Comment on Brian Romanchuk/Tom Hickey on ‘Canadian Establishment: "Deficit Myths? Yes, Please!"’
Brian Romanchuk explains: “The Canadian economic establishment is very much wedded to sound finance beliefs, courtesy of the Great Canadian Fiscal Crisis of the early 1990s.”
This sounds like an explanation but is pure blather. First, who is the “Canadian economic establishment” and, second, how can we know to which beliefs this fictitious subject is wedded and, third, is there any way to prove that Brian Romanchuk's statement is true?
This psychological motive-imputation is as far away from science as can be. It is, however, the stuff political propaganda is made of. Read three Trump tweets and you get the pattern.
Things are bad enough with fresh political events but they get exponentially worse with historical events.
As usual, Tom Hickey cannot resist jumping headfirst into the poop: “As an aside, Germany still can't get over the Weimar hyperinflation and ignores the turnaround engineered by Reichsbank president Hjalmar Schacht that contributed to the economic success of the Hitler regime through ‘creative finance’.”
Folk psychologist Tom Hickey has “Germany” on his couch and diagnoses a trauma: hyperinflation. And now it comes “since the end of WWII, Germany has been firmly committed to ‘sound finance’.” That is hysteresis of the worst sort.
OK Doctor, got it. Everybody who talks of sound finance is psychologically deranged. In particular, those people who accuse MMT of unsound economic policy. Your psycho-babble proves nothing but it is good enough for social media trolling.
The first point to realize is: the attempt to explain things historically is bound to fail because in most cases we have NO such thing as a historical fact. Everybody could know this since 1440 when Lorenzo Valla “proved that the Donation of Constantine was a forgery.”#1 This can be extrapolated backward to the folks who fabricated the bible and forward to those who wrote the Warren Report which “concluded that President Kennedy was assassinated by Lee Harvey Oswald and that Oswald acted entirely alone.” (Wikipedia)
Most people are aware that most of what is called history is silly propaganda. For this reason, it is a bad idea to use historical events or mere opinions about those events in an economic argument. History and psychology prove NOTHING. Scientific proof consists of the demonstration of material/formal consistency.
Psychoanalyzing the collective psyche of “Germany” and inflation is a futile exercise. What we know is (i) that hyperinflation does not happen by accident but has to be engineered, (ii) that it ruined the German economy with the middle class as the primary victim. Given the historical context, the combination of Weimar/Inflation is a signifier of an unprecedented political/economical catastrophe and not for some irrational phobia. Inflation has to be understood less as a mental illness and more as a weapon of economic warfare/subversion.
Having enjoyed a thorough economic education “Germany” is well-prepared to smell an economic rat. MMTers understandably do not like this and call “Germany” a paranoid Swabian housewife.
All this has nothing to do with economics understood as science. It is just a political shit show. Scientifically, MMT is worthless and politically it is a fraud. Brian Romanchuk is part of it.#2
Egmont Kakarot-Handtke
#1 Wikipedia Lorenzo Valla
#2 For more on Brian Romanchuk see AXECquery.
Related 'Bill Mitchell cracks the spending whip over the Swabian Housewife' and 'Swabian housewife vs Wall Street loan shark' and 'Links on Austerity' and 'PsySoc — the scourge of economics' and 'Economists cannot properly apply scientific tools' and 'Links on Inflation' and 'MMT has been conclusively refuted and MMTers can do NOTHING about it'. For details of the big picture see cross-references Not a Science of Behavior.
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REPLY to Global Markets Training on Sep 17
You say: “When a bank makes a loan they DEBIT the asset named LOANS and they CREDIT the liability named DEPOSITS. Look up any definition of money as M1 or M2 and you will see that loans create deposits hence create M1 or M2 hence create money.”
For all practical purposes and in normal times, central bank deposits and bank deposits are functionally identical. However, in the strict sense, bank deposits are near-money, only central bank deposits/notes are money.#1 This explains the phenomenon of bank runs, i.e. when many people suddenly try to get central bank money/notes for their bank deposits.
You say: “And I audited banks for Ernst & Young. So I think I know something about the debits and credits of which I speak.”
Agreed. But despite the fact that the underlying math is the same, business accounting and macroeconomic accounting are different things. Obviously, you have not yet realized that MMT gets the macroeconomic sectoral balances equation wrong.#2 This foundational blunder makes that MMT as a whole is scientifically worthless.#3
#2 “And, although a classically trained economist I now fully accept the complete MMT lens.”
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REPLY to Tom Hickey on Sep 20
I argued above “For this reason, it is a bad idea to use historical events or mere opinions about those events in an economic argument. They prove NOTHING.”
For those economists who do not understand how the economy works and habitually try to explain actual problems with a reference to alledged historical precedents some devastating news about history in general just comes in: Almost all you know about history is probably wrong: How Long Was the First Millenium?#1
#1 See also Links on History and Economics
