Procrustean Art of Backtracking: “Functions of Money”
One of the reasons for the macroscopic blunder of macroeconomics is richness in misnomers and misconceptions. As a natural consequence, many models are stillborn. The IS-LM is one and the AS-AD another. The one out of so many misnomers is “stock variable.” To be true, the “stock” is the quantity as of a certain moment and by definition cannot “vary.” Basically, macroeconomists take mathematical variations without the time dimension (T 0 , or as at the moment) for economic changes over time (T -1 , or per period). For them, time flied across space (L -1 but T 0 ) in the first place. “Money supply” and “money demand” are two others. To be true, money is to the market what time is to life. Both time and money as currencies are beyond our control and anything but demanded; for instance, time is to Robinson Crusoe what “money” i...