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and let each economist decide which version is more useful. Mine, at least, correctly describes those same four years as losing ones. National Accounts Overall It seems to me that national accounts are doing nothing wrong except in modeling the depreciation curve from misleading sales evidence. Evidence seems to show depreciation as fast at first, and slower later. That tends to be true when depreciable assets are actually sold. Structures tend to be customized for their original owners and occupants. They tend to be resold when results are disappointing. This disappointment often comes when expectations are first tested. When distressed sellers market illiquid structures customized for themselves, prices too will be disappointing. Better to trust evidence of structures intended in the first place to pass from owner to owner, as with many standardized rather than customized apartment and office and warehouse buildings. Better still, from an economist’s viewpoint if not an accountant’s, is to trust logic. Capital is present value of expected cash flow. Its loss of value with time, under simplifying assumptions, is the present value of the most distant and most discounted cash flow. Depreciation of structures we keep, rather than sell, is least at first and greatest at the end. It is the same as with a level- payment mortgage. National accounts are nonetheless a magnificent achievement. They need interpretation just as corporate accounts do. That’s where economics comes in. And national accounts are not resting on past practices. They can be congratulated on including market valued capital, even if sixty years too late, and on extrapolating it backward where practical. This book could scarcely have been written if they hadn’t. I would recommend the obvious next step. Net investment should be shown alternatively as change in market-valued, and output as that plus consumption. Let economists decide which version is good for what. Chapter 8 Banks, Money and Macroeconomics 2/8/16 21 HOUSE_OVERSIGHT_011110