We print three displays of the same Diagram of Rates of Flow, AKA the Diagram of **Interdependent Velocities**. The second and third displays simply suggest that the serious reader must keep in mind certain precepts as he/she seeks to achieve **a new paradigm and a new framework** for macroeconomic dynamics. Continue reading

# Category Archives: Monetary Circulation

# The Principle of Concomitance: The Foundation of Equilibrium and Continuity

Concomitanceis, I would claim, the key word in Lonergan’s economic thinking. [Philip McShane, [Fusion 1, page 4 ftnt 10]

Recall that the subtitle of CWL 15 is **“An Essay in Circulation Analysis”**. It is by virtue of **concomitance** that **continuity** and **equilibrium** are achieved so as to constitute an orderly process of circulations. (Continue reading)

# Five Why’s

# Insight Into The “Baseball Diamond”: Discovery For Implementation

Thus, if we want to have

a comprehensive grasp of everything in a unified whole, we shall have to construct a diagram in which aresymbolically representedall the various elements along with all the connections between them. [McShane 2014, 11 (quoting CWL 7, 151)]

We wish here to suggest the insights the reader should have to fully appreciate all that is contained in the Diagram of Rates of Flow. (Continue reading).

# A Normative Dynamic Structure, Despite Maladaptive Errors by “Infielders”

Functional Macroeconomic Dynamicshas adefinite, normative, dynamic structure. Evidently, there is a high degree of indeterminacy to events within such a dynamic structure. All one can say is the game can go all awry. But despite this almost baffling indeterminacy,it remains that there is a definite dynamic structure. [CWL 21, 211-12]

The **velocities** of correlated, interdependent payments must keep pace and be in balance. Payments of dummy money **move **at** velocities in circuits; e.g.** *O = I = E = R* (CWL 15, 54) and *O’ + O” = I’ + I” = E’ + E” = R’ + R” *(CWL 15, 54) The arrows in the **Diagram of Rates of Flow** represent channels containing analytically-distinguished, **interdependent**, functional **velocities**. These dynamic functionings are **defined by the functional relations** in which they stand with one another.

The intelligibility of the **concrete process** consists of two components: an **abstract** **primary relativity** expressing the **normative systematic structure**, and a **secondary component of concrete determinations** from the non-systematic manifold. There is a **normativity** to the dynamic structure. An analogy from baseball may help to make the point regarding **interdependence and keeping pace.**

A large and

positive crossover differenceuncompensated by action from the pitcher’s box will result sooner or later in depriving the groups at second and third bases of all their balls, or if thecrossover difference is large and negative, it will result in depriving the groups at home and first of all their balls. Continue reading

# Lilley and Rogoff Recommending Negative Interest Rates

We are commenting with respect to Andrew Lilley and Kenneth Rogoff’s “**conference draft” **discussing the advisability of a FRB policy of negative interest rates:

** **Lilley, Andrew and Kenneth Rogoff, April 24, 2019: **“The Case for Implementing Effective Negative Interest Rate Policy”** (*Conference draft for presentation at Strategies For Monetary Policy: A Policy Conference*, the Hoover Institution, Stanford University, May 4, 2019, 9:15 am PST) **[Lilley and Rogoff, 2019] **(Continue reading)

# A McShane Sampler Relevant to Functional Macroeconomic Dynamics

Philip McShane had a strong background in mathematics and theoretical physics; thus he was able to understand the scientific significance of Bernard Lonergan’s **macroeconomic** **field theory** in an **Einsteinian context**.

First we display, in brief, key excerpts, many of which contain analogies from physics and chemistry, relevant to the science of Functional Macroeconomic Dynamics; then we show the same excerpts more fully within lengthier quotes. Continue reading

# Understanding All in a Unified Whole

“if we want a

comprehensive grasp of everything in a unified whole, we shall have to construct a diagram in which are symbolically representedall the various elementsof the question along with allthe connections between them.” [McShane, 2016,44]

# A Contrast: Understanding Pricing in Macrostatic DSGE and in Macrodynamic FMD

**.I. Introduction: Contrasting Diagrams and What They Represent**

We contrast an **assumption and description** with an **explanation and interpretation**. We contrast the Dynamic Stochastic General Equilibrium (DSGE) **assumption** **and description** of pricing as **exogenously** given and acceptable as a **lead item** in analysis of economic problems with Functional Macroeconomic Dynamics’ (FMD’s) **explanation** and **interpretation** of pricing **in the light of** the significant functional pretio-quantital flows, which **explain** the dynamic economic process. (Continue reading)

# Explanatory Macroeconomic Dynamics; Relevant In Any Instance

There are five figures below from CWL 15: The single figure on the left represents the interrelations of **interdependent** **Monetary Flows; **and the figure contains the important** condition of dynamic equilibrium: G = c”O” -i’O’ = 0**. The four figures stacked on the right demonstrate aspects of the

**productive phases**constituting a

**Pure Cycle of Expansion.**The bidirectional arrows uniting the two sides signify that the

**dynamic equilibrium**among

**interdependent flows**specified on the left is to be achieved

**consistently**

**throughout the long-run expansion**represented on the right. This

**condition of dynamic equilibrium**is that the crossover flows between the two interacting circuits must

**continuously**

**balance**

**even as they continuously vary in magnitude**in the succession of phases constituting the expansionary process. Just as the

**general laws**of simple parabolic or pendular motion are

**explanatory and applicable to any particular instance**of initial angle and velocity, so a) the

**primary relativities**of productive and monetary flows, and b) the

**primary differentials**of long-term expansion

**explain**the economic process, and are normatively

**relevant in every particular instance**. All five diagrams are

**unitary**. Each and every velocitous and accelerative flow of products and money has proximate or remote explanatory aspects embedded in all five diagrams. (Continue reading)