The Chimera of Macroeconomics

  Amongst the rest of us, all “real variables” as named in Cambridge macroeconomics are surreal, if not outright deceptive.   7) Real Variables of Quantities              We never consume apples and oranges for their own sake (M for mass), but we buy into their utilities (M ∙ U). Due to the difference in kind there is no way to add utilities directly of the two products. Owing to the sovereignty, blessedly, we have the common utility metric called “the unit of account” as printed on legal tender; if in the US, for instance, the $ sign is the unit (U) and the dollar bills are the legal tender (m ∙ U).              Now with legal tender as the proxy of all different utilities (M ∙ U), we can add, indirectly notwithstanding, oranges and apples as traded in the respective market over multiple accounting microscopi c periods; all the way to the national i...

  Let us get back to the reality from Cambridge macroeconomics. First of all, we must admit that the gross domestic products (GDP) and the gross national income (GNI) are estimated in the national income accounting. Second of all, the so-called “financial accounting” as such is designed to be conducted with many names given in GAAP (for generally accepted accounting principles).              Trivial yet thirdly, GDP and GNI are a matter of naming. We for the sake of convenience disregard the difference in the two names, “domestic” and “national.”   Nominalism of “Unit of Account.”   To begin, the thaler in virtual and the dollar in real, both as unit of account, are a matter of naming.                More critically, all accounting, particularly “financial” shall be done with the name of “money” as currency; the name shall be continuous ...