Fatal Misnomers: “The General Theory of Employment, Interest and Money”

 

1)     There is no such thing as “the” as far as theories are concerned. A theory as regards a certain kind is a matter of “degree” of confidence. Or, theories are approximations to “actual processes.” At best, “the theory” is of one’s own naming.

2)     There is no such thing as “General” which is applicable to three kinds combined, such as Employment, Interest and Money. Amongst the rest of us, in this particular case of “General,” Employment is for the discipline of Economics and Money is of the discipline “Money, Banking and Finance.” The former is on working over the time in the same space; while the latter about walking across the space in  the same time. The two are beyond combination or consolidation. It would, if anything, a chimera from alchemy.  

              In the middle of the two vices is the virtue of Interest, subject to “a virtue vs a vice” being a matter of subjective “naming” as opposed to objective “reality.” At any rate, “the rate of return” earned from real assets, which are “preferably hoarded” for the future, belongs to Economics. On the contrary, “the rate of interest,” which balances, as at the present, the two sides, credit and debit, is a matter of “Money, Banking and Finance.”

              An honest bystander, by the way, might suspect that “monetary policy” is financial while “a fiscal policy” is economic. By naming, money is generic, while the Bill of budget, Big and Beautiful, is subject to earmarking across products and assets. As such, her suspicion is duly justified: Fiscal policies of BBB is to Economics what monetary policy is to “Money, Banking and Finance.”

              An inquiry of interest: If with the same amount of liquidity discharged, what would be the consequential difference between “monetary policy” and the fiscal policy of “digging a ditch just to refill it”? One thing the rest of us might legitimately imagine is: One is intellectually honest while the other grossly dishonest. Those unlike us would murmur, “Never mind, we are all dead in the long run.”

3)     There is no such thing as a theory of the unknown such as “Employment.” What in the first place do macroeconomists mean with the term employment, “known unknown or unknown known” (indebted to Donald Rumsfeld, ne Trump pas)? The rest of us would never know; for instance, “What is the Employment generally in London or particularly at London School of Economics, Now?”  .

              Economic-ly saying, the “production” as in GDP is from hard-working over the “long” year, hopefully ante mortem, of the  so-called "labor," "capital" and "land." Even a superman or a wonder women could not suggest how to name the number of working hours of each and all in a singly “short” day, not to mention through the year of as “long” as 365 days?  

              Did you mean with “employment” the gross national working hours per annum of each to all the units of "production factors”? You must be kidding, or “barking up the wrong tree.”

4)     There is no such thing as a theory of “Interest” if in the meaning of “expected returns” (either to real assets or to financial instruments"; because, among other reasons, "the basis of such expectations is very precarious" (p.315).  

              By definition, expectation is speculative; any rate of interest or of return is generally personal. Particularly, furthermore, the interest rate suggested in the liquidity-preference equation is monetary and “nominal”; consequently, it has nothing to do with GDP (Y) in “real” quantities. Be careful not to fuse “and” and “or.”

5)     There is no such thing as a theory of money. Among other follies, there has never been a definition of money ever since the Mercantilism was over. In that regard, the so-named “money” is no less illusive than the so-called “mirage is elusive.” We  come back  to  this in  particular in "the short run where  none of  us are dead."

              Exogenous to Cambridge, none has ever built a hypothesis without defining what the object is. Endogenously therein, notwithstanding, whatever will be will be It. No news at all: They have built macroeconomic so-called “theories” and “models” in, of and for the “short run” without naming It. 

              Well in ordinary, even a spirit has the name “fairy” for better or “ghost” for worse.

 

For instance. That there was in the General Theory of Employment and Interest Rate:

In our scheme, the independent variables are the propensity to consume, the schedule 

of the marginal efficiency of capital and the rate of interest. The dependent variables 

are the volume of employment and the real national income.

         

  That there was another for the sake of sake:

      

See, I Told You So: “[W]e are lost in a haze where nothing is clear and everything is possible (p.293).”

Doris Day - Que Sera Sera