The Chimera of Macroeconomics

  By definition and as implied by Adam Smith, Economy flows (T -1 ) goods and services from production (T -1 ) to consumption (T -1 ). In between is commerce, or “trade after specialization.” By design or by chance, la main invisible of the market has two moving hands (T -1 ), that is, the “demanding” and the “supplying.”              On the sidewalk of the economy, Finance balances (T 0 ), or puts in equilibrium, between two petrified hands (T 0 ); the credit side (liabilities, or “sold assets”, T 0 ) and the debit (assets, or “bought assets,” T 0 ).              Owing to conventional wisdom, incidentally, we are never crying (T -1 ) over the split (T 0 ) milk. While history is stuck (T 0 ), the economy keeps flowing with efficiency (M ∙ U ∙ T -1 by definition). For instance, “ labor productivity ” is defined to be the utile output (M ∙ U), or “good” as s...

  Solving the trouble of mismatch between the unlimited desires and the limited resources most of us rely on “the market” for trade after specialization called hereinafter “commerce.” The purpose is of course efficientiating the process from production to consumption. Bridge 2.0 over Troubled Water . On the flipside of being confined to 125 years (T -1 ), life is cyclical. As a result, we are destined to manage obtainable utilities as efficiently as possible over the long run  of lifetime. Individually like Robinson Crusoe and collectively as Mr. and Ms. Does we “manage the portfolio” of assets, human and physical.              In the earlier cycles, we buy, or invest in, physical or human assets; while on the other hand we as needed sell credit , or “short-sell an asset,” usually human but sometimes backed up with physical. In the later cycles, we disinvest of physical assets partly to make up for the shortage i...

  Multiple Choices as to multiple Claims of us:             Cl. 1. There are lives in Mars.             Cl. 2. An organism can exist on the Moon.             Cl. 3. A society may be built in Death Valley.                 Cl. 4. A free market is untenable without the rule of law. We are:             Ch.1, kidding.             Ch. 2, silly.             Ch. 3, insane.             Ch. 4, sober.   No matter what we or your answers may be, there without the rule of law won’t be such a thing as liberty or freedom in the...

  “Theories are approximations. Nothing is completely anything,” or so does the Nobel-laurate Eugene Fama quip. He is very true: At best, laws, principles and theories in science are approximations across the space or tendency over the time.             There are two great reasons for such incompleteness: one is difficulty in specifying and defining the environment; the other presence of frictions. In conjunction with our economic activities in general and market trade in particular, the one may be dubbed as “imperfect knowledge” and the other “transaction costs.”             The law of one price is a rough, very rough, approximation. First, we do not have the complete knowledge conducting arbitrage, interspatial, intertemporal or inter-substitutive. For instance, we do not know for sure prices at Walmart, Trader Joe’s and the other alternative sellers. Moreover, we h...