Occasional Tweets: Stephanie Kelton ― political fraud hyped as creativity

 

#MMT#BadScienceBadPolicyBadPeople

Stephanie Kelton's Deficit Myth is scientifically refuted and proven to be political agenda-pushing for the #Oligarchy.

The page where Stephanie Kelton gets macroeconomics wrong https://t.co/CNFDkXM1Ki pic.twitter.com/SKcTE7ruTx

— E.K-H (@AXECorg) September 4, 2021

For more about Stephanie Kelton see AXECquery. 

What is economics? (II)

Comment on James Galbraith on ‘What is economics?’*

Blog-Reference and Blog-Reference

James Galbraith claims that

• economics is a policy discipline,
• economics co-evolves with circumstances, and is historically contingent,
• economic theories are a byproduct of the social order that spawns them,
• the economy is a complex system, appropriate generalizations, simplifications, heuristics, and principles are to be derived from a study of the actual world,
• mathematical systems are inadequate when they start from the dead dogmas of the neoclassical mainstream: ex nihilo nihil fit,
• the history of economic thought/hallucination crashed against the wall of reality with the Great Financial Crisis 2007-09 and the Pandemic of 2020.

Without going into details the sum is: economics as a policy discipline is scientifically worthless from the founding fathers onward to this day. The problem is this: “In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum)

Lacking sound scientific foundations, economic policy guidance has never been more than personal opinion.#1

However, these things, “… even the dimmest observer of real-existing capitalism already knew.” The point is, again and again: “The moral of the story is simply this: it takes a new theory, and not just the destructive exposure of assumptions or the collection of new facts, to beat an old theory.” (Blaug)

Even the dimmest economist knows by now that it takes a Paradigm Shift to get out of the swamp of cargo cult science. However, this is beyond the means of the representative economist. To this day, neither orthodox nor heterodox economists got the foundational concept of economics ― profit ― right.

Here is the unassailable proof: in his General Theory, Keynes asserted: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63) This syllogism is conceptually and logically defective because Keynes never came to grips with profit. “His Collected Writings show that he wrestled to solve the Profit Puzzle up till the semi-final versions of his GT but in the end, he gave up and discarded the draft chapter dealing with it.” (Tómasson et al.)#2, #3

So, Keynes never got macroeconomic profit right and neither did pro- or anti-Keynesians to this day. Folks who cannot do the elementary algebra of macrofoundations cannot do the Paradigm Shift. Their contribution to human welfare/progress consists of burying themselves in a dark corner of the Flat-Earth-Cemetery.

James Galbraith maintains: “The purpose of economic reasoning is to inform and buttress political and social choices.” That sounds plausible but is false. It is the credo of the agenda pusher.#4 The credo of the scientist is: “The purpose of economic reasoning is to figure out how the economy works.”

The criterion for the scientist is truth, i.e. material/formal consistency, and NOT usefulness. The scientist produces new knowledge and nobody can know in advance whether and for whom it is “useful”.

Economists never understood this, but genuine scientists did: “At one point in that 100 years, Lord Ernest Rutherford was visited by a minister of the Queen. He proudly and busily demonstrated what he had learned about radio. The minister said that’s all very good, but what is it good for. Lord Rutherford replied that he did not know, but he guaranteed that at some point the government would tax it.”#5

To this day, economists are not scientists but useful idiots for the Oligarchy. This is what “economics is a policy discipline” means. All these fake scientists have to be expelled from the sciences.#6

Egmont Kakarot-Handtke

* RWER blog

#1 Opinion, conversation, interpretation, blather: the economist’s major immunizing stratagems

#2 Finalizing the Keynesian Revolution

#3 Profit: The most powerful formula of economics

#4 Economics ― the science that never was

#5 The scientist and the minister

#6 A rough business plan for science

Related 'What is economics? (I)'

For more about science, see AXECquery.

For more about Paradigm Shift, see AXECquery.

***

AXE136f

What is MMT? (III) ― Rectifying Bill Mitchell

Comment on Bill Mitchell on ‘Booming growth in Britain (Brexit?) but child poverty rises (austerity)’

Blog-Reference and Blog-Reference

“Social media is, of course, awash with Modern Monetary Theory (MMT) and a host of different characters have made it a goal to become MMT proponents, which is a good thing in some respects.”

It is pretty obvious that “MMT proponents” on social media and elsewhere are overwhelmingly agenda-pushers/applause-trolls/useful idiots/sales-reps and #EconBlockers.#1, #2, #3

“MMT is an economic framework for understanding how the macroeconomy works and the role of the currency-issuer in the monetary economy.”

MMT got macrofoundations wrong. Because of this, the whole analytical superstructure is scientifically worthless.#4

“But MMT is not a ‘movement’, nor, is it a progressive agenda.”

MMTers present themselves as Real Progressives when it suits them, e.g. when they fight UK Labour. Actually, MMT is a movement of and for the Oligarchy.#5, #6, #7

“I keep reading things like ‘MMT advocates taxing the rich’. It doesn’t.”

No, MMT advocates deficit-spending/money-creation which is (because of the 3-sector Profit Law Q≡(G−T)+(I−S)+Yd) to the advantage of the Oligarchy and to the disadvantage of WeThePeople.#8, #9

Egmont Kakarot-Handtke

#1 Economics, communication, disinformation

#2 Economists ― the Oligarchy's agenda pushers

#3 Links on MMTers push Wall Street’s agenda

#4 The unassailable formal refutation of MMT

#5 How Bill Mitchell stalks Jeremy Corbyn

#6 MMT: Corbynism is dead, British Labour is next

#7 Mission accomplished: Economists as useful idiots of the Oligarchy

#8 MMT, money creation, stealth taxation, and redistribution

#9 MMT pushes the Oligarchy's agenda ― and they push MMT

***

Twitter Jul 30

***

Bill Mitchell

• Deceiving WeThePeople ― the case of MMT/Bill Mitchell
• Bill Mitchell says that economists are fake scientists ― true, but MMTers are NOT different
• Proving Bill Mitchell wrong ― burying MMT for good
• Bill Mitchell cracks the spending whip over the Swabian housewife
• Bill Mitchell, MMT, Progressives: economists as Oligarchy hacks
• Mainstream vs MMT ― another clown show
• Economic backstabbing: Bill Mitchell hits again
• Bill Mitchell’s pure MMT teachings for British Labour
• Bill Mitchell’s dishonorable discharge from the sciences
• Bill Mitchell ― Wall Street’s hitman keeps an eye on MMT defeatists
• MMT, Bill Mitchell, and the lack of basic scientific integrity
• How Bill Mitchell stalks Jeremy Corbyn
• MMT is dead: An unfriendly critique of Bill Mitchell
• Bill Mitchell, MMT’s fake scientist
• Cryptoeconomics ― the best of Bill Mitchell’s spam folder
• The final implosion of MMT

Debunking economists' favorite hallucinations

Comment on J.W. Mason on ‘At Age of Economics: How Should an Economist Be?’*

Blog-Reference and Blog-Reference

1. “The most obvious way that economics matters is that it has an enormous prestige in our society. Economists have a level of respect and authority that no other social scientist, arguably no other academic discipline possesses.”Economics is failed/fake science. #1

The prestige it has in society is a result of massive political promotion and not of any genuine scientific merits. #2

2. “It’s also important to realize that economics has come up with some very useful concepts, to make sense of this world around us: concepts like GDP or employment.”

In 200+ years, economists have not gotten the foundational concept of macroeconomic profit right. Because of this, the concept of GDP is provably false. #3

3. “… you’ll find a lot of useful tools within economics.”

The main tools are constrained optimization and supply-demand-equilibrium and both are methodological garbage, i.e., based on untenable axioms. #4 Because the foundations of economics are false, the whole analytical superstructure is scientifically worthless.

4. “And to be fair, there are plenty of prominent mainstream macroeconomists who have a lot of interesting and insightful things to say about real economies. The thing is that when they’re talking about the real world, they ignore what they doing their scholarly work.”

That is a euphemism for collective schizophrenia, i.e., of the fact that economists are either stupid or corrupt or both. #5

5. “But it’s almost impossible to imagine a non-ideological economics. … So as long as we live under capitalism, we are never going to have an established scientific study of capitalism.”

From J. W. Mason's and other scientifically incompetent economists' lack of imagination does NOT logically follow that economics cannot move above the level of proto-scientific garbage and political corruption. # 6

6. “If you want to think about capitalism as a system, you need to go back to Karl Marx.”

No! Marx was just another scientifically incompetent clown/useful idiot in the political Circus Maximus. #7 If you want to think about the economy, you have to move from false microfoundations and false macrofoundations to true macrofoundations.

Egmont Kakarot-Handtke

* Blog

#1 Wikipedia, economics, scientific knowledge, or political agenda pushing?

#2 The real problem with the economics Nobel

#3 The GDP-death-blow for the economics profession

#4 Get it econ suckers: behavioral microfoundations ⇒ false, systemic macrofoundations ⇒ true

#5 Schizonomics

#6 The Paradigm Shift is an accomplished fact

#7 Dear idiots, Marx got profit and exploitation wrong

***

Graphic AXEC121i

The three dumbest MMT arguments

Comment on Lars Syll on ‘It’s not the debt we need to fix, stupid! It’s our thinking.’

Blog-Reference and Blog-Reference

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.

Egmont Kakarot-Handtke

#1 From the debt economy to the gift economy: how America is brainwashed to love budget deficits

#2 MMT, money creation, stealth taxation, and redistribution

#3 The ultimate ― analytical ― origin of money

#4 How to pay for the war and to be bamboozled by economists

#5 Criminals and the monetary order

For the full-spectrum refutation of MMT see cross-references MMT.

For more about Lars Syll see AXECquery.

Keynes―Marx―Profit: The abysmal scientific failure of economics

Comment on Michael Roberts/Tom Hickey on ‘Marx’s reproduction schema’*

Blog-Reference and Blog-Reference

Michael Roberts summarizes: “… for Marx, under capitalism, … investment growth depends on profitability, …” and “for Marx, savings are profits because workers do not save, so there is a class aspect to his reproduction model.”

Tom Hickey cites Keynes: “The Engine which drives Enterprise is not Thrift, but profit.” (Treatise on Money, 1931)

OK folks, and what does profit depend on? The fact of the matter is that neither Marx nor Keynes had any idea of what profit is. And that is rather bad for any economist who claims to do science.#1, #2

The macroeconomic 3-sector Profit Law reads Q≡(G−T)+(I−S)+Yd.#3 This formula tells one, among many other important things, that monetary profit Q depends on investment I.#4 And there you have it: investment depends on profit, and profit depends on investment. In systems theory, this is called a positive feedback loop. And every half-wit knows by now that positive feedback is what destabilizes a system and eventually destroys it. The big insight about Capitalism is that at its heart there is a positive feedback loop. And this explains the economic system's dynamic and crises.

How does MMT fit in? The Profit Law implies Public Deficit (G−T)>0 = Private Profit Q. Thus, the MMT policy of deficit-spending/money-creation is a free lunch for the Oligarchy. While investment i.e. a growing real capital stock is the life elixir of Early Capitalism, growing public debt is the life elixir of Late Capitalism.#5

This, then, is the scandal of 200+ years of economics. Economics is all in one: scientific failure and political fraud because Walrasianism, Keynesianism, Marxianism, Austrianism, MMT, and Pluralism are mutually contradictory, axiomatically false, and materially/formally inconsistent, and ALL got profit wrong.

Because of this, economic policy guidance NEVER has had sound scientific foundations. It has ALWAYS been brain-dead agenda-pushing of political clowns. Left-right-center does not matter. Time to bury Marx and Keynes and MMT and all the rest at the Flat-Earth Cemetery.

Egmont Kakarot-Handtke

* Michael Roberts blog

#1 Cross-references Profit/Distribution

#2 Wikipedia, economics, scientific knowledge, or political agenda pushing?

#3 Profit: The most powerful formula of economics

#4 Squaring the Investment Cycle

#5 The U.S. economy hangs on the state ventilator for its survival

***

AXEC172

MMTers at the end of their wits

Comment on Bill Mitchell on ‘Intergenerational Report ― the past is catching up with the government and the game is up’*

Blog-Reference and Blog-Reference

Bill Mitchell comments the 2021 Intergenerational Report as follows: ridiculous, smokescreen-creating, jam-packed with scaremongering, latest nonsense, madness, designed to deflect the damage that the government surpluses were creating in the mid-1990s, embarrassing for Treasury workers to be coerced by their bosses into producing this garbage.” and “What parades as economic analysis is just the usual neo-liberal mainstream nonsense that currency-issuing governments have run out of money and fiscal deficits are dangerous.” and “We have also seen that the government can spend what it likes without taxes going up and without bond markets declaring the government insolvent. We have now lived with large deficits as a result of the pandemic and the game is up on the deficits are bad and the sky will crash down story line.“

All this, of course, is not a scientifically valid argument but desperate political shit throwing. As such it is just another example of the abysmal level of academic economics. To this day, economists are too stupid for the elementary algebra of macroeconomics.#1

MMT has been refuted by the proof of its inconsistency. Because the foundational concepts of MMT are false the whole analytical superstructure of MMT is scientifically worthless.#2 That is, MMT's policy guidance has NO sound scientific foundations. It is just political agenda pushing for the benefit of the Oligarchy. The claim that MMT policy is for the benefit of WeThePeople is a political fraud.#3

MMTers debate every crappy argument that comes their way but has never attempted to refute the proof of the inconsistency of the MMT sectoral balances equation.#4

MMT is refuted on all counts and a sure sign that MMTers are at the end of their wits is that all that they do is to repeat their thoroughly refuted silly slogans of the harmlessness of a continuously growing public debt.#5

It is a mathematical certainty that the macroeconomic Profit Law implies Public Deficit = Private Profit. By the same token, it is a political certainty that MMTers are agenda-pushers for the Oligarchy and false Friends-of-the-People.

Egmont Kakarot-Handtke

* Bill Mitchell's blog

#1 Wikipedia, economics, scientific knowledge, or political agenda pushing?

#2 MMT has been conclusively refuted and MMTers can do NOTHING about it

#3 For details of the big picture see cross-references MMT

#4 MMTers still don't get the foundational sectoral balances right

#5 No MMT illusions! YOU are going to pay for it

Related 'Links on Austerity' and 'From the debt economy to the gift economy: how America is brainwashed to love budget deficits' and 'Hype does not help: MMT is toast' and 'Clueless economists / Macrofoundations'.

***

AXEC118d

Profit is the key to the understanding of how the economy works

Comment on Michael Roberts on ‘Some notes on the world economy now’

Blog-Reference and Blog-Reference

Michael Roberts summarizes: “The central argument of Marxian criticism is based on the law of value. This roughly means that companies only invest if they can make a profit. Profit is the centre of their actions and not the needs of the people.” and “For mainstream economists, profit simply does not matter. But even among the left-wing Keynesians, profit hardly appears. For them, it is all about ‘demand’, about ‘speculation’ or about ‘financialisation’. These things all play a major role, but profit is the key category for understanding the capitalist process of production and accumulation.”

Yes, profit is the foundational concept of economics, and economists have got it wrong since Adam Smith/Karl Marx.

The major approaches, Walrasianism, Keynesianism, Marxianism, Austrianism, and their derivatives are mutually contradictory, axiomatically false,  materially/formally inconsistent, and ALL get profit wrong. Economic policy guidance has NEVER had sound scientific foundations. To this day, economics is brain-dead political agenda-pushing.

Marx, too, got profit wrong. #1, #2 Because the foundational concept is false, the whole analytical superstructure is false. Marx was too stupid for science, and this holds for his followers without exception.

To say “I am a Marxist” is to say “I am either stupid or corrupt or both”.

Egmont Kakarot-Handtke

#1 Dear idiots, Marx got profit and exploitation wrong

#2 Profit: The most powerful formula of economics

For details of the big picture, see cross-references Profit/Distribution.

For more about Michael Roberts, see AXECquery.

Orthodoxy is refuted ― but MMT also

Comment on Bill Mitchell on ‘The Cambridge Controversy ― a fundamental refutation of orthodox economic theory’ *

Blog-Reference and Blog-Reference on May 2

It goes without saying that what Paul Krugman says about the CCC and Joan Robinson is abysmally stupid. In Bill Mitchell's words: “Paul Krugman is either a liar or didn’t really get the point, or both.”#1 The fact that he is still a member of good standing of academic economics tells one all about the subzero level of scientific competence/ethics of the profession. In Bill Mitchell's words: “The import though is clear ― orthodox economics, which is still taught on a daily basis in our universities and which people like Krugman use to make money by writing textbooks about is based on a series of myths that cannot be sustained, both logically, in terms of their own internal consistency, and, in relation to saying anything about the real world we live in.”

Neoclassical economists do not understand profit and by consequence distribution. Bill Mitchell argues that Karl Marx did: “The major insight provided by Marx’s theory of surplus-value was that capitalist profits are sourced in the production of surplus-value. In turn, surplus-value is produced by unpaid labour and so under capitalism workers remain exploited (as they were under previous modes of production).” The fact is, that Marx, too, got profit wrong.#2

From this, one may infer that Bill Mitchell and the MMTers have no idea about what profit is. And this, too, is a provable fact.#3

Conclusion: Walrasianism, Keynesianism, Marxianism, Austrianism, MMT are mutually contradictory, axiomatically false, materially/formally inconsistent, and ALL got profit wrong. What passes as economics (“economic sciences” according to the EconNobel) is the pluralism of idiotism.#4

Because the foundational concept of economics ― profit ― is ill-defined and not understood to this day, economic policy guidance has NEVER had sound scientific foundations but has always been brain-dead agenda pushing. In their scientific incompetence, economists have always been a hazard to their fellow citizens. If humanity has made some progress it was NOT because of economists but despite them.

Egmont Kakarot-Handtke

* Bill Mitchell's MMT Blog Part 1 Part 2

#1 Links on Paul Krugman, proto-scientific impresario

#2 Profit for Marxists

#3 For those who want to check the refutation of MMT in greater detail here are the relevant references:

ad Mitchell: Proving Bill Mitchell wrong ― burying MMT for good

ad Kelton: The page where Stephanie Kelton gets macroeconomics wrong

ad Mosler: MMT: The one deadly error/fraud of Warren Mosler

ad Keen: MMT: fraudsters united

ad Wray: MMT: Agenda-pushing and money-making for the Oligarchy

ad Godley: Do economists finally wake up from their methodological delirium?

ad Kalecki: MMT: How mathematical incompetence helps the Kelton-Fraud

ad Minsky: Profit is the key

ad Textbook: Refuting MMT’s Macroeconomics Textbook

#4 For the reset of economics and the correct macroeconomic Profit Law see Profit

Related 'The CCC ― a monument of economists’ utter scientific incompetence' and 'One entirely sufficient reason for the shutdown of economics'. For details of the big picture see cross-references Failed/Fake Scientists.

MMT has been conclusively refuted and MMTers can do NOTHING about it

Comment on James Galbraith on ‘Who’s Afraid of MMT?’*

Blog-Reference and Blog-Reference and Blog-Reference

James Galbraith summarizes: “What, then, is MMT? Contrary to the claims of King and Rajan, it is not a policy slogan. Rather, it is a body of theory in Keynes’s monetary tradition, which includes such eminent thinkers as the American economist Hyman Minsky and Wynne Godley of the UK Treasury and the University of Cambridge. MMT describes how ‘modern’ governments and central banks actually work, and how changes in their balance sheets are mirrored by changes in the balance sheets of the public ― an application of double-entry bookkeeping to economic thought. Thus, as Kelton writes in the plainest English, the deficit of the government is the surplus of the private sector, and vice versa.”

Yes, indeed that's MMT in a nutshell and the last sentence is provably false because MMTers are too stupid for the elementary algebra that underlies macroeconomic accounting. Neither the followers of Stephanie Kelton et al. nor the critics of MMT ever spotted the blunder in the formal foundations that invalidates the whole approach.

So MMT is scientifically worthless and can be unceremoniously buried at the Flat-Earth-Cemetery. Politically, though, MMT still has some use-value for fooling WeThePeople. As a consequence, only stupid/corrupt agenda pushers defend or criticize MMT. No scientist wastes time with this proto-scientific garbage.

For those who want to check the refutation in greater detail, here are the relevant references

• ad Keynes: Wikipedia, economics, scientific knowledge, or political agenda pushing? Section Provably false/Keynes
• ad Kelton: The page where Stephanie Kelton gets macroeconomics wrong
• ad Mitchell: Proving Bill Mitchell wrong ― burying MMT for good
• ad Mitchell: MMT is dead: An unfriendly critique of Bill Mitchell
• ad Mosler: MMT: The one deadly error/fraud of Warren Mosler
• ad Keen: MMT: fraudsters united
• ad Wray: MMT: Agenda-pushing and money-making for the Oligarchy
• ad Godley: Do economists finally wake up from their methodological delirium?
• ad Kalecki: MMT: How mathematical incompetence helps the Kelton-Fraud
• ad Minsky: Profit is the key
• ad Textbook: Refuting MMT’s Macroeconomics Textbook
• Where MMT got macro wrong
• MMT-Refutation for Dummies
• Quick MMT 101 refutation
• MMT refuted in three easy steps
• Refutation of MMT: All proofs and arguments you ever need
• For details of the big picture, see cross-references MMT
• MMT is refuted ― end of story.

Egmont Kakarot-Handtke

* B&FT Online

***

#PointOfProof

#EconBlocker

Economists betray WeThePeople

Comment on Dean Baker on ‘Putting the debt in context’

Blog-Reference

The 3-sector Profit Law Q≡(G−T)+(I−S)+Yd implies that the greater part of macroeconomic profit Q is produced by public deficit-spending/money-creation (G−T). So, a growing public debt secures the permanent self-alimentation of the Oligarchy. #1

Because of Public Deficit = Private Profit, MMT policy is a free lunch for the Oligarchy. Stephanie Kelton's Deficit Myth is scientifically refuted and proven to be agenda-pushing for the advantage of the Oligarchy and disadvantage of WeThePeople. MMTers are scientific nullities and political fraudsters because they pose as Friends-of-the-People. #2-#4

Private financial wealth grows in lockstep with public debt. Financial wealth in turn generates interest income, which is taxed from WeThePeople and handed over to the Oligarchy as long as the debt is rolled over. #5, #6

The MMT policy of deficit-spending/money-creation (for consumptive purposes) is economically a bad deal for WeThePeople. Politically, it amounts to the self-destruction of Democracy. #7 The role of the captured state is to produce sufficient macroeconomic profit. The Oligarchy, in turn, uses the opulent deficit-produced free lunches to nudge the state’s legislative, executive, and judiciary institutions in its favor.

Academic economics ― left, center, right does NOT matter ― plays a supporting role in the process as the propaganda arm of the Oligarchy. Scientifically, economics is worse than worthless.

Egmont Kakarot-Handtke

#1 The U.S. economy hangs on the state ventilator for its survival

#2 The page where Stephanie Kelton gets macroeconomics wrong

#3 Proving Bill Mitchell wrong ― burying MMT for good

#4 Warren Mosler: scientific dilettante and political fraudster

#5 From the debt economy to the gift economy: how America is brainwashed to love budget deficits

#6 How to view public debt ― good for the Oligarchy, bad for WeThePeople

#7 MMT undermines democracy

Related 'Where economics went wrong (II)' and 'The representative economist ― a cargo cult clown' and 'Economics is Not a science, economists are NOT scientists' and 'Since the founding fathers, economics is NOT science but political agenda-pushing' and 'The fatal effect of MMT policy is NOT on inflation but on distribution' and 'Political fraud and the silence of academia' and 'MMT: The fusion of Wall Street and Academia' and 'The representative economist ― a cargo cult clown'. For details of the big picture, see cross-references Failed/Fake Scientists and cross-references Political Economics/Stupidity/Corruption.

For more about Dean Baker, see AXECquery.

***

Graphic AXEC108l

Putting the Quantity Theory of inflation to rest

Comment on Blair Fix on ‘Energizing exchange: Learning from econophysics’ mistakes’

Blog-References

Macroeconomics is provably false since Keynes.#1 The correct macrofoundations are given with this set of axioms: (A0) The objectively given and most elementary configuration of the economy consists of the household and the business sector which in turn consists initially of one giant fully integrated firm. (A1) Yw=WL wage income Yw is equal to wage rate W times working hours. L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) E_c=PX consumption expenditure Ec is equal to price P times quantity bought/sold X.

Under the conditions of market-clearing X=O and budget-balancing E_c=Y_w in each period, the price as dependent variable is given by P=W/R, i.e., the market-clearing price is equal to unit wage costs. This is the most elementary form of the macroeconomic Law of Supply and Demand. For the graphical representation, see AXEC31a

The macroeconomic price is determined by the wage rate W, which takes the role of the nominal numéraire, and the productivity R. The quantity of money is NOT among the price determinants.

Monetary profit for the economy as a whole is defined as Q_m≡E_c−Y_w and monetary saving as S_m≡Y_w−E_c. It always holds that the sectoral balances add up to zero, i.e. Q_m+S_m=0. In other words, the business sector’s deficit=loss equals the household sector’s surplus=saving and vice versa, the business sector’s surplus=profit equals the household sector’s deficit=dissaving. This is the most elementary form of the macroeconomic Profit Law. Under the condition of budget-balancing E_c=Y_w, monetary profit is zero.

What is needed next is two things (i) a Central Bank which creates money on its balance sheet in the form of deposits, and (ii), a legal system that declares the Central Bank’s deposits as legal tender. These conditions define a fiat money system without commercial banks as intermediaries.

Deposit money is needed by the business sector to pay the workers who receive the wage income Y_w  per period. The need is only temporary because the business sector gets the money back if the workers fully spend their income, i.e. if E_c=Y_w.

Overdrafts are needed by the household sector for consumption expenditures if the households want to spend before they get their wage income. This time sequence is no problem for the Central Bank because the temporary overdrafts vanish with wage payments.

For the case of a balanced budget C=Y_w, the idealized transaction sequence of deposits/overdrafts of the household sector at the Central Bank over the course of one period is shown on AXEC98:

The household sector’s deposits/overdrafts are zero at the beginning and end of the period. The business sector’s transaction pattern is the exact mirror image. Money, that is, deposits at the Central Bank, is continually created and destroyed during the period under consideration. There is NO such thing as a fixed quantity of money. The central bank plays an accommodative role and simply supports the autonomous market transactions between the household and the business sector.

From this follows the average stock of transaction money as M=κY_w, with κ determined by the transaction pattern. In other words, the average stock of money M is determined by the autonomous transactions of the household and business sector and created out of nothing by the Central Bank. The economy never runs out of money.

The transaction equation reads M=κY_w=κE_c=κPRL in the case of budget balancing and market clearing, and this yields the commonplace correlation between the average stock of money M and price P for a given employment level L and productivity R, except for the fact that M is the dependent variable. If P doubles, M doubles, and P doubles if W doubles, with the real variables L and R fixed.

Inflation ensues under the conditions of market-clearing and budget-balancing if the wage rate rises faster than the productivity, and deflation ensues in the opposite case. Under the condition of L and R constant, one always gets the commonplace correlation between the average stock of money M and price P, with the causality running from P to M.

For the general case, the elementary macroeconomic price formula states P=ρ_EW/R with ρ_E≡E_c/Y_w. ρ_E>1 represents deficit-spending, and this implies that a period deficit produces a one-off price hike. So, if ρ_E=1 in the initial period and ρ_E=2 in the next period, then the price doubles.

The transaction equation reads for the general case M=κ sup {Y_w, E_c} or M=κ sup {1, ρ_E}Yw and this means that if E_c is greater than Y_w then E_c determines the quantity of transaction money. So, if E_c doubles, i.e., ρ_E=2, then M doubles. In this case, the old Quantity Theory correlation between P and M reappears.

However, this does NOT lead to inflation as a process over multiple periods. If ρ_E=2 again in the next period, then the price P remains at the elevated level but does not rise further. So, the continuous deficit spending of the household sector does NOT cause inflation. (Only successive increases of the expenditure ratio ρ_E lead to successive price hikes.)

However, the average stock of transaction money increases continuously.#2 The transaction pattern in the case of continuous dissaving is shown on AXEC99

As a mirror image, the deposits of the business sector at the Central Bank increase continuously because the profit of the business sector is equal to the dissaving/deficit-spending of the household sector. So, the average quantity of money in the system increases continuously but the price remains stable at the elevated level for a given ρ_E. There is NO proportionality between M and P and this means that the commonplace Quantity Theory is refuted.

Egmont Kakarot-Handtke

#1 Macroeconomics without Keynes

#2 Money and time

Additional link: Michael D. Bordo and Mickey D. Levy, Do Enlarged Fiscal Deficits Cause inflation: The Historical Record

Proving Bill Mitchell wrong ― burying MMT for good

Comment on Bill Mitchell on ‘The income-expenditure relationship in macroeconomics ― graphic treatment’*

Blog-Reference and Blog-Reference

Bill Mitchell introduces his macroeconomic approach: “Over the last several months by way of advancing Modern Monetary Theory (MMT) education initiatives, we have been involved in development a MOOC, i.e. Modern Monetary Theory: Economics for the 21st Century.” and “As part of the planning I have been thinking of simplified frameworks for teaching rather complicated concepts and relationships.”

In his course material, Bill Mitchell deals with nominal flows only; real flows and connecting variables like wage rate, price, and productivity are left out of the picture. This ends up in a lethal mistake that invalidates the whole of MMT.

Here is the proof.

The elementary production-consumption economy is defined with this set of macroeconomic axioms: (A0) The economy consists of the household and the business sector, which, in turn, consists initially of one giant fully integrated firm. (A1) Yw=WL wage income Yw is equal to wage rate W times working hours. L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) Ec=PX consumption expenditure Ec is equal to price P times quantity bought/sold X.

Under the conditions of market-clearing X=O and budget-balancing Ec=Yw in each period, the price as the dependent variable is given by P=W/R. The elementary production-consumption economy is shown on AXEC31a.#1

This graph is a bit more complex, but with regard to nominal flows, absolutely identical with Bill Mitchell's graph, which simply says Yw=Ec.#2

So the starting point of the analysis of nominal flows is identical.

For the time being, real balances are excluded, i.e., it holds X=O. The condition of budget balancing, i.e., Ec=Yw, is now skipped. The resulting monetary saving/dissaving of the household sector is defined as S≡Yw−Ec. The monetary profit/loss of the business sector is defined as Q≡Ec−Yw. So, the balances of the two sectors are complementary, i.e., Q≡−S. In other words, the balances add up to zero, just as they are supposed to do according to the rules of accounting.

The mirror image of household sector saving S is business sector loss −Q. The mirror image of household sector dissaving −S is business sector profit Q. So, Q≡−S is the elementary version of the macroeconomic Profit Law.

Macroeconomic profit, though, is entirely missing in Bill Mitchell's presentation of the income-expenditure relationships. Now, any presentation of the elementary economic system that does not contain the foundational economic variable profit is scientifically worthless. From the fact that the conceptual foundations of macroeconomics are provably false follows that the whole analytic superstructure of MMT is false.#3-#6 This is all one needs to know about Bill Mitchell and MMT.

Egmont Kakarot-Handtke

* Billy Blog

#1 Graphic AXEC31a

#2 Income-expenditure flows

#3 The GDP-death-blow for the economics profession

#4 Wikipedia, economics, scientific knowledge, or political agenda pushing? 

⇒ Section Provably False/MMT

#5 Controlled demolition of MMT ― an exercise in elementary logic

#6 Refuting MMT’s Macroeconomics Textbook

Related 'Debunking MMT’s hallucinatory income-expenditure model' and 'Economics, MMT, and the capture of science by the political mob' and 'Refutation of MMT: All proofs and arguments you ever need'.

For more about Bill Mitchell, see AXECquery.

For more about proof, see AXECquery.about

For more about sectoral balances, see AXECquery.

For the full-spectrum refutation of MMT, see cross-references MMT.

For an extended discussion about defective MMT macrofoundations with Peter Cooper, see AXECquery.

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AXEC118d

MMT refuted in three easy steps

Comment on Asad Zaman on ‘ABC’s of Modern Monetary Theory (MMT)’

Blog-Reference and Blog-Reference

(1) MMT claims to be science. Roughly speaking, science means the material and formal consistency of a theory. The proof has been given that the macroeconomic foundations of MMT are defective. Because the foundations are false, the whole analytical superstructure is false. #1 So, MMT policy guidance has NO sound scientific foundations. It is just political agenda-pushing.

(2) For lack of scientific content, the economic policy arguments of MMTers consist of simple assertions or commonsense truisms, e.g., the government never runs out of money. This is trivially true for a fiat money system, but it also holds for the counterfeiter. The essence of MMT policy is deficit-spending/money-creation for every calamity between unemployment and climate change. Deficit spending has a positive impact on macroeconomic profit. The macroeconomic Profit Law implies Public Deficit = Private Profit. So, MMT causes present and future distributional problems. #2

(3) MMTers present themselves as progressive Friends-of-the-People. This is a political fraud because deficit-spending/money-creation ultimately benefits the Oligarchy and NOT WeThePeople. #3

MMTers cannot refute (1)-(3) in a scientifically valid manner. So they resort to the usual rhetorical tricks: denial, evasion, distraction, blocking, and shit-throwing. MMTers are NOT scientists but clowns and useful idiots in the political Circus Maximus. #4

Egmont Kakarot-Handtke

#1

► Wikipedia, economics, scientific knowledge, or political agenda pushing?

⇒ Section Provably False/MMT

► Quick MMT 101 refutation

► MMT and the magical profit disappearance

► Refuting MMT’s Macroeconomics Textbook

► MMTers: too stupid for simple math

► The MMT fraud in slow motion, so that even economists can get it

► Proving Bill Mitchell wrong ― burying MMT for good

► Bill Mitchell says that economists are fake scientists ― true, but MMTers are NOT different

► For the full-spectrum refutation of MMT see cross-references MMT

#2

► Mad but true: 200+ years after Adam Smith economists still have no idea what profit is

► Keynes, Lerner, MMT, Trump, Biden, and exploding profit

► The Levy/Kalecki Profit Equation is false

► Dear idiots, it is deficit spending that creates the distribution people complain about

► MMT: Distribution is the drawback NOT Inflation

► Cross-references Profit/Distribution

#3

► Links on MMTers push Wall Street’s agenda

► MMTers are false Progressives and false Friends-of-the-People

► MMT: The fusion of Wall Street and Academia

► Political fraud and the silence of academia

► Cross-references Political Economics/Stupidity/Corruption

#4

► Occasional Tweets #210315: Proof of MMT's inconsistency

► Occasional Tweets #210310: Not so smart, those MMT agenda pushers

► Occasional Tweets #210304: MMT has always been a scientific non-starter

► Occasional Tweets #210303: Very busy ― the MMT troll brigade in action

► Occasional Tweets #210225: How the MMT fraud works

► Occasional Tweets #201224: Employment and allocation

► Occasional Tweets #210223: The Kelton Myth

► Occasional Tweets #201218: The sectoral balances equation

► Occasional Tweets #201215: Mental collapse of MMT

► Occasional Tweets #210117b: MMTers hide macroeconomic profit in order to deceive WeThePeople

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#PointOfProof

Dec 20 submission

Dec 25 missing

MMT works just fine (for the Oligarchy)

 Comment on Editor on ‘U.S. billionaires and the pandemic’*

Blog-Reference

The macroeconomic 3-sector ProfitLaw Q≡(G−T)+(I−S)+Yd implies Public Deficit = Private Profit, meaning that the MMT policy of deficit-spending/money-creation is a free lunch for the Oligarchy.#1, #2

The COV19-triggered acceleration of deficit-spending/money-creation will result in the biggest profit explosion ever. Thus, COV19 is a godsend for the Oligarchy. Politically, this is old stuff in a new package.#3

MMT policy works just fine ― for the Oligarchy.#4

Egmont Kakarot-Handtke

* RWER

#1 MMT: A free lunch for the Oligarchy

#2 Deficit cheerleaders ― the Oligarchy’s useful idiots

#3 How Keynesians, Lernerians, MMTers make the Oligarchy great

#4 Dear idiots, MMTers are Wall Street’s agenda pushers

Related 'Wikipedia, economics, scientific knowledge, or political agenda pushing?' and 'A battle for hearts and minds ― economics redefined' and 'Keynes, Lerner, MMT, Trump, etc. and exploding profit' and 'Profit' and 'MMT ― now official doctrine' and 'MMT: fraudsters united' and 'MMTers hide macroeconomic profit in order to deceive WeThePeople'. For the full-spectrum refutation of MMT see cross-references MMT.

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Source: RWER

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US Deficit in 2020

Source: Google

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US National Debt by Year

Source: The Balance

Twitter Jan 3, 2020

Twitter Jan 4

Twitter Mar 15 Debt 2021

Twitter Oct 7

Economists’ foundational conceptual blunder

Comment on Editor on “necessities of thought”

Blog-Reference

Editor quotes Einstein: “Concepts that have proven useful in ordering things easily achieve such an authority over us that we forget their earthly origins and accept them as unalterable givens.” And “For that reason, it is by no means an idle game if we become practiced in analyzing the long commonplace concepts and exhibiting those circumstances upon which their justification and usefulness depend, how they have grown up, individually, out of the givens of experience. By this means, their all-too-great authority will be broken. They will be removed if they cannot be properly legitimated, corrected if their correlation with given things be far too superfluous, replaced by others if a new system can be established that we prefer for whatever reason.”

Applied to economics, the conceptual state of affairs is as follows: the lethal defect of economics is that the major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, MMT ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and ALL get the foundational economic concept of profit wrong. To get the concept of profit wrong in economics is comparable to getting the concept of energy in physics wrong. Because the foundational concept is ill-defined the whole analytical superstructure of economics is scientifically worthless.#1-#3

For 200+ years, economics is a failed science. Since Adam Smith/Karl Marx, economic policy guidance never has had NO sound scientific foundations.#4

Any critique of or conversation about the main approaches is a waste of time. This proto-scientific embarrassment has without further ado to be buried at the Flat-Earth-Cemetery and forgotten.

The way forward consists of a Paradigm Shift. Economics has to move from false Walrasian microfoundations and false Keynesian macrofoundations to true macrofoundations.#5-#6

The good news is that, while economists were sinking deeper and deeper in the methodological mire, the Paradigm Shift has been accomplished.#7

Egmont Kakarot-Handtke

#1 The GDP-death-blow for the economics profession

#2 Profit

#3 Conceptual blunder

#4 Cross-references Political Economics/Stupidity/Corruption

#5 OMG, after 200+ years, economics becomes a science

#6 Cross-references Paradigm Shift

#7 The Paradigm Shift is an accomplished fact

Related 'Clear thinking in economics: hahaha!' and 'Confused Confusers: How to Stop Thinking Like an Economist and Start Thinking Like a Scientist'.

The GDP death blow for the economics profession

Twitter-Reference and Blog-Reference and Blog-Reference on Nov 5

“Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced in a specific time period.” And “GDP can be determined in three ways, all of which should, theoretically, give the same result. They are the production (or output or value added) approach, the income approach, or the speculated expenditure approach.” and “The second way of estimating GDP is to use ‘the sum of primary incomes distributed by resident producer units’. If GDP is calculated this way it is sometimes called gross domestic income (GDI), or GDP (I). GDI should provide the same amount as the expenditure method described later. By definition, GDI is equal to GDP. In practice, however, measurement errors will make the two figures slightly off when reported by national statistical agencies. This method measures GDP by adding incomes that firms pay households for factors of production they hire ― wages for labour, interest for capital, rent for land, and profits for entrepreneurship. The US ‘National Income and Expenditure Accounts’ divide incomes into five categories: 

1. Wages, salaries, and supplementary labour income
2. Corporate profits
3. Interest and miscellaneous investment income
4. Farmers' incomes
5. Income from non-farm unincorporated businesses

These five income components sum to net domestic income at factor cost”. (Wikipedia) #1

To reduce matters to the core, the list 1-5 is condensed to the straightforward formula National Income = Wages (1) + Profits (2). This formula looks plausible, but, in fact, constitutes the foundational blunder of economics to this day. The conceptual blunder invalidates Walrasianism, Keynesianism, Marxianism, Austrianism, MMT, and Pluralism. #2-#6

The fact of the matter is that economists are too stupid for the elementary algebra that underlies macroeconomics. With regard to scientific incompetence, there is NO difference between Orthodoxy and Heterodoxy ― it is the whole of academic economics.

Macroeconomics has to be based on a set of objective and consistent axioms.#7 This is the correct core of premises

(A0) The objectively given and most elementary systemic configuration of the economy consists of the household sector and the business sector, which in turn consists initially of one giant fully integrated firm.

(A1) Y_W=WL wage income Y_W is equal to wage rate W times working hours. L,

(A2) O=RL output O is equal to productivity R times working hours L,

(A3) E_C=PX consumption expenditure E_C is equal to price P times quantity bought/sold X.

The price P follows as the dependent variable under the conditions of budget-balancing, i.e., E_C=Y_W, and market-clearing, i.e., X=O, as P=W/R, i.e., the market-clearing price is, for a start, equal to unit wage costs. This is the most elementary form of the macroeconomic Law of Supply and Demand.

By lifting the condition of budget-balancing, one gets the saving/dissaving of the household sector as S≡Y_W−E_C and the profit/loss of the business sector as Q≡E_C−Y_W. S and Q are the balances of two flows. It holds Q≡−S, that is, the profit of the business sector is equal to dissaving/deficit-spending of the household sector, and loss of the business sector is equal to saving of the household sector. This is the most elementary form of the macroeconomic Profit Law. #8-#10

Profit Q is a balance, i.e., the difference of flows, and NOT a flow like wage income Y_W. So, profit is NOT income. Economists not only confuse stocks and flows but also balances and flows. The Flow-Balance Inconsistency makes the whole of established economics proto-scientific garbage.

It is obvious that the business sector’s loss is something quite different from income. Wage income is a flow from the business sector to the household sector. Loss is the difference between the two flows E_C and Y_W. So it is inadmissible to speak of loss as a type of income. This conceptual blunder is called a category mistake. Wage income and profit are NOT two different forms of income. The inexcusable blunder of the representative economist consists of confusing balances and flows.

This blunder carries over to the concept of National Income as given above, with 1-5, and thus ruins National Accounting and the concept of GDP. In technical terms, according to standard economics, GDI and GDP should be identical. Because the foundational concepts of macroeconomics ― profit and income ― are ill-defined, the whole analytical superstructure of macroeconomics is provably false. Economics is a failed science for 200+ years now. #11

The inescapable Paradigm Shift consists of the move from false microfoundations and false macrofoundations to the true macrofoundations (A1) to (A3).

Egmont Kakarot-Handtke

#1 Wikipedia Gross domestic product

#2 Debunking Squared

#3 Ricardo, too, got profit theory wrong

#4 MIT dilettantes (I)

#5 The Common Error of Common Sense: An Essential Rectification of the Accounting Approach

#6 MMT and Marxism ― blather as immunizing stratagem

#7 “Research is, in fact, a continuous discussion of the consistency of theories: formal consistency insofar as the discussion relates to the logical cohesion of what is asserted in joint theories; material consistency insofar as the agreement of observations with theories is concerned.” (Klant)

#8 Macroeconomics for dummies (II)

#9 Wikipedia and the promotion of economists’ idiotism (II)

#10 Profit

#11 See Ch. 13, The indelible scientific disgrace of economics, in Sovereign Economics

Related 'MIT dilettantes (I)' and 'Wikipedia, economics, scientific knowledge, or political agenda pushing?' and 'Macroeconomics is proto-scientific garbage just like microeconomics' and 'Too stupid for the elementary algebra of macrofoundations' and 'Economists’ scientific incompetence is worse than the plague' and 'Your economics is refuted on all counts: here is the real thing'. For details of the big picture see cross-references Profit and cross-references Accounting and cross-references Refutation of I=S.

For more about Flow-Balance (In-)Consistency, see AXECquery.

For more about the economics profession, see AXECquery.

For more about GDP, see AXECquery.

For more about (material/formal) consistency, see AXECquery.

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Graphic AXEC109i

Graphic AXEC121i For a start, the distributed profit DN can be set to zero

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Twitter Aug 25, 2022 GDP and GDI are supposed to be identical ― the lethal blunder

Twitter Apr 20, 2023 Roughly speaking, since according to the macroeconomic Profit Law #PublicDeficitIsPrivateProfit and profit are mistakenly subsumed under total income there is a close "correlation" between GDP and debt which is the numerical integral of deficits