The Chimera of Macroeconomics

  By definition and as implied by Adam Smith, Economy flows (T -1 ) goods and services from production (T -1 ) to consumption (T -1 ). In between is commerce, or “trade after specialization.” By design or by chance, la main invisible of the market has two moving hands (T -1 ), that is, the “demanding” and the “supplying.”              On the sidewalk of the economy, Finance balances (T 0 ), or puts in equilibrium, between two petrified hands (T 0 ); the credit side (liabilities, or “sold assets”, T 0 ) and the debit (assets, or “bought assets,” T 0 ).              Owing to conventional wisdom, incidentally, we are never crying (T -1 ) over the split (T 0 ) milk. While history is stuck (T 0 ), the economy keeps flowing with efficiency (M ∙ U ∙ T -1 by definition). For instance, “ labor productivity ” is defined to be the utile output (M ∙ U), or “good” as s...

  Solving the trouble of mismatch between the unlimited desires and the limited resources most of us rely on “the market” for trade after specialization called hereinafter “commerce.” The purpose is of course efficientiating the process from production to consumption. Bridge 2.0 over Troubled Water . On the flipside of being confined to 125 years (T -1 ), life is cyclical. As a result, we are destined to manage obtainable utilities as efficiently as possible over the long run  of lifetime. Individually like Robinson Crusoe and collectively as Mr. and Ms. Does we “manage the portfolio” of assets, human and physical.              In the earlier cycles, we buy, or invest in, physical or human assets; while on the other hand we as needed sell credit , or “short-sell an asset,” usually human but sometimes backed up with physical. In the later cycles, we disinvest of physical assets partly to make up for the shortage i...

  We already know that the Phillips curve of tradeoff between the inflation rate (T -1 , or per period) and the unemployment ratio (T 0 , as at a certain moment) makes little sense. Other than the curve, we never plainly compare the driving speed to the driving distance: the two are different in the time dimension.                 Somehow, we have the Baumolite equation in hands: The wanted stock of money for expected transactions of all purposes M w = ( b ∙ T / 2 i ) 1/2 . (We avoid the denotation M d because “money demand” is a fatal misnomer.) Now, we do purposefully move from transactions in general to the nominal gross expenditures ( P ∙ Y ) in particular, together with the convenient assumption T= k ∙ (P ∙ Y) , where k is constant of course.                   Then we can derive this equation: g= 2m+ Δi/ i – π – Δ b ...