The Chimera of Macroeconomics

Through the last couple of decades in the 20 th century, “ outsourcing ” was one of the buzz words in business. The implication: More often than not, “buy” from outside was more efficient (M ∙ U ∙ T -1 ) than “make” it inside, notwithstanding “ the Nature of the Firm .”              At any rate, “Rational People Think as the Margin.” Subject to: ① the fully-functioning machine is the marginal unit, as opposed to the infinitesimal thereof; ② the divide between “to invest or not to invest” is the rate of return 2% PA; ③ “make or buy” is a judgement call after thinking at the margin .   Free to choose. At the capital budgeting , the firm has, again, two alternatives, insourcing the machine and outsourcing the machine. Likewise is upon internal construction; that is, renting it in and selling it out.              In the Republic on the basis of free will a...

    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...