The Chimera of Macroeconomics

  All through, “The only constant is change.” Whom and Where to compete is very much situational as well. Here we focus on competition, as opposed to cooperation where we come later on.   At the household. We compete with family members by birth or by law. The limit to consumable utilities at present is defined by home-produced and market-purchased products. The means to acquisition thereof are limited to 24 hours times the number of members on top of the wealth of the household . The wealth has historically been accumulated through saving to investment of, by and for the household.              Most typically, the master of the household earns monetary incomes out of home, which are to be used in purchasing products (for consumption) and assets (for investment) in the markets. In effect, the incomes are the third means after the wealth of the household as a whole, 16 hours or so of the master and 24 hours eac...

  Believers in of “ ineffective demand ” have imagined such otherworldly ideas as “paradox of thrift” to “ secular stagnation .”   Paradox of thrift. According to Thomas Malthus , we are presupposed to throw whatever unconsumed into the sea  sometimes also called “ Saltwater .”              Cómo es eso ? With the savings from consumption, the rest of us in the rational mind have so many things to invest in. You know what, savings equal investment when exogenous to macroeconomics or outside of Cambridge. There out there in this world is no such thing as a "paradox of thrift." On the contrary, as Daron Acemoglu and James Robinson world-famously verify what fails nations is a lack of motivation to thriftiness or indolence in saving.              As we are more than well aware, the cost of the present ( C ) is the future ( I ). We as nobody would n...

For a starter, we quote from two geo-famed macroeconomists.              Paul Samuelson : “ … one single confusion or fallacy, called by logicians the ‘ fallacy of composition . What is true for each is not necessarily true for all; and conversely, what is true for all might be quite false for each individual” ( Economics , 1948 p.9)              Ben Bernanke : “Although deflation and the zero bound on nominal interest rates create a significant problem for those seeking to borrow, they impose an even greater burden on households and firms that had accumulated substantial debt before the onset of the deflation.” (“Deflation: Making Sure ‘It’ Doesn't Happen Here,” a speech in 2002)              Alas, none other than Bernanke, a student of Samuelson, commits the fallacy of composition. He forgets that t...