This paper solves the century old puzzle about interest rate with Adam Smith's “Of Stock Lent at Interest”. Interest rate is resulted from the interactions between the borrowers and lenders. It is a function of the default rate of lending and the capital's cost, but it also depends on...

This paper shows that Smith has applied a wrong theory to explain public good financing. The result will be insufficient fund for any public project. Instead of encouraging people to honestly reveal their preference, Smith is encouraging them to cheat

This paper shows how VL Smith has destroyed his own perfect theory. Smith used utility maximization to prove that the last person must take up the balance of a public construction cost. When the resulting equilibrium quantity is different from the given one, a new average quantity breaks up the...

This paper uproots David Ricardo's trade theory. When his production possibility curve is concave, there is comparative disadvantage, which should mean loss from trade and hence no trade. Since concave curve is common and realistic, his trade theory is obliterated

Martin Feldstein distinguishes between nominal and real interest rate, and wants to compensate those hurt by inflation, unfortunately he does not have that money. Karl Marx uses profit rate to search for interest rate, but his resulted profit is always zero. To support Marx's Kapital, John...

This paper reestablishes Hayek's assertion that buying a new overcoat will reduce output and unemployment. It is because the spending is like pulling rice plants to help them grow: it simply kills the plants. The proper way to encourage more output, and hence to enjoy more consumption, is by...

This paper proves that Keynes' positive relation between consumption and income is only a statistical observation. No economic theory can support it. Treating superficial observation as theory is cargo-cult practice. This paper then suggests references for drawing correct conclusion about...

This paper refutes Gregory Clark's chauvinist view that European countries are superior to the Asian ones, because they have been so. This paper proves that Clark's empirical result is merely a movement along an isoquant with no implication on productivity. Then, this paper works out a similar...

This paper disproves Ricardo's simple relation between cost and price. Instead, it shows that a more valuable worker may lead to lower price, or more quantity and profit. This paper also shows that practicing Ricardo's simple-minded logic is despotic with suicidal result, and that its...