The Chimera of Macroeconomics

  Here on Earth. For each and every one of us, the time (duration) in Here is limited to 125 years at the longest. As a natural consequence, the time is the most fundamental currency of us who are no macroeconomist. To paraphrase, anything valuable is the “output” of time spent, currently (“product”) or in the past (“asset”), in its creation (T -1 ) by some of us.              The market trade is nothing but an exchange of the thing (“M” for mass in dimension denotation) between values (U for utility value in dimension) as appreciated by the two parties. The product in the form of a good or a service must have some value (M ∙ U). The invisible hand would not let a value-free product in the market. There is no place for the so-called “real quantities,” after all.              For the sake of convenience in trade across the commonwealth (L -2 L for length)...

  Implicit or explicit, macroeconomists conceive that the so-called “liquidity preference” (L≡ M d ) and “money supply” (M≡ M s ) comprise “the money market . ” This market is often opposed to the “product market” of the real investment ( I ) and the real saving ( S ). As well known to students, the two of L and M join forces to produce the LM curve. Umm, the one out of the IS-LM model!             Unfortunately, there cannot be anything like the LM curve. First, the time (duration), more than critical to the rest of us in Here on earth, is completely missing in the curve. Second, all the relevant terms, demand, supply, “liquidity preference” and the like are misnomers .             As expected the LM curve is misconceived and stillborn so as to be firmly fixated in a textbook.    Reality #1. John M. Keynes illustrates the “liquidity preference” function: M= L(r) (1936, p. 168)...

  Two millennia and a half ago, the great Chinese teacher Confucius preached, “Masters shall get the names correct before leading people” ( 正名 , zhèngmíng ). This maxim could not be more relevant as regards macroeconomic theories of today.             The unfortunate facts of macroeconomics includes an abundancy of misnomers and miscomprehension of names in other disciplines, classical economics included. With so many misnomers and misuses, macroeconomics naturally misleads people, “endogenous” or “exogenous.” Mainstream macroeconomists seem at best to be masters in name only.             For instance, “equilibrium,” general or otherwise, is for mechanisms, never for organisms. In every sense, ether the market or the economy is an organism             The “marginal unit” must mean a small but accountable unit o...

  Q1. Are economics and macroeconomics “complementary”? Q2. Are economists and macroeconomists “substitutive”? Q3. Are “the market” and “the economy” on the same boat? Q4. Is “monetary income” in tradeoff against “leisure”?   The answer to Q1, conceptually “Yes,” but practically “No.” More specifically, the vast majority of macroeconomists get “the market” wrong, the very foundation of economics. Often they go even antagonistic to the market.     “No” to Q2. In general, a competent economist makes a good macroeconomist or the other way around. At any rate, most influential economists are mostly macroeconomists. The answer to Q3 is “Up for grabs.” It depends who you ask the question of. Some say the market is to blame for each and every macroeconomic trouble; others would point fingers at the government in general and the central bank in particular, instead, implying a healthy economy only with wholesome markets.    Ditto to Q4. Really fanta...

  Q1. How likely is your taste for “Hersey Kiss ball” to increase as you take more? Q2. How consistent would your taste for “Irish potatoes” be time after time? Q3. How often would you measure the value of a product in terms of “the Irish meat”? Q4. How ready are you to work for longer hours at a lower wage? Q5. How often do you take a piece of cake and a nap at the same time?   My guesses might be as good as the guesses of you who are not established economists such as Paul Samuelson, William Nordhaus, Gregory Mankiw, Paul Krugman…. and Robin Wells   Let’s check out some realities. No.1. “The product” is supposed to be unique and independent from all the other goods and services. The market denies taking any substitutive product out of indefinitely many into consideration. The product is fixed in the first place. Don’t when in the market even think about a single substitute across products. No.2. “The market” is conceived only for the defined time p...

  There are one commonality and numerous differences between the two gentlemen of fame. Differences first: 1)      American vs. British 2)      In the 19 th vs. in the 20 th century 3)      Salesman all across the nation vs. Economist at Cambridge 4)      …… 5)      …… 6)      …… 7)      So on 8)      So forth Only commonality next:              ***Snake oil vendor (by profession or otherwise, wittingly or not)   Don’t get us wrong: J.R. Hicks’ “equation of Cambridge Quantity” is nothing but ineffective amalgam of Finance (about ownership of financial assets at a moment in time, T 0 ) and Economic activities ( per annum , T -1 ). In Economics jargon, the former is a “stock” and the latter a “flow.” The two of them can be associated, ...

  Scene #1. Paul Samuelson and William Nordhaus, Economics (19 th and final ed.), p.159 Some goods or productive factors are completely fixed in amount, regardless of price. There is only one Mona Lisa by da Vinci. Nature’s original endowment land can be taken as fixed in amount. Scene #2 . Gregory Mankiw, Macroeconomics (8 th ed.), p.508 Panel (a) of Figure 17-5 shows how the … price of housing P H … is determined by the supply and demand for existing stock of houses. At any point in time, the supply of houses is fixed.   Really amazing is how on Earth those household-name economists have so powerful blind spots in their eyes.   Blindness #1 . There is no way to trade what is in the inventory aka “stock.” For instance, we, if not they, can by no means purchase Mona Liza or “the fixed stock at any point in time.” In the first place, the object must be put on the block possibly to be purchased. Blindness #2. In the second place, there in the world does ...