Introduction: In a previous lecture, we gave a New Definition of Probability. In this lecture, we will show how this definition enables us to resolve the massive amount of controversy which surrounds an apparently simple probability puzzle, known as the Monty-Hall problem. The book The Power of Logical Thinking, quotes cognitive psychologist Massimo Piattelli Palmarini: “No other statistical… Read More Marilyn & the Goats: A New Solution to an Old Problem

Lecture 8A provides answers to the question of “What is Probability?”. An article by Alan Hajek in Stanford Encyclopedia of Philosophy lists six major categories of definitions. Many more are possible if causality is also taken into account. These definitions conflict with each other, and face serious problems as interpretations of real-world probabilities. As Bertrand Russell quipped:… Read More A New Definition of Probability

{bit.ly/WPcrd} For necessary background, please see previous posts on “ABC’s of Modern Monetary Theory” and “Differentiating Social, Market, and Government Debt”. In this post, I will provide a critique of Raguram Rajan’s article “How Much Debt is Too Much?”. (Alternative link to Rajan’s article) The article opens with a description of the governments “opening their… Read More Critique of Rajan on Debt

A previous post on “Causes of the Global Financial Crisis” provided a detailed summary of the first three chapters of “House of Debt” by Mian and Sufi. This post provides a brief summary of Chapters 4 and 5, in which they present a theoretical framework which explains why leveraged debt leads to high unemployment following… Read More Debt, Levered Losses, & Unemployment

{bit.ly/AZdebt} In a previous post on “ABC’s of MMT”, I explained the basics of MMT as a preliminary to a critique of Raghuram Rajan’s article on “How Much Debt is Too Much?”. A significant part of the discussion on this post consisted of debates over words and their meanings. My use of words like assets,… Read More Differentiating Social, Market, and Government Debts

{bit.ly/AZgfc} This is a review and a summary of some of the key arguments presented by Mian and Sufi in their recent book “House of Debt.” It highlights the contribution of Mian and Sufi by showing how they have solved the mystery of why there was a huge drop in aggregate demand during the Great… Read More Causes of Global Financial Crisis: House of Debt

{bit.ly/ABCmmt} I was overwhelmed by the level of ignorance displayed by distinguished economist Raghuram Rajan in his article entitled “How Much Debt Is Too Much?” published recently in Project Syndicate on Nov 30, 2020. I had meant to write a critique of the article, but to do so requires starting from the very beginning. In… Read More ABC’s of Modern Monetary Theory (MMT)

Among the many dimensions I have listed in “New Directions in Macroeconomics”, the most important is the moral dimension. If we take Adam Smith as the founder, economics was born as a branch of moral philosophy. However, modern economists claim that the subject is purely positive and scientific, and makes no value judgments. Before we… Read More Economics as Moral Philosophy

This post continues a sequence of posts on the numerous changes required to create a Macroeconomics for the 21st Century. The previous post was Ecological Economics For the next post in this sequence, see Economics as Moral Philosophy Classical Physics, the model for modern economics, was based on the ideas of stability and permanence of astronomical orbits; see… Read More Complexity Economics