The Chimera of Macroeconomics

  In economics, the term “unit” has two uses. The one is the name used in the accounting, such as the dollar sign ($) as opposed to the euro sign ( € ), or the yardage as opposed to the meterage. The other is the marginal unit (M for mass) used in the decision making, such as the one-dollar bill (U ∙ m) as opposed to the one-euro bill, the one physical yard (L as a type of M) in race as opposed to the one meter. Probably we would be better-off if we vary the first “unit” to “metric.” For instance, the dollar sign is the metric of account and the one-dollar is the unit as such.   At the household. The metric of account is the hour, or hora in Latin. The marginal unit is hora as well. Our end @home is always and everywhere the utility , outright or removing a disutility; while the currency as fundamental means is the hour . So, the home economy is accounted for in terms of M ∙ U ∙ T -1 ; M is always real, U real but situational and private, and T real but continuous an...

  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...

Suppose a representative product (in mass ) whose utility (in value ) is exchangeable for the purchasing power of the piece of paper (75% cotton 25% linen, to be precise) with the face of George Washington in the front. As a matter of fact, this is the way we, if in the US, index the representative mass-cum-value , or “rep” hereinafter, to the one-dollar bill. Then, one (1) $5 supra-orange is comparable to five (5) reps ; one $3 meta-apple is equivalent to three (3) reps .              In the meantime, incidentally, the otherwise-useless rectangular paper becomes the legal tender to play the function of economy-wide medium of exchange. It is of course the portrait of George Washington (together with two signatures) that transforms one into the other: or the legal tender becomes the medium of exchange.              With the above said, by way of accounting for repr...