Wednesday, February 12, 2014

Dissecting the Mumbo-Jumbo Machine Meme of Economics (#MJMMOE)

Many a pundit in economics would like you to believe:
Gee whiz, Mr. Wilson it works just like a mechanical machine.

Of course that is pure mumbo jumbo.

But where does the mumbo jumbo hide?
That will be the focus of this dissection.

Let's start with the proposition that all "transactions" are the same.
Are they?

When Mr. Farmer agrees to swap his 40 acres of wheat for 1000 barrels of Mr. Drake's oil production, is that the same as ...

When Mr. H. I. Broker agrees to sell an HI policy to Mr. S. M. Broker in exchange for 1000 shares of Enron corp.?
(HI=Health Insurance, SM= Stock Market)

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