Einstein said in connection with Special Relativity Theory, Everything is relative. Lonergan said, The analysis is purely relational. In, normative Monetary Field Theory all flows of products and payments are connected in a purely-relational, unitary system.
How many socioeconomic problems are primarily cultural problems, with leaders throwing more and more money in vain at what are basically problems of culture and its ethos? A president or prime minister or chancellor must not confuse cultural problems with economic problems. A vast educational effort is called for.
A Must-Read: Fred Lawrence, “Money, Institutions, And The Human Good”: An Ordered Perspective Distinguishing Social and Monetary Values.
when a limited liability company has served its day, it goes to bankruptcy court; but when bureaucrats take over power, they intend to stay. … when the pressure of terrorism is needed to oil the wheels of enterprise, then the immediate effect is either an explosion or else servile degeneracy. (CWL 15, Editors’ Introduction xxxiv) Continue reading
Our framework is the Macroeconomic Field Theory represented by the two operative circuits connected by “crossovers” shown in the Diagram of Rates of Flow. (See above right and CWL 15, 55) Important theoretical components of the analysis are a) the abstract explanatory formulation based on the concomitance of basic Expenditures with the basic Outlays, and b) the correlation and normative concomitant variation of the magnitudes and frequencies of flows of products with the magnitudes and frequencies of payments.
P’Q’ = p’a’Q’ + p”a”Q” (CWL 15, 156-62)
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… , positive or negative transfers (from the Redistributive Function) to basic demand (D’-s’I’) and consequent similar transfers (from the Redistributive Function) to surplus demand (D”-s”I”) belong to the theory of booms and slumps. (CWL 15, 64)
The channels of circulation replace the overall dominance claimed for general equilibrium theory, … More positively, the channels account for booms and slumps, for inflation and deflation, (CWL15, 17) Continue reading
The Wall Street Journal of 4/18/ 2019 had a column entitled “Easy Money, Bad Decisions” by James Grant reviewing Andrew H. Browning’s book, The Panic of 1819. Grant related how the government’s financing of excessive expansion with careless loans led to panic and crisis.
We have commented elsewhere on so-called Modern Monetary Theory: See herein So-Called Modern Monetary Theory Does Not Qualify As Scientific Macroeconomics, FMD’s take on Greg Mankiw’s Take on Modern Monetary Theory, Alberto Bisin Re Modern Monetary Theory, and Modern Monetary Theory is Backward.
The economic process, like a motor car, has laws of its own which drivers-participants must respect in order to operate the “vehicle” properly and avoid driving it into a ditch or depression. (Continue reading)
The Wall Street Journal of 4/6/2022 featured an article by William A. Galston entitled “How Will Inflation End?” W. Galston noted that Larry Summers has had a reliable sense of recent excesses and their inexorable consequences. Summers has been right in emphasizing for a long time the inequitable consequences of the intrinsically-inflationary flooding of the money supply by the executive and legislative branches through the agency of the U.S. Treasury and the accomodative Federal Reserve Bank. Continue reading
Textbooks must present a theory of macroeconomics independent of human psychology and anthropology.
A theory of macroeconomic dynamics is constituted by laws which are conceptually prior to and more fundamental than psychological categories such as utility, time preference, rational expectations, irrational behaviorism, etc.. The theory will present the laws and norms to which human psychology must adapt.
Accounting is an exercise within common sense. As such, it is descriptive rather than explanatory, and psychological rather than scientific. (Continue reading)
The list below is excerpted from The IS-LM, AD-AS Models and the Phillips Curve Correlation.
Features of the explanatory science of Functional Macroeconomic Dynamics include: Continue reading