All that should be forgotten from traditional macroeconomics

A number of messages from traditional macroeconomics no longer tally with the reality of contemporary economies at all . The lessons of conventional macroeconomics must therefore be used with much care . These lessons at odds with recent reality are: That declining unemployment gives rise to inflation; That rapid money creation leads to inflation; That central banks practise inflation targeting; That exchange rate depreciation is good for growth and employment; That long-term interest rates (the slope of the yield curve) are leading indicators of future growth; That a large increase in public debt leads to a loss of fiscal solvency; That a fall in interest rates stimulates investment and pushes down the savings rate; That the exchange rate of the higher-growth country appreciates; That the development of new technologies stimulates long-term growth; That population ageing pushes down the savings rate and leads to inflation; That a financial asset ’s price is the discounted sum of its future income.