A Unifying Approach to Macro-Economics

Without discrepancy with the general economic theory or the Austrian school of economics, we recognize the limitations of the Keynesian ideas and the monetary policies of the Chicago school. We examine the effects on the economy introduced by government regulation, bureaucracy, assets and debt, which all contribute to economic instability and inevitable recessions. We introduce the concept of optimization of society’s investment in government, to enable the economy to reach its potential in wealth production, at the same time maximizing the ability for government to deliver its services. We detail a model of a simple society and use it as an example to quantify how much our total investment in government should be and how this relates to standard of living conditions and government’s ability to provide services. In summary, we suggest a prevention strategy, rather than seeking for an instant cure for the economy in a time of crisis.