March 19, 2021
Macroeconomics ― still dead after 80+ years
Comment on Mason/Cochrane on ‘The American Rescue Plan as Economic Theory and Back to the 60s’
How can you know that both Mason's and Cochrane's macroeconomics is proto-scientific garbage? Search for the term profit and you will come up with nothing. So, both economists are doing economics without ever mentioning the foundational concept of economics. That is like doing physics without ever mentioning the concept of energy.
For this reason alone one can forget the whole discussion. Keynes messed up macroeconomics 80+ years ago because he was too stupid for elementary algebra.#1, #2 But economists have not realized anything to this very day.
The 3-sector macroeconomic Profit Law Q≡(G−T)+(I−S)+Yd implies Public Deficit = Private Profit. Therefore, the current policy of massive deficit-spending/money-creation will result in a profit explosion (the other factors taken out of the picture for the moment).
What unfolds before our eyes is that the Oligarchy pulls off the biggest redistribution of income/wealth in recent history. Deficit-spending/money-creation pushes up macroeconomic profit. So, private financial wealth grows in lockstep with public debt. WeThePeople owes the debt and is taxed for the interest payments to the Oligarchy in all eternity. The debt, to be sure, is rolled over and grows permanently. The rest happens beyond the time horizon.
Mason/Cochrane agree on: ‘what we need now is new textbooks and theories.’ It does not occur to them that we need to get rid, first of all, of scientifically incompetent economists.
Related: Kevin Hoover, The Struggle for the Soul of Economics, SSRN, in particular, the exit:
"In the end, saving the soul of economics comes down to three things:
2) Vigorous criticism in the search for truth;
3) In the words of Charles Sanders Peirce, following “The First Rule of Reason” “which itself deserves to be inscribed on every wall of the city of philosophy: Do not block the way of inquiry.” [Peirce 1931, para. 135]"
For more about macroeconomics see AXECquery.
For more about macrofoundations see AXECquery.