This is the “money is a veil over barter” Dynamic Stochastic General Equilibrium theory assumption….and it is a false one. Steve Keen the Australian economist has de-bunked most of the assumptions behind DSGE, the most basic of which is Equilibrium itself. We live in a monetary economy. Both cost push and monetary inflation exist, and the economy does not tend toward equilibrium, but rather, as Keen has recently re-discovered and Douglas realized over 90 years ago, it is in a continual state of disequilibrium. DSGE theorists like the libertarians in America are actually market idolaters who think that the market is all powerful and you can just let it righteously decide things. What we actually need is to take adult, responsible and gracious control of both cost push and monetary inflation via the policy mechanisms of a universal dividend and a compensated retail discount whose plus (dividend) and minus (discount) are in fact the anatomy of macro-economic equilibrium. People are not entirely rational and businesses aren’t either, but in most affairs they tend in that direction…especially if they are informed by an ethic of Grace. One of the major aspects of Grace is balance as in balanced thinking and acting, i.e. rationality. An ethic of Grace, precisely what we need…in every way.

Wisdomics: Knowing What to Avoid, and What, Where, When and to Whom to Apply Economic Policy

The economic/commercial system itself creates the problems that economics is attempting to fix. Hence there is no solution to micro-economic problems by applying inputs into the system first, or of dealing with aggregate/macro-economic statistics without waiting until after a period of time has elapsed in order to perceive the policy necessary, and only then applying them directly to those aggregations which are the actual and operative problems.

The two most significant and chronic problems of modern economies are a scarcity of actually available money to spend by the individual and the continuous condition of inflation. Given these two metrics and the above fact of the system itself being the problem it follows that an input of money, a dividend, must go directly to the individual without it going through commerce/the economy first, otherwise it will initiate/re-initiate the disequilibrium of the system. This is the essence of Direct Distributism. Likewise and macro-economically, an attempt to regulate only a specific aggregate or one that is not systemically significant will never encompass the entire macro-economy including as per above the element of time. That is why a discount based on a ratio of aggregate statistics and applied to retail sales to the individual which is the sum point of costs for that item, is the macro-economic policy that will maintain and continue through time, the virtual equilibrium created by the dividend.

The essential goal to always keep in mind is the freedom of the individual. In a monetary economy such as ours freeing the individual monetarily and economically also frees the system, and then adjusting the system in aggregate, in order to keep its costs and abilities to clear them as equal as possible, maintains that freedom for all entities individual, commercial and national within the economy. This is the adult, concrete, responsible and most importantly individually ethical thing to do as opposed to declaring that the market, like some conscious and rational entity, will automatically clear itself despite its incredible complexity of form and individual decision making.