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 ...

    Chapter 1 The Economy in “Nominal Money”              Suppose John Greedy McScrooge puts one billion dollars under the mattress on the beginning of Mach for the purpose of “saving” (for the future). Originally, the money was earmarked to be spent in the month for widgets. His individual market demand curve for the widget suddenly disappears. There is an interspatial gap of spending between the two scenarios, original vs actual.              A classical economist would account for such a variation in March: ① the aggregate demand curve shifts to the left; ② the market price declines; ③ the real quantity traded, or sold and bought, declines; ④ accordingly, the suppliers in town who happen to be “rational” collectively reduce the “real quantities” of production; ⑤ notwithstanding, the market is cleared in equilibrium; ⑥ everybody including McScrooge i...