The Chimera of Macroeconomics

  We revisit an insightful observation of J. S. Mill : Take, again, such a familiar case as that of a good system of taxation and finance. This would generally be classed as belonging to the province of Order. Yet what can be more conducive to Progress? A financial system which promotes the one, conduces, by the very same excellences, to the other. Economy, for example, equally preserves the existing stock of national wealth, and favors the creation of more. –Words on a good taxation system to follow- ( Considerations on Representative Government , 1861, Ch. II)      Roughly saying, incidentally, Order is to stability of the systems of taxation and finance what Progress is to growth of the economy . Several pages later, Mill additionally clarifies that Order and Progress are of “a difference merely in degree” as opposed to “these two functions of a government” (“upon men” vs “upon things”) being different in kind.        ...

  We manage the lifecycle not only physically but also economically. Sometimes in economic life we are in the long position of the General purchasing force of Money, while other times in the short of the “ preferred liquidity .” Again, money as legal tender (U ∙ m) is a “unanimously current” means to the end of demanding for products (M ∙ U).                “Everywhere except for in Cambridge,” “the only raison d'être of money is in facilitation of trade”; while trade is no more consumption than productions is consumption. In the middle of the road, “Money is useless until a Time for Us to sing Con Te Partirò .”              Now the real question: How for us to bridge between the short of money and the long of money? Whatever it might be named took a long run in classical times and a medium run in modern times; but it takes at present as short a run ...

  Worldwide except for a couple of renowned cities, the three captioned words are generally regarded of a certain kind, yet another kind than utility, economy, efficiency and effectiveness. First of all they are “nominal” (U ∙ m), as opposed to “real and substantive” (M ∙ U) of the latter. This fact (read: truth) is particularly opined by the Nobel laurates Paul Samuelson and William Nordhaus : “Money is useless until we get rid of it” (2010, p. 458; i talics added).              Second of all, “Money, Banking and Finance” when in Classical works would stay “stationary” under the fame of “equilibrium” in stock, balance, and peace; later days, the Keynesians call the same the “steady state” (each in T 0 ). All these are opposed to all those creative powers in the keep of running, flowing, destructing, creating, “nominally destructing yet really creating,” progressing, and growing (all in T -1 ).    ...

Blessed, we do not only have frictions in the physical world but also transaction costs in the economic world. Otherwise, a lot of celebs, with or without a Nobel from Stockholm , would surely lose the job and be rostered as “unemployed,” among other collateral damages.   Die Welt ohne Reibung . Which would you prefer, Rocky Mountains or Tower of London Ice Rink . Depending upon the answer, we can tell who you are.              Next on: Which would be in the longer run, the mountain climbing or the skating? “Rational people think at the margin” (borrowed from Gregory Mankiw ) and would “unanimously” answer that the climbing is in the long run as opposed to the skating for the short run.  (Many many a year ago in a city by the sea, there was an op-ed to the effect that Gregory Mankiw appears to be trading a potential Nobel Prize for actual writing of textbooks. By design, humans prefer real to nominal. ) ...

  If resources were unlimited, we would not need economy. If all are equal we would not need trade. Where there is no need for either, there is no need for economics, either.              Fortunately, both economy (M ∙ U ∙ T -1 ) and trade (M ∙ U ∙ T -1  v is-à-vis  U ∙ m ∙ T -1 ) are absolute necessaries while we stay in Here (T -1 possibly as long as 125 years before “we are all dead”).   Pareto optimum . First, who with the legitimate wherewithal should be served first, from the most desperate to the least desperate? Yes, exactly in that order, whether to the letters of ethics or in the spirit of Adam Smith .              Second, who with the wherewithal should be allowed to utilize the human or natural resources, first before all others, from the most efficient to the least efficient? Yes, exactly in that order.    ...

  There are three types of arbitrage in association with  trade in the market. As arbitrage becomes prevalent, prices will be converging to a particular price level .  There in economics as abstract science will be “one price” of each (independent) event which must be defined per period .              In reality, what we have is not anything more than a rough trend to convergence, subject first of all to information deficiency disorder (IDD). When it comes to crossing over periods, the IDD gets even more problematic due to the maxim, “The only constant is change.” By definition of the would-be “doomsayer” (Heraclitus), the change is over the lapsing time (T -1 ).              By the way, “ asymmetric information ” is anything but news if in the real economy of unanimous and ubiquitous IDD. On the flipside, “being constant” would be news of GOST, or t...