Comment on Brian Romanchuk on ‘Primer: Understanding The Post-Keynesian Rejection Of Mainstream Inflation Theory’
Blog-Reference and Blog-Reference
Economics is a failed/fake science or what Feynman called a cargo cult science. The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got profit ― the pivotal concept of the subject matter ― wrong. The pluralism of provably false theories is evidence for the representative economist’s scientific incompetence.
After 200+ years, there is still no such thing as a valid profit-, employment-, or inflation they, there is always a whole bunch of theories/models and everyone is free to pick the one that suits him politically. This guarantees that economics remains what it is since the founding fathers: a brain-dead talk-show.
Brian Romanchuk gives a vivid description of how economists produce their proto-scientific junk: “So imagine that your boss tells you to come up with ‘an inflation model’ for some country (which is a pretty common demand for employees of central banks or investment firms). According to post-Keynesian theory, the ‘correct’ answer is to respond that inflation is an historical accident. However, I must point out that the theoretically correct answer is also an extremely career-limiting one, so any employee stuck in that particular situation needs to figure out what their superiors want to see, and give them exactly that (even if the model stinks).”
This characterization of the representative economist fits the definition of a pseudo-inquirer: “A genuine inquirer aims to find out the truth of some question, whatever the color of that truth. ... A pseudo-inquirer seeks to make a case for the truth of some proposition(s) determined in advance. There are two kinds of pseudo-inquirer, the sham and the fake. A sham reasoner is concerned, not to find out how things really are, but to make a case for some immovably-held preconceived conviction. A fake reasoner is concerned, not to find out how things really are, but to advance himself by making a case for some proposition to the truth-value of which he is indifferent.” (Haack)
There is no use to untangle the multiple idiocies in Brian Romanchuk’s treatment of inflation theory. What has to be done is to replace his blather by the scientifically correct approach.
In order to go back to the basics, the elementary production-consumption economy is for a start clearly defined by three macroeconomic axioms (Yw=WL, O=RL, C=PX), two conditions (X=O, C=Yw) and two definitions (profit/loss Qm≡C−Yw, saving/dissaving Sm≡Yw−C).
Money is needed by the business sector to pay the workers who receive the wage income Yw per period. The workers spend C per period. Given the two conditions, the market clearing price is derived for a start as P=W/R (i). So, the macroeconomic price P is determined by the wage rate W, which has to be fixed as a numéraire, and the productivity R.
The average stock of transaction money follows for a start as M=kYw, with k determined by the payment pattern. In other words, the quantity of money M is determined by the AUTONOMOUS transactions of the household and business sector and created out of nothing by the central bank. This, to begin with, kills the commonplace Quantity Theory of inflation.#1, #2
The market clearing price is given in the general case with the macroeconomic Law of Supply and Demand P = ρEW⁄R (ii), with ρE≡C/Yw.#3 An expenditure ratio ρE greater than 1 indicates credit expansion = dissaving, a ratio ρE less than 1 the opposite. In the initial period ρE=1, i.e. the household sector’s budget is balanced. The ratio ρE establishes the link between the product market and the money/capital market.
Now we have deficit spending, i.e. ρE greater 1, yields a price hike. If deficit spending is repeated period after period, the price remains on the elevated level but there is NO inflation. No matter how long the household sector’s debt increases, there is NO accelerated price increase. The same holds for the government sector.#4
The macroeconomic Law of Supply and Demand makes it clear that inflation only occurs if the wage rate W increases in successive periods faster than productivity R. This can happen at ANY employment level. It is NOT a precondition that employment is close to the capacity limit. This is merely a false interpretation of the Phillips curve.#5
The explanation for the fact that inflation in the USA is since some time below the FED’s target value of 2 percent is that the rate of change of the average wage rate has been lower than the rate of change of productivity. Things become a bit more complex, of course, when foreign trade, investment etcetera is taken into account. This does not change the fact that the core of inflation theory is given with eq. (ii). This tiny equation fully replaces Brian Romanchuk’s gigantic roll of proto-scientific toilet paper.
Egmont Kakarot-Handtke
#1 Inflation: back to basics
#2 Attention: there are THREE types of inflation
#3 Wikimedia, Macroeconomic Law of Supply and Demand
#4 MMT was right all along: Gov-Deficits do NOT cause inflation
#5 NAIRU, wage-led growth, and Samuelson's Dyscalculia
September 24, 2018
September 22, 2018
Why the MMT benefactors of humanity never talk about profit
Comment on John Weeks on ‘Why the public debt should be treated as an asset’
Blog-Reference and Blog-Reference and Blog-Reference and Blog-Reference
The most curious thing about economics is that most models ― Walrasian, Keynesian, Marxian, Austrian does not matter ― do NOT contain macroeconomic profit in explicit form. And when it appears occasionally it is misspecified.#1 This is why economics is a failed/fake science. MMT is no exception.
In John Weeks’ post about the mistreatment of public debt as perennial problem instead of a long-term benefit, the word profit does not appear once. The bottom line of his argument is that the public debt is not as massive as everybody thinks and on closer inspection, not a burden but, on the contrary, has a lot of advantages for WeThePeople. In detail he argues:
Fact is:
Egmont Kakarot-Handtke
#1 For details of the big picture see cross-references Profit
#2 For the full-spectrum refutation of MMT see cross-references MMT
#3 Keynes, Lerner, MMT, Trump and exploding profit
#4 Down with idiocy!
#5 MMT: Redistribution as wellness program
#6 MMT, money printing, stealth taxation, and redistribution
#7 MMT: academic snake oil for the people
You say: “Jammers comment at Naked Capitalism has so far gone unrefuted and that’s a shame since he apparently has a good mind and some inkling of the issues involved. So, since I’m banned at NC, I’ll try to correct him here.”
Then you go on to elaborate on the difference between deficit-spending for investment goods and consumption goods/services.
This distracts from the main point, i.e. the profit effect of public deficit spending. When the axiomatically correct Profit Law, which is given by Qm=Yd+(I−Sm)+(G−T)+(X−M) for the simple case, is extended for deficit spending on public investment Qm=Yd+(Ib+Ig−Sm)+(G−T)+(X−M) with Ib indicating business investment expenditures and Ig indicating government investment expenditures and I=Ib+Ig then it becomes obvious that for the profit effect it makes no difference whether the government spending is on investment goods or consumption goods/services.
While in the first case public debt=liability is ‘backed’ by a real asset, in the second case the public debt is ‘backed’ by nothing. In any case, it would be false to follow John Weeks’ suggestion and to treat public debt as an asset. This is a verbal shell game.
The economic fact of the matter is (i) that public debt is a liability, (ii) that this liability may be ‘backed’ by real assets or not, and (iii), that this does not matter for the profit effect of deficit spending. It always holds Public Deficit = Private Profit and MMT is fake science and corrupt politics.
Blog-Reference and Blog-Reference and Blog-Reference and Blog-Reference
The most curious thing about economics is that most models ― Walrasian, Keynesian, Marxian, Austrian does not matter ― do NOT contain macroeconomic profit in explicit form. And when it appears occasionally it is misspecified.#1 This is why economics is a failed/fake science. MMT is no exception.
In John Weeks’ post about the mistreatment of public debt as perennial problem instead of a long-term benefit, the word profit does not appear once. The bottom line of his argument is that the public debt is not as massive as everybody thinks and on closer inspection, not a burden but, on the contrary, has a lot of advantages for WeThePeople. In detail he argues:
- People are told that public debt 1) must be repaid, 2) threatens the country with bankruptcy, and 3) is a burden on future generations. All these arguments are wrong.
- The British government can never default on its debt.
- A good portion of the national debt is held by the public sector, i.e. Bank of England, this is what the public sector owes itself.
- The interest paid on debt held by pension funds is income to retired households.
- At the end of 2016, private corporate and foreign gilts holders owned 41% of the UK’s national debt. Only the £524 billion of gilts held by foreign creditors could be considered a “burden” in that the associated interest payments are from UK taxpayers to non-UK creditors.
- A fair and progressive taxation system could ensure that interest payments to domestic bond holders don’t have negative redistribution effects.
- Sound management of the national debt means more public borrowing for investment and current expenditure, which is justified by the modest size of the effective debt.
Fact is:
- MMT is a macroeconomic theory that is refuted on all counts.#2
- John Weeks does not mention once the profit effect of deficit-spending/money-creation.#3
- From the axiomatically correct Profit Law follows (I−S)+(G−T)+(X−M)−(Q−Yd)=0 which boils down to Public Deficit = Private Profit.#4
- MMT economic policy boils down to the permanent growth of public debt which is nothing else than the permanent self-alimentation of the oligarchy.#5
- All the social benefits MMTers promise are paid in real terms by WeThePeople themselves via stealth taxation.#6
- Public debt is deferred taxation of WeThePeople which is simply pushed beyond the time horizon. Public debt is NOT an asset but a time bomb.
Egmont Kakarot-Handtke
#1 For details of the big picture see cross-references Profit
#2 For the full-spectrum refutation of MMT see cross-references MMT
#3 Keynes, Lerner, MMT, Trump and exploding profit
#4 Down with idiocy!
#5 MMT: Redistribution as wellness program
#6 MMT, money printing, stealth taxation, and redistribution
#7 MMT: academic snake oil for the people
***
REPLY to Andrew Anderson on Sep 23You say: “Jammers comment at Naked Capitalism has so far gone unrefuted and that’s a shame since he apparently has a good mind and some inkling of the issues involved. So, since I’m banned at NC, I’ll try to correct him here.”
Then you go on to elaborate on the difference between deficit-spending for investment goods and consumption goods/services.
This distracts from the main point, i.e. the profit effect of public deficit spending. When the axiomatically correct Profit Law, which is given by Qm=Yd+(I−Sm)+(G−T)+(X−M) for the simple case, is extended for deficit spending on public investment Qm=Yd+(Ib+Ig−Sm)+(G−T)+(X−M) with Ib indicating business investment expenditures and Ig indicating government investment expenditures and I=Ib+Ig then it becomes obvious that for the profit effect it makes no difference whether the government spending is on investment goods or consumption goods/services.
While in the first case public debt=liability is ‘backed’ by a real asset, in the second case the public debt is ‘backed’ by nothing. In any case, it would be false to follow John Weeks’ suggestion and to treat public debt as an asset. This is a verbal shell game.
The economic fact of the matter is (i) that public debt is a liability, (ii) that this liability may be ‘backed’ by real assets or not, and (iii), that this does not matter for the profit effect of deficit spending. It always holds Public Deficit = Private Profit and MMT is fake science and corrupt politics.
September 20, 2018
MMT = Modern Monetary Trash
Comment on Bill Mitchell on ‘Understanding what the T in MMT involves’
Blog-Reference and Blog-Reference and Blog-Reference on Sep 21
In his latest post#1, Bill Mitchell says: “… a Tweet the other day reminded me that there was still major misunderstandings of what Modern Monetary Theory (MMT) represents and that it was time to clarify some of those errors in comprehension. Specifically, there is a current out there that considers MMT to be incorrectly labelled because according to the argument there is no theory involved. It’s hard to imagine why anyone would think that but the fact that they do tells me that I should write this blog post. As I noted yesterday, our Macroeconomics textbook to be published by Macmillan Palgrave in February 2019 is full of theory. It has a lot of description, taxonomy, accounting, history, and philosophy, but also a lot of theory that ties some of those other components together in a meaningful way. The T in MMT is not a misnomer.”
Then he goes on to specify what a theory is and how scientific methodology relates to MMT. The first lethal error/blunder of Bill Mitchell is to maintain that economics is a social science. Here, MMT is in full accordance with mainstream economics. The fact of the matter is, though, that economics is a system science.#2
The second methodological error/blunder is that “There are no ‘laws’ in economics as there are in physics, for example.” This is true only insofar as there are NO behavioral laws. This, however, is irrelevant because economics is a system science and there are systemic laws of the monetary economy. Systemic laws are invariances (Nozick’s term) like physical laws but do not entail the physicists' notion of causality.
The third methodological error/blunder consists of abandoning the concept of scientific truth which is well-defined since 2000+ years by material and formal consistency and to replace it by congruency.
All this is in line with J. S. Mill’s attempt to establish economics as “separate and inexact science” which, however, has never been anything else but a euphemism for failed/fake science.
Since the founding fathers, economics is a cargo cult science (Feynman’s term) and Bill Mitchell is in the state of self-delusion by maintaining he and his MMT colleagues are “standing on the shoulders of giants”.#3
Fact is that economists do not get the foundational concepts of profit/income/saving straight to this day. MMTers are no exception.#4
Bill Mitchell argues: “An oft-stated claim is that MMT is about accounting relationships. … Those who make that spurious claim about MMT often use the sectoral balances framework to make their point. They note that the basic sectoral balances relationship, which is a core part of the way an MMT economist analyses the world, is, at heart an accounting truism that has to be true because it is derived from a larger accounting framework ― the nation’s National Accounts. That is true so far. While I know there is a debate in accounting about the theory of accounting, we will accept, here, that an accounting truism is one that has to be true (add up in this case) by the way we define it. It is not opinion or conjecture ― it just has to be. So the statement: the Government deficit (surplus) equals the Non-government surplus (deficit) dollar-for-dollar is such a truism. It must be true.”
Unfortunately, it is false.#5 As Schumpeter once put it: “There is no more fertile source of error than apparently trivial premises.” Economics is NO exception: “In fact, the history of every science, including that of economics, teaches us that the elementary is the hotbed of the errors that count most.” (Georgescu-Roegen)
Because the sectoral balances equation is false, the whole analytical superstructure is false. And because of this, MMT policy guidance has NO sound scientific foundations. Worse, MMT is a political fraud, it claims to promote the cause of WeThePeople but in fact, promotes the cause of WeTheOligarchy. The proof is in the accounting truism Public Deficit = Private Profit which follows from the axiomatically correct balances equation (I−S)+(G−T)+(X−M)−(Q−Yd)=0.
Just like mainstream economics, MMT is cargo cult science. The difference is that mainstream economics is built upon false microfoundations and MMT is built upon false macrofoundations. MMT is proto-scientific trash and ― to use Stephanie Kelton’s words ― “one of the greatest cons ever perpetrated on the American people.”#6
Egmont Kakarot-Handtke
#1 Bill Mitchell, Understanding what the T in MMT involves
#2 For details see cross-references NOT a Science of Behavior
#3 Economists: Standing on the Shoulders of Gnomes
#4 MMT and the single most stupid physicist
#5 Rectification of MMT macro accounting
#6 Smart! How to make people fund their brain-washing
Blog-Reference and Blog-Reference and Blog-Reference on Sep 21
In his latest post#1, Bill Mitchell says: “… a Tweet the other day reminded me that there was still major misunderstandings of what Modern Monetary Theory (MMT) represents and that it was time to clarify some of those errors in comprehension. Specifically, there is a current out there that considers MMT to be incorrectly labelled because according to the argument there is no theory involved. It’s hard to imagine why anyone would think that but the fact that they do tells me that I should write this blog post. As I noted yesterday, our Macroeconomics textbook to be published by Macmillan Palgrave in February 2019 is full of theory. It has a lot of description, taxonomy, accounting, history, and philosophy, but also a lot of theory that ties some of those other components together in a meaningful way. The T in MMT is not a misnomer.”
Then he goes on to specify what a theory is and how scientific methodology relates to MMT. The first lethal error/blunder of Bill Mitchell is to maintain that economics is a social science. Here, MMT is in full accordance with mainstream economics. The fact of the matter is, though, that economics is a system science.#2
The second methodological error/blunder is that “There are no ‘laws’ in economics as there are in physics, for example.” This is true only insofar as there are NO behavioral laws. This, however, is irrelevant because economics is a system science and there are systemic laws of the monetary economy. Systemic laws are invariances (Nozick’s term) like physical laws but do not entail the physicists' notion of causality.
The third methodological error/blunder consists of abandoning the concept of scientific truth which is well-defined since 2000+ years by material and formal consistency and to replace it by congruency.
All this is in line with J. S. Mill’s attempt to establish economics as “separate and inexact science” which, however, has never been anything else but a euphemism for failed/fake science.
Since the founding fathers, economics is a cargo cult science (Feynman’s term) and Bill Mitchell is in the state of self-delusion by maintaining he and his MMT colleagues are “standing on the shoulders of giants”.#3
Fact is that economists do not get the foundational concepts of profit/income/saving straight to this day. MMTers are no exception.#4
Bill Mitchell argues: “An oft-stated claim is that MMT is about accounting relationships. … Those who make that spurious claim about MMT often use the sectoral balances framework to make their point. They note that the basic sectoral balances relationship, which is a core part of the way an MMT economist analyses the world, is, at heart an accounting truism that has to be true because it is derived from a larger accounting framework ― the nation’s National Accounts. That is true so far. While I know there is a debate in accounting about the theory of accounting, we will accept, here, that an accounting truism is one that has to be true (add up in this case) by the way we define it. It is not opinion or conjecture ― it just has to be. So the statement: the Government deficit (surplus) equals the Non-government surplus (deficit) dollar-for-dollar is such a truism. It must be true.”
Unfortunately, it is false.#5 As Schumpeter once put it: “There is no more fertile source of error than apparently trivial premises.” Economics is NO exception: “In fact, the history of every science, including that of economics, teaches us that the elementary is the hotbed of the errors that count most.” (Georgescu-Roegen)
Because the sectoral balances equation is false, the whole analytical superstructure is false. And because of this, MMT policy guidance has NO sound scientific foundations. Worse, MMT is a political fraud, it claims to promote the cause of WeThePeople but in fact, promotes the cause of WeTheOligarchy. The proof is in the accounting truism Public Deficit = Private Profit which follows from the axiomatically correct balances equation (I−S)+(G−T)+(X−M)−(Q−Yd)=0.
Just like mainstream economics, MMT is cargo cult science. The difference is that mainstream economics is built upon false microfoundations and MMT is built upon false macrofoundations. MMT is proto-scientific trash and ― to use Stephanie Kelton’s words ― “one of the greatest cons ever perpetrated on the American people.”#6
Egmont Kakarot-Handtke
#1 Bill Mitchell, Understanding what the T in MMT involves
#2 For details see cross-references NOT a Science of Behavior
#3 Economists: Standing on the Shoulders of Gnomes
#4 MMT and the single most stupid physicist
#5 Rectification of MMT macro accounting
#6 Smart! How to make people fund their brain-washing
***
Wikimedia, AXEC140
September 18, 2018
There is NO such thing as a “labor share of income”
Comment on Stephen Gordon on ‘Why do we care about the labour share of income?’
Blog-Reference
Stephen Gordon summarizes: “A lot has been said and written about the decline in the labour share of income, usually calculated as total employee compensation divided by nominal GDP. This decline is generally regarded as a negative development: the reduction in the share of income going to workers is interpreted as a symptom of suppressed wage growth and of increased income inequality.”
Indeed, a lot has been said and written about income, wages, profits and all is false because economists failed for 200+ years to get the concept of profit straight. As the Palgrave Dictionary summarizes: “A satisfactory theory of profits is still elusive.” (Desai, 2008)#1 In other words, economists have NO idea what the pivot of their subject matter is.
Because profit is ill-defined, income is ill-defined, and by consequence, saving is ill-defined. Monetary profit, to begin with, is NOT a flow of income like wage income but the difference of flows. Distributed profit is income but profit is NOT income. Distributed profit and profit is NOT the same thing.
By consequence, total income is NOT the sum of wages and profits,#2 which in turn means that there is NO “profit share of income” and by consequence no “wage share of income”. This means that the content of this thread, comments included, is vacuous blather because all is based on false premises. #3, #4, #5, #6
Without the true profit theory, there is no true distribution theory. The axiomatically correct Profit Law is given as Qm=Yd+(I−Sm)+(G−T)+(X−M) (i) and this reduces to Qm=(I−Sm)+(G−T) (ii) for Yd, X, M=0; Legend: Qm monetary profit/loss, Yd distributed profit, I investment expenditure, Sm monetary saving/dissaving, G government expenditures, T taxes, X exports, M imports. Total profit Q is the sum of monetary and nonmonetary profit, i.e. Q=Qm+Qn (iii).
Accordingly, the so-called “labor share” λ ― which is NOT a “share” but a quotient ― is defined as relation of wage income Yw to the sum of wage income and total profit Q, that is, λ≡Yw/(Yw+Q) with Q given by (iii) above.
Fact is that neither market power nor automation can account for a falling “labor share” λ. The MAIN drivers of increasing overall profit have been in the past decades the increased deficit spending of the household- and the government sector which translates into an ever-growing private/public debt.
Traditional distribution theory and the concept of a wage/profit “share” is abysmal proto-scientific nonsense since the founding fathers.#7, #8
Egmont Kakarot-Handtke
#1 The Profit Theory is False Since Adam Smith. What About the True Distribution Theory?
#2 How the Intelligent Non-Economist Can Refute Every Economist Hands Down
#3 Profit and distribution: a primer
#4 Profit and the decline of labor’s nominal share (I)
#5 Profit, income, and the Humpty Dumpty Fallacy
#6 For details of the big picture see cross-references Profit
#7 Ricardo, too, got profit theory wrong. Sad!
#8 Economists simply don’t get it
Blog-Reference
Stephen Gordon summarizes: “A lot has been said and written about the decline in the labour share of income, usually calculated as total employee compensation divided by nominal GDP. This decline is generally regarded as a negative development: the reduction in the share of income going to workers is interpreted as a symptom of suppressed wage growth and of increased income inequality.”
Indeed, a lot has been said and written about income, wages, profits and all is false because economists failed for 200+ years to get the concept of profit straight. As the Palgrave Dictionary summarizes: “A satisfactory theory of profits is still elusive.” (Desai, 2008)#1 In other words, economists have NO idea what the pivot of their subject matter is.
Because profit is ill-defined, income is ill-defined, and by consequence, saving is ill-defined. Monetary profit, to begin with, is NOT a flow of income like wage income but the difference of flows. Distributed profit is income but profit is NOT income. Distributed profit and profit is NOT the same thing.
By consequence, total income is NOT the sum of wages and profits,#2 which in turn means that there is NO “profit share of income” and by consequence no “wage share of income”. This means that the content of this thread, comments included, is vacuous blather because all is based on false premises. #3, #4, #5, #6
Without the true profit theory, there is no true distribution theory. The axiomatically correct Profit Law is given as Qm=Yd+(I−Sm)+(G−T)+(X−M) (i) and this reduces to Qm=(I−Sm)+(G−T) (ii) for Yd, X, M=0; Legend: Qm monetary profit/loss, Yd distributed profit, I investment expenditure, Sm monetary saving/dissaving, G government expenditures, T taxes, X exports, M imports. Total profit Q is the sum of monetary and nonmonetary profit, i.e. Q=Qm+Qn (iii).
Accordingly, the so-called “labor share” λ ― which is NOT a “share” but a quotient ― is defined as relation of wage income Yw to the sum of wage income and total profit Q, that is, λ≡Yw/(Yw+Q) with Q given by (iii) above.
Fact is that neither market power nor automation can account for a falling “labor share” λ. The MAIN drivers of increasing overall profit have been in the past decades the increased deficit spending of the household- and the government sector which translates into an ever-growing private/public debt.
Traditional distribution theory and the concept of a wage/profit “share” is abysmal proto-scientific nonsense since the founding fathers.#7, #8
Egmont Kakarot-Handtke
#1 The Profit Theory is False Since Adam Smith. What About the True Distribution Theory?
#2 How the Intelligent Non-Economist Can Refute Every Economist Hands Down
#3 Profit and distribution: a primer
#4 Profit and the decline of labor’s nominal share (I)
#5 Profit, income, and the Humpty Dumpty Fallacy
#6 For details of the big picture see cross-references Profit
#7 Ricardo, too, got profit theory wrong. Sad!
#8 Economists simply don’t get it
Smart! How to make people fund their brain-washing
Comment on Down with Tyranny on ‘Want To Sound Really Smart About Economic Issues? Read This’
Blog-Reference and Blog-Reference and Blog-Reference
Down with Tyranny argues: “When Blue America endorses a candidate, there are several ways we can be helpful to their campaigns, the most obvious being to help them raise campaign funds by connecting them to small dollar campaign contributors. This cycle one of the most valuable other ways we’ve helped candidates is by connecting them to Stephanie Kelton, America’s most brilliant economist.”
Stephanie Kelton argues: “Government debt is just the money the government spent into the economy and didn’t tax back. That’s all the national debt is. It’s a historical record of all of the times that they made a net deposit, spent more than they taxed out, and the bonds are the difference between those. One of the greatest cons ever perpetrated on the American people is this notion that the national debt belongs to us, that we are responsible in our individual capacity for a share of it.”
Everything is wrong with Stephanie Kelton’s economics:
• Her whole argumentation is based on MMT which is an economic theory that is refuted on all counts.#1
• MMT is scientifically worthless. It is political economics, in other words, agenda-pushing in the garb of academic authority.
• MMT and Stephanie Kelton claim to push the agenda of WeThePeople but in fact push the agenda of WeTheOligarchy.
• All MMT policy guidance boils down to deficit-spending/money-creation.
• Because the macroeconomic Profit Law states Public Deficit = Private Profit, MMT economic policy boils down to the permanent growth of public debt which is nothing else than the permanent self-alimentation of the oligarchy.
• All the social goodies MMTers promise are paid in real terms by WeThePeople themselves via stealth taxation.
• Public debt is deferred taxation of WeThePeople which is simply pushed beyond the time horizon.
• From the scientifically correct Profit Law follows (I−S)+(G−T)+(X−M)−(Q−Yd)=0 which boils down to Public Deficit = Private Profit.#2 MMTers hide this distributional fact by lumping the business and the household sector together to the private sector and saying Public Deficit = Private Sector Surplus suggesting that private sector means WeThePeople. This is a verbal shell-game.#3, #4
MMT is ― to use Stephanie Kelton’s words ― “one of the greatest cons ever perpetrated on the American people”.#5
Egmont Kakarot-Handtke
#1 For the full-spectrum refutation of MMT see cross-references MMT
#2 Keynes, Lerner, MMT, Trump and exploding profit
#3 MMT is gangsta economics
#4 The Kelton-Fraud
#5 MMT and grassroots movements
Blog-Reference and Blog-Reference and Blog-Reference
Down with Tyranny argues: “When Blue America endorses a candidate, there are several ways we can be helpful to their campaigns, the most obvious being to help them raise campaign funds by connecting them to small dollar campaign contributors. This cycle one of the most valuable other ways we’ve helped candidates is by connecting them to Stephanie Kelton, America’s most brilliant economist.”
Stephanie Kelton argues: “Government debt is just the money the government spent into the economy and didn’t tax back. That’s all the national debt is. It’s a historical record of all of the times that they made a net deposit, spent more than they taxed out, and the bonds are the difference between those. One of the greatest cons ever perpetrated on the American people is this notion that the national debt belongs to us, that we are responsible in our individual capacity for a share of it.”
Everything is wrong with Stephanie Kelton’s economics:
• Her whole argumentation is based on MMT which is an economic theory that is refuted on all counts.#1
• MMT is scientifically worthless. It is political economics, in other words, agenda-pushing in the garb of academic authority.
• MMT and Stephanie Kelton claim to push the agenda of WeThePeople but in fact push the agenda of WeTheOligarchy.
• All MMT policy guidance boils down to deficit-spending/money-creation.
• Because the macroeconomic Profit Law states Public Deficit = Private Profit, MMT economic policy boils down to the permanent growth of public debt which is nothing else than the permanent self-alimentation of the oligarchy.
• All the social goodies MMTers promise are paid in real terms by WeThePeople themselves via stealth taxation.
• Public debt is deferred taxation of WeThePeople which is simply pushed beyond the time horizon.
• From the scientifically correct Profit Law follows (I−S)+(G−T)+(X−M)−(Q−Yd)=0 which boils down to Public Deficit = Private Profit.#2 MMTers hide this distributional fact by lumping the business and the household sector together to the private sector and saying Public Deficit = Private Sector Surplus suggesting that private sector means WeThePeople. This is a verbal shell-game.#3, #4
MMT is ― to use Stephanie Kelton’s words ― “one of the greatest cons ever perpetrated on the American people”.#5
Egmont Kakarot-Handtke
#1 For the full-spectrum refutation of MMT see cross-references MMT
#2 Keynes, Lerner, MMT, Trump and exploding profit
#3 MMT is gangsta economics
#4 The Kelton-Fraud
#5 MMT and grassroots movements
***
Wikimedia, AXEC142
September 17, 2018
Good news for the one-percenters
Comment on Alan Longbon on ‘Good News: U.S. Government Posts A $214 Billion Deficit For August 2018, The U.S. Private Sector Posts A $214 Billion Surplus’
Blog-Reference and Blog-Reference
Alan Longbon rejoices: “The US budget deficit is $214 billion in August 2018; this is a net add of income to the private sector and a bumper month.” and “Professor Wynne Godley first comprehended the strategic importance of the accounting identity, which says that measured at current prices, the government’s budget balance, less the current account balance, by definition is equal to the private sector balance. GDP = Federal Spending [G]+ Non-Federal spending [P] + Net Exports [X].”
Unfortunately, the MMT balances equation is false. From the axiomatically correct Profit Law for the open economy with government and profit distribution, follows (I−S)+(G−T)+(X−M)−(Q−Yd)=0 which boils down to Public Deficit = Private Profit.
MMTer hide this distributional fact by lumping the business and the household sector together to the private sector and saying Public Deficit = Private Sector Surplus suggesting that private sector means WeThePeople. This is a verbal shell game. Given the saving/ dissaving of the household sector = WeThePeople, the public deficit increases the macroeconomic profit of WeTheOligarchy one to one.#1, #2
Alan Longbon’s good news is MMT’s shot in the head of WeThePeople.
#1 MMT and the single most stupid physicist
#2 Keynes, Lerner, MMT, Trump and exploding profit
REPLY to Tom Hickey, Konrad, The Economists Challenge, Calgacus on Sep 19
I am well aware that you suffer from ADHD but even you will realize that the issue is NOT the Job Guarantee but the “Good News: U.S. Government Posts A $214 Billion Deficit For August 2018, The U.S. Private Sector Posts A $214 Billion Surplus.” This is the MMT fraud in a nutshell.
There is no such thing as the private sector but there is the business sector and the household sector. Hence, the MMT balances equation is false. From the axiomatically correct Profit Law for follows (I−S)+(G−T)+(X−M)−(Q−Yd)=0 which boils down to Public Deficit = Private Profit.
So Alan Longbon’s good news is NOT good news for WeThePeople but for WeTheOligarchy.
MMT is one of the most devious attempts to deceive WeThePeople since Karl Marx #1, #2 and you are part of it.
#1 Wolfgang Waldner, Der preußische Regierungsagent Karl Marx
#2 Wolfgang Waldner, Karl Marx, Prussian government agent
You say: “Define ‘the private sector’ as ‘the business sector’ plus ‘the household sector’. Did Zeus strike me down with lightning? As far as I know, you are the only person ever who has objected to making such definitions. Why? The (impossible) burden of proof is on you to defend the bizarre assertion that some well-defined and useful ways of dividing up an economy are ‘real’ while others are not. This isn’t Karl Mannheim; it is just common sense and using natural language and accounting in a completely unexceptionable and humdrum way, when they entirely coincide.”
You are just parroting long refuted arguments.#1 To think that one is free to define anything in any way is the Humpty Dumpty Fallacy.#2, #3
Common sense is NOT a valid argument in science because since the Middle Ages it is well-known that the ‘sun goes up’ is well-accepted among common-sense imbeciles but not accepted among scientists.#4
Take notice that MMT has NO sound scientific foundations, MMT’s sectoral balances equations are mathematically false, MMTers violate scientific standards on a daily basis, MMT is political agenda pushing in a scientific bluff package.#5, #6
From the fact that Zeus does not strike you and the rest of brain-dead/corrupt MMTers down with lightning does not follow anything because that is not how science works. MMT is long dead because of material/formal inconsistency. The fact that common-sense folks have not realized that MMT is a proto-scientific zombie is only a redundant confirmation of their abysmal stupidity.
#1 Failed economics: The losers’ long list of lame excuses
#2 Profit, income, and the Humpty Dumpty Fallacy
#3 Wikipedia and the promotion of economists’ idiotism (II)
#4 Why J. S. Mill had no friendly word for the bigots and votaries of common sense
#5 For the full-spectrum refutation of MMT see cross-references MMT
#6 Are MMTers stupid or corrupt or both?
Blog-Reference and Blog-Reference
Alan Longbon rejoices: “The US budget deficit is $214 billion in August 2018; this is a net add of income to the private sector and a bumper month.” and “Professor Wynne Godley first comprehended the strategic importance of the accounting identity, which says that measured at current prices, the government’s budget balance, less the current account balance, by definition is equal to the private sector balance. GDP = Federal Spending [G]+ Non-Federal spending [P] + Net Exports [X].”
Unfortunately, the MMT balances equation is false. From the axiomatically correct Profit Law for the open economy with government and profit distribution, follows (I−S)+(G−T)+(X−M)−(Q−Yd)=0 which boils down to Public Deficit = Private Profit.
MMTer hide this distributional fact by lumping the business and the household sector together to the private sector and saying Public Deficit = Private Sector Surplus suggesting that private sector means WeThePeople. This is a verbal shell game. Given the saving/ dissaving of the household sector = WeThePeople, the public deficit increases the macroeconomic profit of WeTheOligarchy one to one.#1, #2
Alan Longbon’s good news is MMT’s shot in the head of WeThePeople.
#1 MMT and the single most stupid physicist
#2 Keynes, Lerner, MMT, Trump and exploding profit
***
I am well aware that you suffer from ADHD but even you will realize that the issue is NOT the Job Guarantee but the “Good News: U.S. Government Posts A $214 Billion Deficit For August 2018, The U.S. Private Sector Posts A $214 Billion Surplus.” This is the MMT fraud in a nutshell.
There is no such thing as the private sector but there is the business sector and the household sector. Hence, the MMT balances equation is false. From the axiomatically correct Profit Law for follows (I−S)+(G−T)+(X−M)−(Q−Yd)=0 which boils down to Public Deficit = Private Profit.
So Alan Longbon’s good news is NOT good news for WeThePeople but for WeTheOligarchy.
MMT is one of the most devious attempts to deceive WeThePeople since Karl Marx #1, #2 and you are part of it.
#1 Wolfgang Waldner, Der preußische Regierungsagent Karl Marx
#2 Wolfgang Waldner, Karl Marx, Prussian government agent
***
REPLY to Calgacus on Sep 20You say: “Define ‘the private sector’ as ‘the business sector’ plus ‘the household sector’. Did Zeus strike me down with lightning? As far as I know, you are the only person ever who has objected to making such definitions. Why? The (impossible) burden of proof is on you to defend the bizarre assertion that some well-defined and useful ways of dividing up an economy are ‘real’ while others are not. This isn’t Karl Mannheim; it is just common sense and using natural language and accounting in a completely unexceptionable and humdrum way, when they entirely coincide.”
You are just parroting long refuted arguments.#1 To think that one is free to define anything in any way is the Humpty Dumpty Fallacy.#2, #3
Common sense is NOT a valid argument in science because since the Middle Ages it is well-known that the ‘sun goes up’ is well-accepted among common-sense imbeciles but not accepted among scientists.#4
Take notice that MMT has NO sound scientific foundations, MMT’s sectoral balances equations are mathematically false, MMTers violate scientific standards on a daily basis, MMT is political agenda pushing in a scientific bluff package.#5, #6
From the fact that Zeus does not strike you and the rest of brain-dead/corrupt MMTers down with lightning does not follow anything because that is not how science works. MMT is long dead because of material/formal inconsistency. The fact that common-sense folks have not realized that MMT is a proto-scientific zombie is only a redundant confirmation of their abysmal stupidity.
#1 Failed economics: The losers’ long list of lame excuses
#2 Profit, income, and the Humpty Dumpty Fallacy
#3 Wikipedia and the promotion of economists’ idiotism (II)
#4 Why J. S. Mill had no friendly word for the bigots and votaries of common sense
#5 For the full-spectrum refutation of MMT see cross-references MMT
#6 Are MMTers stupid or corrupt or both?
September 13, 2018
Both Mainstreamer and MMTer are either stupid or corrupt or both
Comment on Bill Mitchell on ‘The divide between mainstream macro and MMT is irreconcilable ― Part 3’
Blog-Reference and Blog-Reference and Blog-Reference on Sep 15
In order to clarify the specifics of MMT, Bill Mitchell refers back to functional finance: “So his classic statement of functional finance: Government should adjust its rates of expenditure and taxation such that total spending in the economy is neither more nor less than that which is sufficient to purchase the full employment level of output at current prices. If this means there is a deficit, greater borrowing, ‘printing money,’ etc., then these things in themselves are neither good nor bad, they are simply the means to the desired ends of full employment and price stability …” and “But we do consider fiscal policy should be directed to advancing public purpose and the particular levels of resulting aggregates (for example, fiscal deficits/surpluses) are immaterial.”
This, clearly, is a statement about the objectives of economic policy. What everybody overlooks is that the economist as scientist is NOT entitled to policy agenda pushing. His sole task is to figure out how the actual economy works. So, economists are comparable to the physicists and engineers who figure out how a piece of metal can be made to defy gravity and to get off the ground and to safely land at the desired destination.
Economists as scientists have NO say about the destination. The destination is determined in the political process by the Legitimate Sovereign. So, political economics is a contradiction in itself.#1
Economists are NOT the Legitimate Sovereign as already J. S. Mill made abundantly clear: “A scientific observer or reasoner, merely as such, is not an adviser for practice. His part is only to show that certain consequences follow from certain causes, and that to obtain certain ends, certain means are the most effectual. Whether the ends themselves are such as ought to be pursued, and if so, in what cases and to how great a length, it is no part of his business as a cultivator of science to decide, and science alone will never qualify him for the decision.”
For 200+ years economists overstep their competence. They have taken on the role as clowns and useful idiots in the political Circus Maximus and they have failed thoroughly as scientists. The four main approaches ― Walrasianism, Keynesianism/MMT, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got profit ― the pivotal concept of the subject matter ― wrong. With this pluralism of provably false theories, economists have not achieved anything of scientific value.
Bill Mitchell is right in pointing out that mainstream economics is but one big Fallacy of Composition.#2 But he fails to address the fact that MMT is based upon provably false macrofoundations. With regard to economic policy he fails to address the fact that deficit-spending in the intellectual tradition of Keynes/Lerner has produced the insoluble distributional problems everybody has clearly before their eyes today.#3
So, with regard to scientific failure/corruption, there is NO difference between the mainstream and MMT.#4, #5 With regard to policy there seems to be a real difference. Mainstream economics is traditionally the mouthpiece of the one-percenters. MMT claims to be morally superior and to promote the cause of the ninety-nine-percenters.
This is an optical illusion. There is no real political difference either. Both Mainstreamer and MMTer are agenda-pusher for the oligarchy.#6, #7 The meager academic to-and-fro between Bill Mitchell and Jayadev/Mason has nothing at all to do with science but is a smokescreen for the ongoing joint political fraud that is the economist’s business since Adam Smith/Karl Marx.
Egmont Kakarot-Handtke
#1 The end of political economics
#2 Reference to Arjun Jayadev/J. W. Mason ‘Mainstream Macroeconomics and Modern Monetary Theory: What Really Divides Them?’
#3 Keynes, Lerner, MMT, Trump and exploding profit
#4 MMT, Bill Mitchell, and the lack of basic scientific integrity
#5 For the full-spectrum refutation of MMT see cross-references MMT
#6 MMT: How WeTheOligarchy communicates with WeThePeople
#7 MMT and grassroots movements
Preceding 'Forget mainstream economics, scrap MMT, move on to the new paradigm' and 'Both, mainstream economics and MMT are axiomatically false' and 'Neoclassics and MMT ― much like pest and cholera'.
Blog-Reference and Blog-Reference and Blog-Reference on Sep 15
In order to clarify the specifics of MMT, Bill Mitchell refers back to functional finance: “So his classic statement of functional finance: Government should adjust its rates of expenditure and taxation such that total spending in the economy is neither more nor less than that which is sufficient to purchase the full employment level of output at current prices. If this means there is a deficit, greater borrowing, ‘printing money,’ etc., then these things in themselves are neither good nor bad, they are simply the means to the desired ends of full employment and price stability …” and “But we do consider fiscal policy should be directed to advancing public purpose and the particular levels of resulting aggregates (for example, fiscal deficits/surpluses) are immaterial.”
This, clearly, is a statement about the objectives of economic policy. What everybody overlooks is that the economist as scientist is NOT entitled to policy agenda pushing. His sole task is to figure out how the actual economy works. So, economists are comparable to the physicists and engineers who figure out how a piece of metal can be made to defy gravity and to get off the ground and to safely land at the desired destination.
Economists as scientists have NO say about the destination. The destination is determined in the political process by the Legitimate Sovereign. So, political economics is a contradiction in itself.#1
Economists are NOT the Legitimate Sovereign as already J. S. Mill made abundantly clear: “A scientific observer or reasoner, merely as such, is not an adviser for practice. His part is only to show that certain consequences follow from certain causes, and that to obtain certain ends, certain means are the most effectual. Whether the ends themselves are such as ought to be pursued, and if so, in what cases and to how great a length, it is no part of his business as a cultivator of science to decide, and science alone will never qualify him for the decision.”
For 200+ years economists overstep their competence. They have taken on the role as clowns and useful idiots in the political Circus Maximus and they have failed thoroughly as scientists. The four main approaches ― Walrasianism, Keynesianism/MMT, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got profit ― the pivotal concept of the subject matter ― wrong. With this pluralism of provably false theories, economists have not achieved anything of scientific value.
Bill Mitchell is right in pointing out that mainstream economics is but one big Fallacy of Composition.#2 But he fails to address the fact that MMT is based upon provably false macrofoundations. With regard to economic policy he fails to address the fact that deficit-spending in the intellectual tradition of Keynes/Lerner has produced the insoluble distributional problems everybody has clearly before their eyes today.#3
So, with regard to scientific failure/corruption, there is NO difference between the mainstream and MMT.#4, #5 With regard to policy there seems to be a real difference. Mainstream economics is traditionally the mouthpiece of the one-percenters. MMT claims to be morally superior and to promote the cause of the ninety-nine-percenters.
This is an optical illusion. There is no real political difference either. Both Mainstreamer and MMTer are agenda-pusher for the oligarchy.#6, #7 The meager academic to-and-fro between Bill Mitchell and Jayadev/Mason has nothing at all to do with science but is a smokescreen for the ongoing joint political fraud that is the economist’s business since Adam Smith/Karl Marx.
Egmont Kakarot-Handtke
#1 The end of political economics
#2 Reference to Arjun Jayadev/J. W. Mason ‘Mainstream Macroeconomics and Modern Monetary Theory: What Really Divides Them?’
#3 Keynes, Lerner, MMT, Trump and exploding profit
#4 MMT, Bill Mitchell, and the lack of basic scientific integrity
#5 For the full-spectrum refutation of MMT see cross-references MMT
#6 MMT: How WeTheOligarchy communicates with WeThePeople
#7 MMT and grassroots movements
Preceding 'Forget mainstream economics, scrap MMT, move on to the new paradigm' and 'Both, mainstream economics and MMT are axiomatically false' and 'Neoclassics and MMT ― much like pest and cholera'.
***
Wikimedia, AXEC142
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