The Chimera of Macroeconomics

    With “benevolence” out of question, the rest of us wear quite many economic hats in everyday life: 1)      Home or in private capacity                - Producer and consumer of goods and services                - Constructer of and investor in assets including human credentials                - Owner and renter of physical and human assets 2)      At the firm in public capacity                 - The investor in and a partial owner of the firm                 - The renter of various assets, physical or human               ...

Classical economists including Irving Fisher defined the real interest rate to be the nominal rate after the inflation rate : or r= i- π . This makes sense (to a certain extent).              Somehow, Cambridge macroeconomists call as “real variable” a monetary aggregate divided by the price level; for instance, the “real GDP” ( Y ) is to mean the monetary GDP over the price level ( Y N / P ). They claim the real GDP as such represents the GDP in “real quantities.” The same is for all the other macroeconomic aggregates such as C, I, G, X, M (for Imports) , L, K, N and the like. Very fine, convenient and great, but for being totally empty!              Emptiness No.1: There is no time dimension conceived howsoever. The GDP must represent an aggregate per annum , but the year in such a definition is never clear: the past, the coming or other 360 consecutive days?...