Velocity Wanted: Infertile Like the Mule
The horse is utile and fertile. The donkey is utile and fertile. The mule is utile but infertile. According to a celeb (ex)-columnist, the IS-LM model “makes a lot of sense.” “Sense,” in what sense is it? Probably he means “utile and fertile.” Alas, such a sensible saying as “The sun rises in the east” might be conventionally utile but “empirically” futile. No more is the supposedly “sensible” IS-LM! Frictions and Transaction Costs. By naming, a product, good or service, means utility for the present while an asset for the future. As David Ricardo from London illustrates, on the other hand, “trade after specialization of production” is the first of “win-win strategies” as called in business. [Auto-correction: That’s a compromise , not a strategy; by naming, there is only one winner in every war .] In theory, we don’t need money at all according to the Ricardian “theory” as such. In a sligh...