praying for world peace 20)
(After)-life in Eternity |
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