July 24, 2018

MMT is gangsta economics

Comment on Tom Hickey/Tony Wikrent on ‘How are you going to pay for it? Why Understanding Monetary Theory and Policy Is Critical For the Left’

Blog-Reference

The journalist’s qualification consists of only one skill and that is how to write an emotion-catcher. First, the you-can-trust-me personality frame: I am from Racine, Wisconsin, then comes auntie with her heart-warming practical wisdom: “She [my aunt] used to say, ‘You know, during the Depression there wasn’t any money around. Then they decided to run a war, and there was all kinds of money around. Why can’t we do that when we want to do that?’” Gotcha, politicians, auntie from Wisconsin sees through your shenanigans!

The educated answer to the apparently dumb question How are you going to pay for it? is nobody pays because in a fiat money system WeThePeople/Government/Central Bank can easily produce money in any quantity. This MMT standard answer is, of course, true, but only technically.#1

Let us come back from journalism to reality. The correct answer is Dear questioner, it is WeThePeople who pays for it through stealth taxation, and economically it does not matter at all whether the government’s deficit-spending is for military or social purposes. The first thing to grasp is: YOU pay in real terms, either through open or stealth taxation.

But that’s not all. Because of the macroeconomic Profit Law, it holds always and everywhere: Public Deficit = Private Profit. So, it does not matter how the deficit money is spent, in any case, it increases macroeconomic profit by the same amount ― to the penny.#2 WeTheOligarchs say thank you to WeThePeople!

There is one correct way for the central bank to inject out-of-thin-air money into the economy and that is by financing a growing wage bill. The false way is the counterfeit-money-printer’s way, that is, to spend the additional money on current output. This leads to stealth taxation via the price mechanism or, as the euphemism goes, via the invisible hand.

Why do MMTers always laugh at the question How are you going to pay for it? Because they know that it is always the asking sucker who pays. Yes, it’s a rigged game, and journalists, economists, and MMTers are part of the plot.#3 That’s rather funny as any auntie from Wisconsin can tell you.

Egmont Kakarot-Handtke


#1 For the full-spectrum refutation of MMT see cross-references MMT
#2 Keynes, Lerner, MMT, Trump and exploding profit
#3 The Kelton-Fraud

Related 'The Magic Money Tree is real ― too bad that the magic is fraud' and 'MMT: Academic snake oil for the people' and 'MMT and grassroots movements' and 'Criminals and the monetary order'.