The Fed's generation of profit, interest, and capital gains is second to none

Comment on Brian Romanchuk on 'No, QE Is Not Costless'

Blog-Reference

The US economy runs on profit. The 3-sector  ProfitLaw Q≡(G−T)+(I−S)+Yd implies that the greater part is produced by deficit-spending/money-creation. The institutional setup ― including Congress/Fed/Treasury/Wall Street/Big Business ― guarantees the  Oligarchy's continuous self-alimentation with  Profit. Profit generation has worked just fine over the last 200+ years.

So, private financial wealth grows with public debt and, in the form of bonds, becomes the eternal interest cash cow for the  Oligarchy. WeThePeople owe the public debt and are taxed for interest. The IRS ensures that interest is paid on time to the Oligarchy.

The profit/interest double-whopper explains the observable time path of distribution, i.e., the exponentially growing inequality of income/wealth in the so-called free market economies.

In sum, the Fed is pivotal for the creation of the profit/interest/financial wealth of the US economy, respectively, its oligarchic owners. Actually, that's the Fed's main task. 

How does this work over the interest rate cycle? Remember how Mr. Volker pushed the interest rate up to exorbitant heights and how it then fell gradually to the zero lower bound?

Everybody knows that there is an inverse relation between the interest rate and the current value of a bond. So, bondholders (banks, funds, asset management groups, investment management groups, etc.) could realize capital gains all the way down from the Volcker peak until the interest rate reached the zero lower bound.

At this point, the easy part of the game was over. The Fed could not lower the interest rates any further, and everybody knew that nominal/realized capital losses would be inevitable as soon as the  Fed raised interest rates again. But the Fed wouldn't commit such financial cruelties to the esteemed holders of public debt? So, somehow, the Fed was trapped at the zero lower bound.

At this point ― lowest interest rate and highest bond value ― the Fed started QE, i.e., buying bonds from its financial market “customers/partners/colleagues” who swapped their bonds for liquidity, a.k.a central bank balances.

Smart move, because in this way the big Wall Street players avoided any nominal/realized losses when the interest rate increases eventually happened. As they did when the Fed declared it would fight inflation at any cost. Those who were hit immediately with nominal losses were some banks and institutional investors who traditionally hold bonds to maturity ― and, of course, the Fed itself with its gargantuan QE assets.

Over the interest rate cycle, the losses of the  Fed during the current phase of rising interest rates are the counterpart of the realized capital gains of fixed-interest securities during the phase of falling interest rates. In other words, with QE, the Fed acted as a direct Profit Pump for the Oligarchy.

Seen from the Oligarchy, the Fed's generation of profit, interest, and capital gains is second to none.

Egmont Kakarot-Handtke

***

Twitter/X Aug 31, 2025  Some statistics about the profit pump

MMT vs Mainstream ― a proto-scientific clown show

Comment on Bill Mitchell on ‘ECB researchers find fiscal policy is very effective and more so if central banks buy up the debt’ and ‘They never wrote about it, talked about it, and, did quite the opposite ― yet they knew it all along!’*

Blog-Reference

In these two pieces, Bill Mitchell argues in great detail that mainstream economics is proto-scientific garbage. And he correctly identifies the foundational methodological blunder: “Consequently, treating macro as if it is micro means there is a tendency to conclude that what applies at the individual level also applies at the aggregate level, which is demonstrably false.” Indeed, this is the well-known Fallacy of Composition.#1

As far a the critique of mainstream economics goes, Bill Mitchell is on firm ground. However, the death and burial of mainstream economics at the Flat-Earth Cemetery is NOT news, and repeating the non-news is not exactly a contribution to scientific progress. Also, the suggestion that the provable falsity of mainstream economics somehow implies the correctness of MMT is misleading.#2-#4

While MMT's policy intuition is superior to that of the Sargent/Wallace crowd.#5, the underlying theoretical foundations are also provably false. So, this is the current state of economics: the Walrasian microfoundations of the mainstream are false and the Keynesian macrofoundations of MMT are false.#6-#10

Bill Mitchell concludes:

(i) “So far in more than 25 years of doing this stuff, I have not been systematical wrong about my predictions, which are quite converse relative to the mainstream predictions.”

(ii) “So it matters how you come to a conclusion, which might be similar to a conclusion that the rival paradigm reaches. The surrounding body of knowledge is what matters.”

It turns out that (i) is true with regard to fiscal and monetary policy. It is NOT true with regard to macroeconomic profit, distribution, the advantages for the Oligarchy, and the disadvantages for WeThePeople. The problem-solving capacity of MMTers is basically that of counterfeiters.#11

Yes, from the standpoint of science “it matters how you come to a conclusion” and the “body of knowledge is what matters”. The fact is that both mainstream and MMT are based on provably false axiomatic foundations and because of this, all policy advice lacks sound scientific foundations. Actually, mainstream policy guidance is plucked from the vacuum of five behavioral axioms.#12

Economics has to advance beyond the mainstream and MMT.

Egmont Kakarot-Handtke

* Bill Mitchell's blog here and here

#1 For more about the Fallacy of Composition see AXECquery

#2 MMT vs Mainstream: examining proto-scientific garbage in detail

#3 From the fact that mainstream economics is false does not logically follow that MMT is true

#4 MMT: fundamentally false

#5 “When I started studying economics in the mid-1970s, this was a raved about paper. I read it and couldn’t believe how asinine it was.”

#6 Clueless economists / Macrofoundations

#7 Forget Keynes

#8 Profit: The most powerful formula of economics

#9 Refuting MMT’s Macroeconomics Textbook

#10 The page where Stephanie Kelton gets macroeconomics wrong

#11 Criminals and the monetary order

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

Related 'Mainstream vs MMT ― another clown show' and 'Swabian housewife vs Wall Street loan shark' and 'The not so funny MMT vs Neoliberalism slapstick' and 'Post Keynesianism vs MMT: a Zombie debate' and 'MMT vs WSJ: Another futile exercise in moron bashing' and 'Krugman vs MMT ― like the blind talking about colors' and 'MMT vs The Rest of Economics ― a Punch and Judy show' and 'MMT vs Keynesianism: Nothing to chose' and 'MMT vs Neoliberalism: Just another clown show' and 'Orthodoxy vs Heterodoxy: the squabbling of quacks' and 'Storytelling vs Theory = Politics vs Science' and 'Confused Orthodoxy vs confused Heterodoxy' and 'Economists vs Economics' and 'Sales talk vs Science' and 'Knowledge vs Belief' and 'Around the world: storytelling vs science' and 'Economics vs Sociology' and 'First Fundamental Law vs Fundamental Theorem of Income Distribution' and 'Agenda pushers and hijackers vs scientists' and 'Politics vs Science' and 'Entertainment vs Science' and 'Opinion vs Knowledge.

There is an absolute limit to the growth of public debt

Comment on Mike Norman on ‘Absolutely idiotic hit piece on MMT by 3 clowns at the Richmond Fed’

Blog-Reference

“This core tenet of so-called ‘modern monetary theory’ ignores the fact that deficit spending is constrained in the long run by a government's ability to satisfy creditors.”

Except that it is not the government that satisfies creditors but WeThePeople. For the public debt holds We-The-People-Owes-It and Oligarchy-Owns-It. This cash cow produces interest for the Oligarchy which is taxed from WeThePeople in all eternity. So, deficit-spending/money-creation is always and everywhere a bad deal for WeThePeople.

The absolute limit to the growth of public debt is given by: total interest on public debt = total wage income of WeThePeople.#1 Practically, the limit is reached much earlier.

The 3-sector Profit Law Q≡(G−T)+(I−S)+Yd implies Public Deficit = Private Profit. If tax T goes to the minimum and spending G goes to the maximum, profit Q goes to the maximum. With their advocacy for deficit-spending/money-creation, MMTers are the profit maximizers for the Oligarchy.

In this capacity, they shred everyone who says that public debt has an absolute upper limit even the folks at the central bank who have supported since their founding the growth of public debt ― which, by the way, has always been their real job.

So, actually, the central bank clowns and the MMT clowns both push the agenda of the Oligarchy.#2

Egmont Kakarot-Handtke

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

#2 Deficit cheerleaders ― the Oligarchy’s useful idiots

Related 'How to pay for the war and to be bamboozled by economists'.

***

REPLY to Mike Norman

#DearIdiots

#LearnEconomics

“Meanwhile, corporate profits are at a record with ‘nobody’ working.” (Mike Norman)

What a surprise!

Not really. COV is a godsend for the Oligarchy. The 3-sector Profit Law Q≡(G−T)+(I−S)+Yd implies Public Deficit = Private Profit. Therefore, the policy of increased deficit-spending/money-creation (= growing public debt) produces a profit explosion.

MMT works just fine (for the Oligarchy)

REPLY to Activist #MMT on 10 Sep

#MMT

#BadScienceBadPolicyBadPeople

“It would also be nice if more people recognized the likely, literally, hundreds of times these exact criticisms have been explicitly and directly addressed over the years, not to mention the even more thorough treatments to be found throughout the academic literature..” (Activist #MMT)

It is NOT true that “criticisms have been explicitly and directly addressed” by MMTers. The opposite is true. MMTers ignore refutation#1 and systematically suppress it.#2

The MMT macrofoundations are provably false. Because of this, the whole analytical superstructure is false. Because of this, MMT policy guidance has NO sound scientific foundations. It is just brain dead agenda pushing for the advantage of the Oligarchy and disadvantage of WeThePeople.

#1 MMT is refuted ― end of story

#2 For more about #EconBlocker see AXECquery

REPLY to Ahmed Fares on 13 Sep

#LearnEconomics

Kalecki, too, got macroeconomic Profit wrong.

For all about Egmont and Kalecki see AXECquery.

Yes, doing economics these days means dealing with people who are either stupid or corrupt or both. After all, economics is failed/fake science.

***

Twitter Jan 19, 2023 Ineffective limits

From the fact that mainstream economics is false does not logically follow that MMT is true

Comment on Bill Mitchell on ‘As the mainstream paradigm breaks down’*

Blog-References

Bill Mitchell comments on the address the Head of the BIS Monetary and Economic Department, Claudio Borio, gave at the University of Melbourne and claims that the mainstream economics central bankers have in the back of their minds is false.

This, of course, is true but not news. Macroeconomics in all its variants is known to be proto-scientific garbage since Keynes.#1 So, criticizing mainstream economics is nothing else than dead-horse beating. It is a cheap pleasure for Heterodoxy with no consequences for the advancement of science.#2

The correct conclusion from Bill Mitchell's debunking is that economics needs a Paradigm Shift and the one and only task of economists is to implement the new Paradigm.

This, however, is not Bill Mitchell's conclusion. He suggests that MMT and he personally were right all along. This is true with regard to mainstream economics which is based on false microfoundations. However, MMT, too, is axiomatically false but with regard to macrofoundations.

Both mainstream economics and MMT get macroeconomic profit wrong.#3-#5 So both are scientifically worthless.

Egmont Kakarot-Handtke

* Bill Mitchell's blog

#1 Forget Keynes

#2 For more about dead horse beating see AXECquery

#3 Profit: The most powerful formula of economics

#4 Refuting MMT’s Macroeconomics Textbook

#5 The page where Stephanie Kelton gets macroeconomics wrong

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 economics? (I)

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

Blog-Reference and Blog-Reference on 4 Aug

James Galbraith's first sentence reads: “Economics is a policy discipline” and it is false. Because the premise is false, the rest of his argument is false.

Economics is a science. The first thing to know about science is that it is ontologically different from politics. The strict separation of science and politics is imperative because politics corrupts everything. This happened to economics.#1

There are two economixes: political economics and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda; the goal of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics, anything goes; in theoretical economics, the scientific standards of material and formal consistency are observed.

Theoretical economics (= science) had been hijacked from the very beginning by political economists (= agenda pushers). Political economics has produced NOTHING of scientific value in the last 200+ years. Economics is a failed science, or, in Feynman's term, a cargo cult science. The Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel is a fraud because there is NO such thing as economic sciences.

Right policy depends on true theory. Economists do NOT have the true theory. So, economic policy guidance (left/center/right does not matter) NEVER has had sound scientific foundations. Economists are NOT scientists but clowns/useful idiots in the political Circus Maximus.#2 James Galbraith is no exception.

Science is defined by material/formal consistency: “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)#3

The fact is: the major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, MMT, Pluralism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and ALL got the foundational economic concepts of profit/income/value wrong.#4, #5, #6

The fact that economists have, in 200+ years, not gotten their foundational concepts right is disqualifying. To this day, economics is proto-scientific garbage, economic policy has no sound scientific foundations, and in their utter incompetence, economists are a hazard to their fellow citizens.#7

Economists are stupid or corrupt or both. Stupid because Walrasian microfoundations and Keynesian macrofoundations are provably false. And when the foundations are false, the whole analytical superstructure is scientifically worthless. Corrupt, because economists push a political agenda under the guise of science.#8 Of all moral evils, this is the worst.

Egmont Kakarot-Handtke

* RWER issue 96

#1 For details of the big picture, see cross-references Political Economics/Stupidity/Corruption

#2 For details of the big picture, see cross-references Failed/Fake Scientists

#3 For details of the big picture, see cross-references Proto-Science/Cargo Cult Science/Fake Science

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

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

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

#7 Econogenics: economists pose a hazard to their fellow citizens

#8 Political fraud and the silence of academia

Related 'How the Intelligent Non-Economist Can Refute Every Economist Hands Down' and 'Confused Confusers: How to Stop Thinking Like an Economist and Start Thinking Like a Scientist' and 'Disgrace again ― is economics really that bad?' and 'Occasional Tweets: What is economics?' and 'As Napoleon said: don’t listen to economists' and 'What is economics? (II)'.

***

AXEC172  Scientific incompetence ― the smoking gun proof

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 did not get 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

***

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.

Economics • Communication • Disinfotainment

Comment on Matt Franko on ‘AOC weighs in on “inflation!”’

Blog-Reference

Economists from Adam Smith/Karl Marx onward claimed to do science. They never did. For 200+ years, economics has been failed/fake science.#1, #2

“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) Economists do NOT have the true theory: Walrasianism, Keynesianism, Marxianism, Austrianism, and MMT are mutually contradictory, axiomatically false, materially / formally inconsistent, and all got macroeconomic profit wrong.

So, economists have NO scientific knowledge but only their worthless personal opinions. As a matter of principle, everybody has the right to his own opinion no matter how stupid, crazy, wrong, or absurd, the only exception is scientists. The ancient Greeks started science by distinguishing between doxa (= opinion) and episteme (= knowledge). Scientific knowledge is well-defined by material and formal consistency. Knowledge is established by proof — belief or opinion counts for NOTHING. Economics is provably false.#3

As a matter of principle, scientists do NOT discuss the statements of politicians on scientific matters because politicians have by definition only opinions but no knowledge. Politics and science are mutually exclusive. Only economists who are themselves political agenda pushers discuss the silly pronouncements of politicians on economic matters.

Inflation is a case in point. Of course, what Alexandria Ocasio-Cortez says about inflation is garbage. Nobody expects anything else from a politician. However, one expects more from an economist because economists are ― according to their self-presentation since Adam Smith/Karl Marx ― scientists.

The fact of the matter is, though, that what MMTers say about inflation is worth as much as what the member of the United States Congress, Alexandria Ocasio-Cortez, says: nothing.#4

Economists in general, and MMTers in particular, are NOT scientists but an integral part of a political disinformation exercise.#5

Egmont Kakarot-Handtke

#1 Delusions of useful idiots

#2 Economists: Incompetent? Stupid? Corrupt?

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

#4 Clueless economists / Inflation

#5 AXEC176b

Related 'How to get out of the swamp of ignorance' and 'Economic recommendations out of the swamp between true and false' and 'A new curriculum for swampies?' and 'NAIRU and economists’ lethal swampiness' and 'Getting out of the economics swamp' and 'Macroeconomics: Drain the scientific swamp' and 'Dialectic: the swampies’ methodology of choice' and '#DrainTheScientificSwamp' and 'Economists and philosophers ― creatures from the scientific swamp.

For more about disinfotainment, see AXECquery.

***

Twitter Oct 14, 2022

Twitter/X Jan 13, 2024 In the meantime, misinformation/disinformation/disinfotainment has become the #1 global risk

Twitter/X, Feb 16, 2025

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

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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'.

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AXEC118d

MMT and the staying power of stupidity/corruption

Comment on Bill Mitchell on ‘MMT and Power ― Part 2’*

Blog-Reference

MMT's sectoral balances equation has been refuted #1-#3 but Bill Mitchell stubbornly repeats the foundational blunder. This, of course, is long known as unscientific behavior: “In economics we should strive to proceed, wherever we can, exactly according to the standards of the other, more advanced, sciences, where it is not possible, once an issue has been decided, to continue to write about it as if nothing had happened.” (Morgenstern, 1941)

In the section Description and Theory, Bill Mitchell states: “Another example of the ‘description’ story is that MMT is just about accounting relationships ― for example, deriving sectoral balances from the National Accounting framework and then concluding that a government deficit (surplus) must equal the non-government surplus (deficit).

In part, MMT certainly exploits accounting consistency to assemble an analytical framework This is part of the stock-flow tradition in heterodox economics that ensures consistency between flows of things and the stocks they flow into, period to period. …

So the statement: the Government deficit (surplus) equals the non-government surplus (deficit) dollar-for-dollar is a truism and must be true.”

Not at all, it is only true for the scientifically incompetent. MMT gets even the most elementary economic truism wrong. It all depends on what MMTers put in their “non-government” top hat.

Axiomatically correct macroeconomics says for the 2- and 3-sector economy:

• Q≡−S i.e. profit of the business sector Q is trivially equal to dissaving/deficit-spending of the household sector −S, and loss of the business sector −Q is trivially equal to saving of the household sector S. The balances add up to zero, that is the accounting truism for the most elementary case.
• Q≡(G−T) i.e. profit of the business sector Q is trivially equal to the budget deficit of the government sector T−G<0.
• Q≡(G−T)−S is the general case, i.e. profit of the business sector Q is trivially equal to the combined deficit of the household and government sector. In other words: the profit of the business sector equals the combined deficit of the non-business sector and vice versa, the loss of the business sector equals the combined surplus of the non-business sector.

The “non-government” sector is an MMT construct that makes profit disappear. Isn't it a bit strange that Bill Mitchell applies in his post the foundational sociological concept of power but not the foundational economic concept of profit?#4 Except in this summarizing complaint: “I have seen many social media attacks on our work that claims that we are just part of the establishment and want to shore up profits.”#5

Yes, indeed. That's what MMT is all about. It is trivially true that the macroeconomic Profit Law implies Public Deficit = Private Profit. MMTers introduce the redundant non-government sector in order to hide macroeconomic profit from WeThePeople. The remarkable fact is that the rest of academic economics does not realize anything.

If there is a scientific hell, Bill Mitchell and his MMTers will spend an eternity there for political fraud.#6 The rest of academic economics will be there for negligence/complicity.

Egmont Kakarot-Handtke

* Bill Mitchell's blog

#1 The unassailable formal refutation of MMT

#2 Proving Bill Mitchell wrong ― burying MMT for good

#3 The page where Stephanie Kelton gets macroeconomics wrong

#4 Profit: The most powerful formula of economics

#5 Deficit cheerleaders ― the Oligarchy’s useful idiots

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

Related 'Political fraud and the silence of academia'. For details of the big picture see cross-references MMT.

For more about Bill Mitchell see AXECquery.

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 get it wrong since Adam Smith/Karl Marx.

The major approaches Walrasianism, Keynesianism, Marxianism, Austrianism, MMT, are mutually contradictory, axiomatically false,  materially/formally inconsistent, and ALL get profit wrong. Economic policy guidance NEVER has 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 on Michael Roberts see AXECquery.

Profit Law: The most powerful formula of economics

Comment on Robert Vienneau on ‘Adam Smith On The Source Of Profits And Rents In The Exploitation Of The Worker’

Blog-Reference and Blog-Reference

Adam Smith, one of the founding fathers of economics, was not a particularly smart guy: “Smith … disliked whatever went beyond plain common sense. He never moved above the heads of even the dullest readers. He led them on gently, encouraging them by trivialities and homely observations, making them feel comfortable all along.” (Schumpeter)

Accordingly, he got the foundational concept of economics ― profit ― wrong. That is bad, but what is worse is that economists did not get it right to this day.#1-#3

To make matters short here, the macroeconomic 3-sector (household, business, government) Profit Law is given with Q_m≡(I−S_m)+(G−T)+Y_d, Legend: Q_m business sector's monetary profit/loss, S_m household sector's monetary saving/dissaving, G government's expenditures, T taxes, Y_d distributed profits. #4

The main drivers of macroeconomic profit/loss Q_m are the difference between the business sector's investment expenditures I and the household sector's saving/dissaving S_m, and the government's budget deficit/surplus (G−T). 

The first half of the formula is dominant in early capitalism, and the second half is dominant in late capitalism.#5

It is pretty obvious that profit has NOTHING to do with the Labour Theory of Value.#6 So, Adam Smith and Karl Marx got the macroeconomic profit formula wrong, and later Keynes.#7, #8

Economics is proto-scientific garbage because economists in their abysmal scientific incompetence do not get the profit formula right to this day. Walrasianism, Keynesianism, Marxianism, Austrianism, and MMT are mutually contradictory, axiomatically false, materially/formally inconsistent, and ALL get profit wrong.

Egmont Kakarot-Handtke

#1 The profit theory is false since Adam Smith

#2 Dear idiots, Marx got profit and exploitation wrong

#3 Cross-references Profit

#4 Profit

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

#6 Ricardo, too, got profit theory wrong

#7 How Keynes got macroeconomics wrong and Allais got it right

#8 Profit analysis ― another exercise in economic deception

Related 'The Profit Law'

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AXEC143d  Profit Law® and sectoral balances equation

Economists’ periodically recurring crocodile tears about inequality

Comment on Brad DeLong on ‘RHETORICAL QUESTION: Why Do Economists Ignore the Greatest of All Market Failures?’

Blog-Reference and Blog-Reference

Distribution is the greatest of all theory failures.

Economics is failed/fake science for 200+ years. Walrasianism, Keynesianism, Marxianism, Austrianism, MMT are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got profit wrong. Because the foundational economic concept of profit is false the whole analytical superstructure is false. Economics is scientifically worthless.

Deficit-spending/money-creation is the cause of the extreme inequality of income and wealth. The 3-sector Profit Law Q≡(G−T)+(I−S)+Yd implies Public Deficit = Private Profit. Private financial wealth of the Oligarchy grows in lockstep with the public debt of WeThePeople. Public debt, in turn, is the interest cash cow that produces perpetual income which is taxed by the IRS from WeThePeople on behalf of the Oligarchy.

The Oligarchy, in turn, uses the opulent free lunches to corrupt what remains of the state’s legislative, executive, judiciary institutions. Ultimately, it is scientifically incompetent economists who work ― intentionally or unintentionally does NOT matter ― for the growing inequality of income/wealth. Only stupid/corrupt economists rhetorically wonder about the inequality of income/wealth.#1-#3

Egmont Kakarot-Handtke

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

#2 Keynes, Lerner, MMT, Trump, Biden, and exploding profit

#3 First Fundamental Law vs. Fundamental Theorem of Income Distribution

Related 'Why economists always seem to lose the fight against inequality'.

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

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