The Chimera of Macroeconomics

  Spot question: How many kinds of models can we name? Two snap answers: 1)      Macroeconomists: There are “so many models,” indefinitely many actually. 2)      The rest of us: We can think largely of four kinds, namely, ① really moving, ② virtually unmoving, ③ invisibly exemplary and ④ Eternal.   11) Model or Not                  “Is the AS-AD Model a model?” It’s a great question except for the fact that the answer all depends.   1)      Macroeconomists in Cambridge shall say, “Are you kidding me?” 2)      The rest of us on the sidewalk, “Well, sort of.”              First, the demand schedule (T -1 ) and the supply schedule are conceivable in the market for each product, an infinitely tiny microcosm out of the greatest macroscopic economy. By conception, ergo , househ...

    A quick question: How many kinds of markets are there in standard vocabulary? A snap answer: There are at least five; that is, the mart in practice, the market in economics, markets in finance and two more in macroeconomics.   8) The “Money Market.” Very clear to the rest of us by now: We keep “money” for the sole purpose of using it as medium in the market while in the meantime saving financial transaction costs in transforming an asset to “the useless when preferred” money (adapted from Irving Fisher, Paul Samuelson and William Nordhaus). On the flipside, the only way to getting rid of the over-flowing money due to “fiscal policy” or else is spending for various things including “final goods and services” of GDP              Don’t even think about eating, wearing or using as shelter the annoying money for the purpose of acquiring utilities: it’s not only deleterious but unlawful. On the waysid...

  Many a macroeconomist refers to “empirical science.” Is physics one? Is chemical engineering another? Is economics a third? Is finance a fourth? Is macroeconomics yet another? What about “political science”? Science for Abstract Theories . Through history, mathematics used to be named as “science” (e.g. J.S. Mill, 1861). In modern times, it is not so any more. Particularly in the US, the term STEM differentiates science, technology, engineering and mathematics from one another. Generally speaking: ①    Science is of idealized abstract theories from observations and experiments of the reality, natural or economic. ②    Technology is a set of theories and other knowledge more or less readily applicable to the practice. ③    Mathematics is for the sake of convenience in calculation while being silent to causality and blind to metric of dimensions and scales. By the way, measurement is one calculation is another; the former with metric the latter...

  We in the physical world have three ultimate kinds of resources, viz. Time (T), space (L 3 , L for Length) and Mass (M). By definition, resources are limited. Limited in what sense? Of course vis-à-vis human wants, or “necessities, conveniences and luxuries” Thomas Malthus talked about (1836).              See we told you so: Economy ( 经济 , jīngjì ) in the meaning of “efficiency” is a necessity in life of us the human. “Economy” in what terms? Of course, Utilities per hour of Time (M ∙ U ∙ T -1 ); whereas Utilities encompass necessities, conveniences and luxuries; whereas the time is our ultimate currency in Here on Earth. Probably, the Malthusian “indolence” would be a type of convenience or another type of luxury; so might “leisure” be. Oh wait, we when in Economy need a fourth dimension of accounting, the Value of utility (U) W.S. Jevons talked about (1957 posthumous).        ...

  Amongst the rest of us, all “real variables” as named in Cambridge macroeconomics are surreal, if not outright deceptive.   7) Real Variables of Quantities              We never consume apples and oranges for their own sake (M for mass), but we buy into their utilities (M ∙ U). Due to the difference in kind there is no way to add utilities directly of the two products. Owing to the sovereignty, blessedly, we have the common utility metric called “the unit of account” as printed on legal tender; if in the US, for instance, the $ sign is the unit (U) and the dollar bills are the legal tender (m ∙ U).              Now with legal tender as the proxy of all different utilities (M ∙ U), we can add, indirectly notwithstanding, oranges and apples as traded in the respective market over multiple accounting microscopi c periods; all the way to the national i...

  Appetizing question: “Is Shaquille O'Neal tall?”  The only consistently (L -1 ) and continuously (T -1 ) true answer: “His stature is what it is.”               In everyday life, we live in a given community with friends, foes, rights, wrongs, benefits, costs, “the good, the bad and the ugly” of all different kinds and degrees. As such most everything is subject to comparison. For instance, you are taller than he is taller than she is taller than I am taller than my kid is taller than the doll is, and on and on. At this moment, for another, I would prefer knowledge of political economy to physics to mathematics to economics to AI technology, & cetera , all the way to knowledge of macroeconomics.              In no case all through the long process of “production to consumption” (to Adam Smith): The rest of us as no Scrooge would never ever “prefer liquidity” to a certain cr...

  Probably by now, it is surefire clear ( 明若 观 火 , míngruòguānhuǒ in pinyin ) to the rest of us that a price for each is alive and active at the moment of individual exchange. On the contrary, the price and the price level are dead and fixed at the time of accounting for the collective exchanges.   Paraphrase 1 . By saying “moment,” we mean “the shortest run”  (T -1 )  where no relevant changes take place. To be true, there in Here on Earth is no such thing as a moment  (T 0 ) . Paraphrase 2 . A price is applicable to each exchange and at the "moment" of exchange. In theory of the real marketplace, there from a certain short "moment"  of time   to the very "long run" can possibly be as many prices as exchanges are.              Again, the time never flies across (L -1 ) but it flows over (T -1 ). Paraphrase 3 . There  per accounting period  are "so many exchanges" but only...