The Chimera of Macroeconomics

  To be fair, the velocity of money ( V for velocity) is a non-issue in Cambridge Macroeconomics . Probably, that is the single greatest mistake ever made in Cambridge. As far as the real economy is concerned, “velocity of money” is far more relevant than “ liquidity preference .” To be truthful, the latter is an oxymoron at best.              According to Irving Fisher from New Haven, “Money is of no use to us until it is spent” (1930, p. 5). He is not alone: Paul Samuelson from Cambridge and William Nordhaus from New Haven second, “Money is useless until we get rid of it” (2010, p.458). Worse, money when preferred is in solid legal tender or thin-airy demand deposits, far from liquid, fluid or current.              At any rate, the rest of us as non-macroeconomist couldn’t agree more with the three great names. In the first place, we are legally forbidd...

  <Questions for Review of “Money Demand”> 1.      What was “money” historically? - Commodities: shells, stones, copper, nickel, silver, gold and so on - Classical economists: a veil - David Hume among others 3) : the annual average 2) of monetary outstanding               - John M. Keynes among others: the outstanding balance as at a moment of interest - John R. Hicks among others 4) : something that is a “constant” fraction (or multiple) of                                                                          the annual “nominal” income: i.e. M= k ∙ I = k ∙ ( P∙Y ) 2.      How do we calculate the average?             <A> There ar...