December 7, 2016

Nick Rowe: Bury me at the end of coal pit

Comment on Nick Rowe on ‘Why I=S is a bad place to start doing macro, again’


Economics is a failed science and this is the current state in Hume’s apt metaphor: “... when the road ends at a coal-pit, he [the traveler] doesn’t need much judgment to know that he has gone wrong, and perhaps to find out what has led him astray.”

So, let us find out what has led economics astray.

Nick Rowe says: “National Income Accounting identities then tell us: C+S=Y=C+I, and therefore S=I”

Just for the record (there is no hope for Nick Rowe to ever understand it):
  • Because of a conceptual error/mistake/blunder, these equations are false since Keynes.#1
  • National accounting replicates the conceptual error/mistake/blunder and is false, too.#2
  • All After-Keynesians, except Allais, were too stupid to identify the foundational error/mistake/blunder of macro.#3

Egmont Kakarot-Handtke

#1 For the formal proof and more details see cross-references Refutation of I=S
#2 See working paper ‘The Common Error of Common Sense: An Essential Rectification of the Accounting Approach
#3 See working paper ‘Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It’ and post ‘How Keynes got macro wrong and Allais got it right

Related 'The false foundations of economics' and 'Why economists know nothing' and 'How to end the Punch and Judy show about profit' and 'Getting out of IS-LM = Getting out of despair' and 'Worthless Canadian model bricolage' and 'I is never equal S and even Nick Rowe will eventually grasp it'.