The problem here is that you are building a conceptual model of economics before you measure anything. It's backwards. If I buy a candy bar, am I trading an hour of my wages for food? I'm using money, but how did I get the money? Am I trading an equal amount of gold that represents the perceived valued I provided the rest of the economy? What is the real definition of the thing taking place here? I'd wager that there is no universal definition that applies to all economic transactions. It's something more like cellular automata with multiple dimensions, not a causality chain built of little blocks.

You want to measure something, and you're immediately knee-deep into abstract terms and aggregate numbers. So you come up with an abstract model for measuring aggregation before you even begin to measure anything. It's never going to work. You're never going to be able to construct a reproducible model with high fidelity like that.

So if you want to talk GDP, you can say you observed this amount of cash moving around. I'm okay with that. But if you say the economy grew or some such, it doesn't work. You are presupposing the thing you are trying to describe. Each transaction involving that measurement had it's own value and definition. You're taking an aggregate of a fudge of a bunch of smoke. At the end you get a number, sure, and you can take it and plug it in to various models and get something kinda/sorta useful. It's heuristics for mathematicians, not science (as we understand it)

If I'm actually on to something here and am not just being a crackpot, the implications could be that economics as a science can probably be only understood in a causal way by really complex computer models very carefully and rigorously constructed.

Hmm, try this. Money is water. Ok that is pretty opaque :-) An economy is a system, and like any system it produces a variety of outputs, the outputs are then consumed. If you have a commute, I really recommend the audio course on Economics by Dr. Tim Taylor of Standford [1].

Economics is a system build not by measurement but by observation. Not all economies have the same rules that run them, different governments put different variations in the ability for the system to adapt. You may find, as I did, that conceptual 'money' is simply an exchange mechanism for work done in the system, and it need not be coins or gold, the fabulous example from the lectures is 'large rocks' as money.[2]

From your comments it sounds like you are thinking of money in terms of something of 'value' or as a counter, which it is in the micro sense but it is a non-entity in the macro sense where you are trying to compute how much work a system (or economy) can get done in any given time.

"But if you say the economy grew or some such, it doesn't work."

Ah but it does, just as one can measure the efficiency of a textile mill in terms of joules, even though the people working there rarely think about how many joules are in the food they just ate.

The original article touches on, but doesn't really express, the 'real' problem Europe is having which is that giving up sovereignty over the currency you use means that you cannot lie to yourself or others about how efficient or inefficient your economy is.

Lets look at it this way, let's say you live next to guy who has a nice 3 bedroom single family home, a couple of kids in private school, he and his wife drive cars that are less than 3 years old, they vacation in various trendy spots, and go out to dinner at nice places a couple of times a week. You have every reason to believe they are successful upper middle class folks living the good life.

You on the other hand haven't been able to afford to replace a car except maybe every 5 or 6 years, you're kids go to public school, and its a big treat for you to go out with the wife. When you vacation you go camping rather than to Disney World.

Now lets say for some reason you enter into this weird agreement where everyone in your neighborhood turns over their finances to the Homeowners Organization, you and your neighbor both have your income and credit card bills go through them and if you want to get a loan you go to them first and they go to banks on your behalf. Now when this happens you discover that your neighbor earns less than you do.

Now to resolve the dichotomy between your lifestyle and theirs you dig into the financials a bit, and discover your neighbor is maxing out their credit cards, saving nothing for their kids college funds, much less for a rainy day, they lease their cars and have numerous complaints about late or missed payments, and they are currently trying to negotiate a tax payment plan with the IRS. BLAM! Because everyone shares financial information they can't 'lie' about their situation any more than you can.

So lets take this back to Europe. When a nation prints their own money, runs their own banks, and reports their own numbers. They can be like your neighbor and paint a very rosy picture about themselves even when it isn't true. When they can't print their own money so their output production is measured by a common value, they also can't lie about their situation. That becomes a 'crisis' because they really are insanely poorly managed.

Often times these folks deceive even themselves about the problems. It's a human weakness. And fundamentally governments have no money. Its always amazing when people talk about "the Government is paying for ..." when they should say "the Government is going to take an additional $x from citizens to give to pay for ..." and when you look at it that way, you have to understand that 'tax payers' are a finite resource. And in places like Greece where 'not paying taxes' appears to be a national pastime (I'm sure it isn't but the Economist paints it that way) that resource is further diminished.

So dialing all of that back to the notion of GDP. The simplest way to explain GDP to someone who has a limited knowledge of economics, is to pretend its like a persons salary. They spend their time working, playing, sleeping, living and they are paid some salary. The sum total of things they can do is nominally limited by that salary, and if they have more salary they can do more, less and they can't do quite so much. Through credit they can trade some future salary for stuff today, but they make a bet that they will have a bigger salary later so it won't be as painful to spend that money then as it is now. If people paid themselves their own salary in their own dollars they could decide to pay themselves what ever they wanted. So I could pay myself a million chuck dollars a year, and try to buy things with other people who pay themselves their own salaries. When I want to buy a loaf of bread from you I have to decide how many Chuck Dollars I'm willing to pay, you have decide what its worth in Dan Dollars or your currency. If you sell me bread for four Chuck Dollars and then find out one Chuck Dollar is only really worth about 10 Dan Cents then you will stop selling me bread so there is some incentive to keep it close to rational. Sometimes we will fail and I'll be stuck paying a five hundred Chuck Dollars for bread which seems excessive so I'll give my self a raise to 10 million Chuck Dollars a year. Now the bread is reasonably priced (for me) at 500 Chuck Dollars until you figure it out and start charging 2,500 Chuck Dollars for a loaf.

None of those games and problems are possible when we share a common currency. But we lose the ability to 'give our self a raise' as well.

Some of Europe's economies have lived, like the fictional neighbor, way beyond their actual means and covered up that fact with loose fiscal policy. Going with a common, centrally managed currency, has exposed those games and brought reality crashing down. What is sad is that this 'step' (going to the Euro) was a looooooooong time in coming and the various nations knew it was coming, and if they had been honest could have started ramping back then, but they did not. Reality hurts. It hurts a lot. And when you have been lying to your citizens about things for a long time, and now you have to tell them the truth, well that gets politicians kicked right to the curb. But the new guys and gals coming in, can't change reality. They can't go backwards to the 'good old days' of lying about things. They need to face facts, roll up their sleeves. downsize their outlays and upsize their tax rates to a point where everyone is back on board and then start the hard work of becoming better managed countries. It sucks, it sucks big time, but that it sucks unfortunately does nothing to fix it. Austerity is a 'program' like 'amputation' is a treatment for gangrene. Antibiotics and better hygiene early on might have saved your limb, but once you've got gangrene the choices become much more limited. Once folks get past the anger of losing the limb, hopefully they can process the changes they have to make to prevent it from happening again. Between now and then, pretty much non stop whining and lamenting.

[1] http://www.thegreatcourses.com/tgc/courses/course_detail.asp... (note don't let the price get you down they have sales all the time for like 80% off, and you can sometimes check them out from your public library)

[2] https://en.wikipedia.org/wiki/Rai_stones

I think we're fine here. I understand and agree with everything you've said. My comment was about the larger problem of creating the same kind of mathematical model for economics that we have for physics. We certainly have a lot of general models that work great and do all sorts of useful things. These things have their limits, though. But none of that has to do with Spain or the Euro. I was just referring to the foundations of economics itself, not this particular situation.

Looking forward to the course!

By the way, for any other readers who are diving down this far in the comments, there was also a great series of cassette tapes (I believe they're on CD now?) about economics and philosophy that I listened to back in the 80s from Knowledge Products. Great intro-level material. The Austrian economics and overview of Marx were especially good.

EDIT: Tip for TTC courses: never buy them at full price. They periodically have tremendous sales, and they're sufficiently expensive that you could easily save a hundred or two by waiting.