The Chimera of Macroeconomics

  More or less arguably, the first textbook of macroeconomics is written by Prof. Paul Samuelson ( Economics , 1948). He starts off by warning against “fallacy of composition.” Namely, “What is true for each is not necessarily true for all; and conversely, what is true for all may be quite false for each individual” (p.9 of pp. 622). In short, the market may not be like the economy and conversely.              Alas, we as human are prone to err. In the first place, each and all of us are created with “blind spots.” Macroeconomists not excluding Paul Samuelson as  human are prone to fall in the trap of the very fallacy. An interesting question by the way of commonwealth: What are the “several interacting markets” (to a  geo-famed celeb) of macroeconomics like? Fallacy of Composition . At each moment, the money stock is “fixed” by the central bank, or so is claimed by household-name macroeconomists. As some in...

  To begin, no one with the right mind would “prefer” liquidity to anything.              Ever since the so-claimed “General Theory of the Rate of Interest,” the concept of “liquidity preference” has been firmly settled in some minds of super-strong influence. Alas, the term is an oxymoron at best or as much strongly misleading at worst. Incidentally, “liquidity” is the nick name of money in Keynesian macroeconomics.              First of all, we never hoard money preferably or wishfully. We are forced to hold money “just in case.” More specifically, we carry money around for the purpose of purchasing various goods, services and assets on the way of “muddling through” the long life. The more certain, the less money we hoard.                    In the year of 1930, six years ...