July 24, 2021
The three dumbest MMT arguments
Comment on Lars Syll on ‘It’s not the debt we need to fix, stupid! It’s our thinking.’
1. “Can a government go bankrupt? No. You cannot be indebted to yourself.”
The 3-sector Profit Law Q≡(G−T)+(I−S)+Yd implies Public Deficit = Private Profit. So, private financial wealth grows in lockstep with public debt. WeThePeople owes the debt and is taxed for the interest payments to the Oligarchy for an indefinite time. The upper limit for the public debt ― which is in class terms the debt of the working class to the capitalist class ― is given by the interest burden in relation to wage income.#1
2. “Can a central bank go bankrupt? No. A central bank in a monetary sovereign country can always ‘print’ more money.”
Yes, the central bank creates money out of nothing at any time and any amount. There is no technical problem. The economic problem is whether the central bank finances the wage bill of the business sector or whether it finances the government’s direct or indirect purchase of current output. In the latter case, the central bank acts like a counterfeiter who helps the government to redistribute output among WeThePeople.#2
3. “Do taxpayers have to repay government debts? No, at least not as long the debt is incurred in a country’s own currency.”
Public debt can be rolled over for an indefinite time. And for this time it is the interest cash cow of the Oligarchy. However, pushing debt beyond the time horizon does not mean that it vanishes. Central bank money is a specific form of an IOU, i.e. the liability side of the central bank's balance sheet (= money) is equal to the amount of short- or long-term debt on the credit side.#3 It is the defining property of debt that it has eventually to be repaid. So yes, the grandchildren of WeThePeople have to repay the public debt to the grandchildren of the Oligarchy.#3, #4
With deficit-spending/money-creation, i.e. a growing public debt, actual problems are not really solved but merely shifted beyond the time horizon. Ultimately, this is to the advantage of the Oligarchy and to the disadvantage of WeThePeople.
Whether they know it or not does not matter: MMTers in general and Lars Syll, in particular, are just the useful idiots of the Oligarchy.#5 Academic economics is provably false, that is, scientifically worthless.
For the full-spectrum refutation of MMT see cross-references MMT.
For more about Lars Syll see AXECquery.