The Chimera of Macroeconomics

  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...

  In a sense, the great tragic comedy of macroeconomics starts from “so many” misconceptions to as many stillborn names. Macroeconomists shall heed to the Confucian saying two millennia and a half ago, “Masters get the names correct before trying to teach or lead people” ( 正名 , zhèngmíng ).              If you, for instance, shout “ Adrian ” while intending to call “ Private Ryan ,” thou shalt not be able to save him ante Eternity of both. Wake up!   Factory, Market vs. Economy . By naming, the firm resides on one side of the market facing the household on the other side. “Natural” or otherwise, “ sticky wages ” never equal to “sticky prices”: the former must also affect the demand curve and subsequently the latter. Don’t forget to remember that the household and the firm are legitimate residents in the community including the cities of Cambridge and affect one another. If you ever forget, you are destined to ke...