Fallacy of Composition: Hand vs Hands
“Give me a one-handed Economist. All my economists say 'on ONE hand...', then 'but on the other’” is said to have been said by the former US president Harry S. Truman . The complaint notwithstanding, each and all economists have by creation two hands. Economists are supposed to work, individually and collectively, on the economy. As such, the real question is, “How many hands does the economy have?” Needless to say, the answer depends on whom we ask the question of. The Liquidity Preferrer . As the case may be, at a certain level of interest rate people “unanimously” prefer the liquidity to all the other assets, physical and financial. This must fair-ly and fairy-ly mean that the velocity of money ( V ) falls down to the earth, or “the absolute zero base” as sometimes called, and that positively out of blue: V= 0 , period. First ...