The Chimera of Macroeconomics

  Back to the reality, the gross national saving ( S in macroeconomics) is what can get the aggregate dream of better life to come true. “ Paradox of Thrift .” A couple of celebrated names are closely associated with this term of fame. Probably, on the other hand, Thomas Malthus is the first conceiver of the idea. The essence at any rate: The larger the GNS ( S ↑ ), the smaller the MPC ( ΔC/ΔY ↓ ), the smaller the real GDP ( Y ↓ ) . Therefore, the smaller will t he gross national saving become ( S ↓ ) at the end of the day. In short, “the more savings we try the fewer savings we make.”              Nice try!              A lining in the dark cloud: The saving would never implode the economy because the private saving, as opposed to fiscal dis-saving, does not multiply; or equivalently the multiplier shalt not be in the negative territory by decree ...

  Exogenous to “Failed Nations,” we in aggregate save only for the purpose of enhancing creative efficiencies in the coming years. Again, with population growth on hold, the problem of individual life cycle is irrelevant to the aggregate economic cycle. Necessity of GDP Growth. On the demand side, there are largely two drives for the national income per annum per capita to grow over the years expected to arrive. First, we have a dream of better future owing to ever-effective individual demand for utilities. If history is any guide, human desires do not recognize the limit.              Second, we wish to outlive the individual wealth, which might be called “precautionary motive.” This leads to positive bequests of wealth in aggregate or in terms of average per capita on the way of crossing the River. The collective “bequests” in everyday language are an inevitable consequence of “uncertainties” when the eventual ...