The Chimera of Macroeconomics

  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...

  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 ...