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Economic Science and Logics

By Santiago Sevilla Economist ( Zurich University)


Great experience it was to be able to study Logics and Economics, at the same
time, at Zurich University. One could enter freely to the lessons of Philosophy or
Economics. Universal knowledge was promoted. Famous professors of both sciences
held their brilliant discourses. Rudolf Mayer in Philosophy, Friedrich Lutz in
Economics. Systematic doubt, instead of dogmatism was the tacit rule. The result:
Economics appears to be faulty decades later.
The root of this unpleasant notion lies in Logics. The problem is that it is
ilogical to act in reality, blindly following fiction. Fiction is feigned or
invented theory, a work of imagination, a myth. As it is ilogical to model life
and death in accordance to religious myth, it counters reason to apply economic
models which only follow the whims of the wit. A great number of economic
principles are produced under unreal assumtions, such as "Expectations", "ceteris
paribus", the "Static Economy", the "Close Economy", the "Dynamic Economy", which
all, in the end, lead to conclusions not applicable to the real world, but,
nevertheless, are accepted as a valuable paradigm.
The cult of John Maynard Keynes has led to accept the equality between Savings and
Investment in a static economy, and its contradiction in a dynamic one. Neither
one, nor the other are at all true. Savings is equal to money. Investment is a
different amount all together, and can only be measured statisticaly. The famous
expression S=I is false. It is not even a mere tautology. The concept of
"equilibrium" is again an invention of fancy, a sort of unachievable state of
economic Nirvana. All economic models in their mathematical drapery,
are pretentious fakes of reality, with damaging consequence to factual policies.
Induction through models is the wrong path for economic theory. Only statistical
correlations and factual regularities could create useful deductions with general
validity.
Economics must center its attention into the nature of money, and its true
multiplier, which is the rate of interest. The burden of debt is enormous and
injustifiable. If the state can create money, notwithstanding its bicephalic
nature with two heads, Executive Government and Central Bank or FED, it is
inconceivable and absurd to create debt. The two heads have led the monstruous
Cerberus to a self defeating confusion. This nonsence is worlwide, due to the
revered independence of Central Banks. Public debt in the world is now huge, and
menacing to general stability and progress. But so is taxation, devouring more
than 40% of Income. Here again the state could replace taxation with moderate
money creation. People trust the government with the posibility of waging war, but
people doubts about giving to it the faculty of issuing money according to a well
controlled budget. This again is contrary to logics. Human life is bedeviled by
inconsistency with itself, incongruity and contrariety of things, words, thoughts
and propositions, but it is our duty to turn round to redress errors, and make
amends. I wonder if society is going to persist in these obvious mistakes, after
seeing the light.