Who Were the Sea Peoples?

Here's a way explain the difference between the "classical" market for loanable funds and the "Keynesian" market for loanable funds, and bring home the important difference between market participants moving along a supply or demand curve and their moving the supply or demand curve. We start with a supply and demand diagram for loanable funds, with the equilibrium interest rate at 6%: Now, consumers decide to save more, increasing the supply of loans and dropping the equilibrium interest rate from 6% to 5%: Well done, market! Equilibrium achieved, end of story, right? Well, if all of our ceteris are paribus , yes, that's it. The market clears at 5% and our tale has ended. And that certainly could be what happens! But it doesn't have to be what happens. Firms are manned by human actors who themselves interpret , and based on that interpretation react to , events. What if they interpret that rise in savings as an ominous sign: consumers ...

They are abstractions that highlight an aspect of the thing being modeled. That is why I deny that, by making a model of a recession in which "recessions are not about output and employment and saving and investment and borrowing and lending and interest rates and time and uncertainty... the only essential things are a decline in monetary exchange caused by an excess demand for the medium of exchange," Nick Rowe has shown that in real recessions, those are the only essential things. For instance, what about the proposition that "The Ptolemaic model of the solar system proves that it is not about rock-and-ice-and-gas planets orbiting a giant plasma orb: The only essential thing is pure circular movement"? But perhaps the problem there is that that is not a good model. So let's say we get a better one: Newton's. Now we have a planet as a point mass, orbiting the Sun, another point mass. Is this the "essence" of the solar system? That d...