Functional Macroeconomic Dynamicshas adefinite, normative, dynamic structure. Evidently, there is a high degree of indeterminacy to events within such a dynamic structure. All one can say is the game can go all awry. But despite this almost baffling indeterminacy,it remains that there is a definite dynamic structure. A large andpositive crossover differenceuncompensated by action from the pitcher’s box will result sooner or later in depriving the groups at second and third bases of all their balls, or if thecrossover difference is large and negative, it will result in depriving the groups at home and first of all their balls. Continue reading

# Category Archives: Monetary Circulation

# Lilley and Rogoff Recommending Negative Interest Rates

We are commenting with respect to Andrew Lilley and Kenneth Rogoff’s “**conference draft” **discussing the advisability of a FRB policy of negative interest rates:

** **Lilley, Andrew and Kenneth Rogoff, April 24, 2019: **“The Case for Implementing Effective Negative Interest Rate Policy”** (*Conference draft for presentation at Strategies For Monetary Policy: A Policy Conference*, the Hoover Institution, Stanford University, May 4, 2019, 9:15 am PST) **[Lilley and Rogoff, 2019] **(Continue reading)

# A McShane Sampler Relevant to Functional Macroeconomic Dynamics

Philip McShane had a strong background in mathematics and theoretical physics; thus he was able to understand the scientific significance of Bernard Lonergan’s **macroeconomic** **field theory** in an **Einsteinian context**.

First we display, in brief, key excerpts, many of which contain analogies from physics and chemistry, relevant to the science of Functional Macroeconomic Dynamics; then we show the same excerpts more fully within lengthier quotes. Continue reading

# Understanding All in a Unified Whole

“if we want a

comprehensive grasp of everything in a unified whole, we shall have to construct a diagram in which are symbolically representedall the various elementsof the question along with allthe connections between them.” [McShane, 2016,44]

# A Contrast: Understanding Pricing in Macrostatic DSGE and in Macrodynamic FMD

**.I. Introduction: Contrasting Diagrams and What They Represent**

We contrast an **assumption and description** with an **explanation and interpretation**. We contrast the Dynamic Stochastic General Equilibrium (DSGE) **assumption** **and description** of pricing as **exogenously** given and acceptable as a **lead item** in analysis of economic problems with Functional Macroeconomic Dynamics’ (FMD’s) **explanation** and **interpretation** of pricing **in the light of** the significant functional pretio-quantital flows, which **explain** the dynamic economic process. (Continue reading)

# Explanatory Macroeconomic Dynamics; Relevant In Any Instance

There are five figures below from CWL 15: The single figure on the left represents the interrelations of **interdependent** **Monetary Flows; **and the figure contains the important** condition of dynamic equilibrium: G = c”O” -i’O’ = 0**. The four figures stacked on the right demonstrate aspects of the

**productive phases**constituting a

**Pure Cycle of Expansion.**The bidirectional arrows uniting the two sides signify that the

**dynamic equilibrium**among

**interdependent flows**specified on the left is to be achieved

**consistently**

**throughout the long-run expansion**represented on the right. This

**condition of dynamic equilibrium**is that the crossover flows between the two interacting circuits must

**continuously**

**balance**

**even as they continuously vary in magnitude**in the succession of phases constituting the expansionary process. Just as the

**general laws**of simple parabolic or pendular motion are

**explanatory and applicable to any particular instance**of initial angle and velocity, so a) the

**primary relativities**of productive and monetary flows, and b) the

**primary differentials**of long-term expansion

**explain**the economic process, and are normatively

**relevant in every particular instance**. All five diagrams are

**unitary**. Each and every velocitous and accelerative flow of products and money has proximate or remote explanatory aspects embedded in all five diagrams. (Continue reading)

# Elements of The Analysis

**Our aim is to prescind from human psychology** that, in the first place, we may define the **objective situation **with which man has to deal, and, in the second place, define the **psychological attitude that has to be adopted** if man is to deal successfully with economic problems. Thus something of a **Copernican revolution** is attempted: **instead of taking man as he is or as he may be thought to be** and from that deducing what economic phenomena are going to be, **we take the exchange process in its greatest generality** and attempt to deduce the **human adaptations** necessary for survival. [CWL 21,42- 43]

Taking into account past and (expected) future values does not constitute *the creative key transition to dynamics**.*Those familiar with elementary statics and dynamics will appreciate the shift in thinking involved in passing **from equilibrium analysis…to an analysis where attention is focused on second-order differential equations****,** on d^{2}θ/dt^{2}, d^{2}x/dt^{2}, d^{2}y/dt^{2}, on a range of related forces, central, friction, whatever….. **What is significant is the Leibnitz-Newtonian shift of context**. [McShane 1980, 127]

A distinction has been drawn between description and explanation. Description deals with things as **related to us**. Explanation deals with the same things as **related among themselves**. … description supplies, as it were, the tweezers by which we hold things while **explanations** are being discovered or verified, applied or revised. … [CWL 3, 291/316]

again, as to the **notion of cause**, Newton conceived of his forces as efficient causes, and the **modern mechanics drops the notion of force**; it gets along perfectly well without it. It thinks in terms of a **field theory**, the set of relationships between *n***objects**. The field theory is **a set of intelligible relations linking what is implicitly defined by the relations themselves; it is a set of relational forms**. **The form of any element is known through its relations to all other elements.** What is a mass? A mass is anything that **satisfies the fundamental equations** that regard masses. Consequently, when you add a new fundamental equation about mass, as Einstein did when he equated mass with energy, you get a new idea of mass. **Field theory is a matter of the immanent intelligibility of** **the object**. [CWL 10, 154]

# The Relativistic Invariant: The Ideal Pure Cycle at the Root of the Aberrant Trade Cycle

The heart of the normative theoretical framework that can

actually explainbusiness and trade cycles is what (Lonergan) calls the‘Pure Cycle’(§10, §24, 114). This cyclegeneralizesinto clearly articulated relationships theideal phases characteristic of major economic transformationsas they depart from a stationary phase and move through phases first of surplus expansion and then of basic expansion, only to return to a new stationary phase. … (CWL 15, Editors’ Introduction, lxiii) (Continue reading)

# FMD’s Take on Greg Mankiw’s Take on Modern Monetary Theory

**Contents:**

- .I. Introductory
- .II. The “legal” basis of our criticism; the “laws” of the process
- .III. Key objections to Modern Monetary Theory
- .IV. Observations re “A Skeptic’s Guide to Modern Monetary Theory”
- .V. Why and how the Basic Expansion fails to be implemented
- .VI. Addendum #1: Primary relativities of the economic process
- .VII. Addendum #2: Excerpts re the drift to totalitarianism

# The Process is Always the Current, Purely Dynamic Process, etc. (See full title specification below.)

The **process** is always the current, purely dynamic process. The **analysis** is purely functional, purely relational and explanatory analysis. The **theory** is general and universally applicable to concrete determinations in any Instance; The theory is a **normative theory** having a condition of equilibrium.

Our subheadings in this treatment are as follows:

**Always the Current Process:****A Purely Dynamic Process Requiring a Dynamic Heuristic:****A Purely Functional Analysis:****A Purely Relational, Explanatory Analysis:****A Theory, General and Universally Applicable to Concrete Determinations in Any Instance:****A Normative Theory Having a Condition of Equilibrium:**

**Always the Current Process:** Continue reading