Fallacy of Composition: Money Market vs Product Market
A quick question: How many kinds of markets are there in standard vocabulary? A snap answer: There are at least five; that is, the mart in practice, the market in economics, markets in finance and two more in macroeconomics. 8) The “Money Market.” Very clear to the rest of us by now: We keep “money” for the sole purpose of using it as medium in the market while in the meantime saving financial transaction costs in transforming an asset to “the useless when preferred” money (adapted from Irving Fisher, Paul Samuelson and William Nordhaus). On the flipside, the only way to getting rid of the over-flowing money due to “fiscal policy” or else is spending for various things including “final goods and services” of GDP Don’t even think about eating, wearing or using as shelter the annoying money for the purpose of acquiring utilities: it’s not only deleterious but unlawful. On the waysid...