Posted To RWER Blog Regarding Calibration In Economics

LS: In the hands of Lucas, Prescott and Sargent, rational expectations have​ been transformed from an – in principle – testable hypothesis to an irrefutable proposition. Believing in a set of irrefutable propositions may be comfortable – like religious convictions or ideological dogmas – but it is not science​.

So where does this all lead us? What is the trouble ahead for economics? Putting a sticky-price DSGE lipstick on the RBC pig sure won’t do. Neither will just looking the other way and pretend it’s raining.​

P:  For guys who claim to be math honchos using non dimensionally homogeneous equations is seriously bush league. The experience of math physics teaches that, though highly complex, systems can often be successfully modeled by a small number of equations. It’s surprising how constraining each added governing equation can be. For example, in fluid mechanics, the continuity equation, which says voids cannot appear inside the fluid or at a wall, is highly constraining. Combined with momentum conservation, a few fluid constitutive equations, and initial data, and you have the basis for fluid dynamic modeling.
My point is, if you find the correct model equations, it doesn’t take much more than that to make real predictive progress. When you see a discipline wallowing around getting no where prediction wise, the problem isn’t insurmountable complexity. Often it’s failure to build the right simple model. Steve Keen’s approach comes to mind but there are certainly others.

Me:  What does this blog post tell us? It tells us that not integrating policy with philosophy is the road to hardening orthodoxy. It also tells us that economic theory has not consciously recognized the ultimate integrative concept that will bring the discipline into the modern age.

Quantum physics tells us that in reality “nothing ever touches”. This is anathema to our temporal universe habituated senses, but is paradoxically the actual truth. The cosmos is actually one seamless whole that simultaneously we experience as separateness…..and the only way to resolve this is to cognite on the one philosophical concept that being an expression of duality ultimately integrated to the point of thirdness greater oneness, that is grace as in a flowing wholeness/oneness/process… necessary to enlighten and make sense of that personal, economic and temporal universe paradox. And that aligning policy with that concept is simply the temporal universe expression of logic.

May we please not let orthodox non-integrated/non-integrative science be the stumbling block that keeps finance’s monopolisitc paradigm of Debt Only in effect for another 5000 years?

Even though I’m in agreement with virtually all of the heterodox theoretics being presented on this blog I’m the only one here who is comfortably willing and able to talk about monetary and economic POLICY because no one else here is confident enough to do so, and the reason for that is they have not yet recognized the philosophical concept upon which the new economic philosophy and paradigm needs to be based.

When you do a thorough exegesis of that concept and see how it fits seamlessly within the legitimate operations of economics, resolves its deepest and most chronic problems, replaces the dominance and primacy of the current structurally dominant entity and its paradigm (private finance/Debt Only) and defines the new paradigm itself…you become the one eyed man in the country of the blind.


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