Occasional X: Clueless economists / Money (CXLXXV)

“That money is a store of value is absolutely wrong. Money is a receipt issued at purchase and extinguished when buyer turn seller.” (Scott Cahill) Scott Cahill has never had any idea of the difference between transaction money and money as a store of value. Let's clarify some basics about the two with the summary in table AXEC237e ⇓. Microfoundations are methodologically false. First, a Paradigm Shift is required. Therefore, the elementary production-consumption economy is given with three macroeconomic axioms in lines 1, 2, 3. Under the initial analytical conditions of market-clearing and budget-balancing, this yields the price P in line 5. The price is the dependent variable here. That's a starting condition. Methodologically, the formula in line 5 replaces the silly Supply-Demand-Equilibrium cross. Line 9 delivers the generalization with ρE≠1. In the initial state, the price is equal to unit wage costs W/R. The workers get the whole product O. The profit Qm for the business sector is zero. Price increases can come only from wage rate increases or from productivity decreases. The quantity of money is not a determinant. The methodologically right approach to start with in Monetary Theory is that transaction money is pure fiat money at the Central Bank. How money developed historically is not an issue. Symmetric fiat money is zero at the beginning and the end of a given period; see line 16. It is periodically created out of nothing and returns to nothing. There's no problem here; money is endogenous. It's a medium. The quantity of the medium is determined by the autonomous transactions between the business and the household sector. (i) If the wage rate W doubles in line 5, the price doubles, and the average quantity of transaction money M doubles in line 16. It is still zero at the period's beginning and end. If tested, this yields a proportionality between price P and the average quantity of transaction money M. However, this is NOT causality. The common cause is the doubling of the wage rate W. However, empirically this correlation between P and M seems to be a strong indication that the Quantity Theory holds. (ii) If the real variable employment L is doubled, output O in line 2 and wage income Yw in line 1 double. The market-clearing/budget-balancing price P remains unchanged in line 5. The average quantity of transaction money M doubles in line 16. Now, there is no relationship between the price and the average quantity of transaction money. The Quantity Theory fails. Reality is a mix of (i) and (ii). That money is created out of nothing and backed by nothing is NOT the critical point of a fiat money system. In period 0, the transactions between the business sector and the household sector are symmetrical. At the beginning, transaction money is zero. Monthly, the households receive wage income and spend it successively on consumption. This increases and reduces their deposits at the Central Bank. The business sector mirrors the transaction. Thus, deposits and overdrafts are always equal. At the end of the initial period, transaction money is again zero. The average stock of transaction money is calculated in lines 16, 17. If the household sector saves in period 1, its deposits increase. This gives rise to losses Qm in line 11. Accordingly, the business sector's overdrafts increase. The average quantity of money M in lines 16, 17 increases because of the household sector's saving. Here, money as a store of value emerges. In period 2, one has both: money as a transaction medium and money as a store of value. In period 3, the households dissave, and the business sector makes a profit, according to line 11. Over all periods, the sum of profit/loss is zero. Things are rather simple as long as ρE=1. As soon as balances appear, i.e., ρE≠1, complexity increases and money as a store of value logically emerges from transaction money. The store-of-value money can also be used to buy financial assets. It then vanishes again. But that's a different story.

— AXEC (@EgmontHandtke) November 11, 2026

Occasional X: Time to get the axioms of economics right (XI)

“Excited to share this tool — a Macroeconomic simulator that lets you run the Federal Reserve's large macroeconomic model FRB/US. It has 13,442 different simulations pre-loaded--different versions of 15 different shocks. I plan to add more models over time.” (Jason Furman) Before you plan to add more models, you have to go in the opposite direction. Because your macroeconomic axioms are provably false, the analytical superstructure is scientifically worthless. It is methodologically correct that the economy has to be formally represented by a simulation. Legacy economics starts with General Equilibrium in the mental background. This is why economics is failed/fake science to this day.‡ The axiomatically correct simulation for the most elementary case is given by the Economics God Equation (⇓ AXEC25e). The Equation embodies the open simulation of the elementary production-consumption economy from t=0 to infinity, with the change rates as random variables. The variable ∏ denotes a random path. Put simply, you have the development of the most elementary economy in one equation. The God Equation is based upon a set of consistent systemic axioms. To finally become a science, economics needs a Paradigm Shift from false behavioral microfoundations and false Keynesian macrofoundations to true macrofoundations. For the axiomatically correct Monetary Theory, see the working paper ⇒ The Dark-Matter Theory of Fiat Money https://t.co/0QSqFFrVUX ‡ Reminder: Legacy economics is a variant of the neo-Walrasian set of hardcore propositions/axioms: “HC1 economic agents have preferences over outcomes; HC2 agents individually optimize subject to constraints; HC3 agent choice is manifest in interrelated markets; HC4 agents have full relevant knowledge; HC5 observable outcomes are coordinated, and must be discussed with reference to equilibrium states.” (Weintraub)

— AXEC (@EgmontHandtke) November 11, 2026

Occasional X: Clueless economists / Money (CXLXXIV)

“It is an indisputable fact that quantity theory is nothing but a tautology. There is another point too. Cochrane has also pointed this out. Correlation does not imply causation. The direction of the relationship between inflation and the money supply is not from the money supply to inflation, as foolish monetarists claim, but more strongly from inflation to the money supply.” (Baki Demirel) No, money is not among the determinants of the price. That's false macroeconomics. The microbrained representative economist has never had any idea of the difference between transaction money and money as a store of value. Let's clarify some basics about transaction money with the summary in table AXEC237d ⇓. Microfoundations are methodologically false. First, a Paradigm Shift is required. Therefore, the elementary production-consumption economy is given with three macroeconomic axioms in lines 1, 2, 3. Under the initial analytical conditions of market-clearing and budget-balancing, this yields the price P in line 5. The price is the dependent variable here. That's a starting condition. Methodologically, the formula in line 5 replaces the silly Supply-Demand-Equilibrium cross. In the initial state, the price is equal to unit wage costs W/R. The workers get the whole product O. The profit Qm for the business sector is zero. Price increases can come only from wage rate increases or from productivity decreases. The quantity of money is not a determinant. The methodologically right approach to start with in Monetary Theory is that transaction money is pure fiat money at the Central Bank. Symmetric fiat money is zero at the beginning and the end of a given period; see line 16. It is periodically created out of nothing and returns to nothing. There's no problem here; money is endogenous. It's a medium. The quantity of the medium is determined by the autonomous transactions between the business and the household sector. (i) If the wage rate W doubles in line 5, the price doubles, and the average quantity of transaction money M doubles in line 16. It is still zero at the period's beginning and end. If tested, this yields a proportionality between price P and the average quantity of transaction money M. However, this is NOT causality. The common cause is the doubling of the wage rate W. However, empirically this correlation between P and M seems to be a strong indication that the Quantity Theory holds. (ii) If the real variable employment L is doubled, output O in line 2 and wage income Yw in line 1 double. The market-clearing/budget-balancing price P remains unchanged in line 5. The average quantity of transaction money M doubles in line 16. Now, there is no relationship between the price and the average quantity of transaction money. The Quantity Theory fails. Reality is a mix of (i) and (ii). That money is created out of nothing and backed by nothing is NOT the critical point of a fiat money system. The point is whether money is injected (i) on the left side of the business sector's national account in the form of wages, or (ii) on the right side in the form of additional nominal demand, i.e., in the form of deficit spending. This gives rise to profit Qm in line 11 and the average quantity of money M in lines 16, 18, because of ρE>1. Here, money as a store of value emerges. The case of deficit-spending/money-creation, i.e., increasing consumptive public debt, is equivalent to bringing counterfeit money into circulation, which in real terms amounts to stealing stuff from WeThePeople. National debt is roughly equal to the financial wealth of WeTheOligarchy. Ultimately, most of WeTheOligarchy's financial wealth is printed by the Central Bank. This is not a 'problem', but the defining characteristic of Capitalism. The problem with the Central Bank is NOT that it creates fiat money out of nothing, but that it creates profit out of nothing. If the Central Bank is only allowed to create transaction money to meet the needs of businesses and households, then fiat money is the most economical solution. The problems arise with sectoral balances, i.e., ρE≠1, and with licit/illicit money creation. For the axiomatically correct Monetary Theory, see the working paper ⇒ The Dark-Matter Theory of Fiat Money https://t.co/0QSqFFrVUX

— AXEC (@EgmontHandtke) November 11, 2026

Occasional X: Clueless economists / Money (CXLXXIII)

“Essential reminder. Inflation is always a monetary phenomenon.” (Daniel Lacalle) No, money is not among the determinants of the price. That's false macroeconomics. The microbrained representative economist has never had any idea of the difference between transaction money and money as a store of value. Let's clarify some basics about transaction money with the summary in table AXEC237d ⇓. Microfoundations are methodologically false. First, a Paradigm Shift is required. Therefore, the elementary production-consumption economy is given with three macroeconomic axioms in lines 1, 2, 3. Under the initial analytical conditions of market-clearing and budget-balancing, this yields the price P in line 5. The price is the dependent variable here. That's a starting condition. Methodologically, the formula in line 5 replaces the silly Supply-Demand-Equilibrium cross. In the initial state, the price is equal to unit wage costs W/R. The workers get the whole product O. The profit Qm for the business sector is zero. Price increases can come only from wage rate increases or from productivity decreases. The quantity of money is not a determinant. The methodologically right approach to start with in Monetary Theory is that transaction money is pure fiat money at the Central Bank. Symmetric fiat money is zero at the beginning and the end of a given period; see line 16. It is periodically created out of nothing and returns to nothing. There's no problem here; money is endogenous. It's a medium. (i) If the wage rate W doubles in line 5, the price doubles, and the average quantity of transaction money M doubles in line 16. It is still zero at the period's beginning and end. If tested, this yields a proportionality between price P and the average quantity of transaction money M. However, this is NOT causality. The common cause is the doubling of the wage rate W. However, empirically this correlation between P and M seems to be a strong indication that the Quantity Theory holds. (ii) If the real variable employment L is doubled, output O in line 2 and wage income Yw in line 1 double. The market-clearing/budget-balancing price P remains unchanged in line 5. The average quantity of transaction money M doubles in line 16. Now, there is no relationship between the price and the average quantity of transaction money. The Quantity Theory fails. Reality is a mix of (i) and (ii). That money is created out of nothing and backed by nothing is NOT the critical point of a fiat money system. The point is whether money is injected (i) on the left side of the business sector's national account in the form of wages, or (ii) on the right side in the form of additional nominal demand, i.e., in the form of deficit spending. This gives rise to profit Qm in line 11 and the average quantity of money M in lines 16, 18, because of ρE>1. Here, money as a store of value emerges. The case of deficit-spending/money-creation, i.e., increasing consumptive public debt, is equivalent to bringing counterfeit money into circulation, which in real terms amounts to stealing stuff from WeThePeople. National debt is roughly equal to the financial wealth of WeTheOligarchy. Ultimately, most of WeTheOligarchy's financial wealth is printed by the Central Bank. This is not a 'problem', but the defining characteristic of Capitalism. The problem with the Central Bank is NOT that it creates fiat money out of nothing, but that it creates profit out of nothing. If the Central Bank is only allowed to create transaction money to meet the needs of businesses and households, then fiat money is the most economical solution. The problems arise with sectoral balances, i.e., ρE≠1, and with licit/illicit money creation. For the axiomatically correct Monetary Theory, see the working paper ⇒ The Dark-Matter Theory of Fiat Money https://t.co/0QSqFFrVUX

— AXEC (@EgmontHandtke) November 11, 2026

Occasional X: The futile attempt to recycle Keynesianism (CII)

“Only an idiot would mistake reading Ludwig von Mises for economic literacy in the 21st century. Keynes is still worth your time. Parts are dated, but much of his framework can be updated and developed, particularly the marginal efficiency of capital.” (Mr.Keynes) Neither von Mises nor Keynes are worth your time. Keynesianism has been proven false from the beginning (⇓ AXEC172a). Therefore, it has never been more than theatrics, or what Feynman called a Cargo Cult Science. Keynes got macroeconomics axiomatically wrong. His scientifically incompetent followers never spotted the methodological defect. After-Keynesian macrofoundations are not a real improvement of the microeconomic approach. Both approaches are axiomatically false. When the axioms are inconsistent, no improvement is ever possible. Keynes, too, misunderstood the concept of profit because he was too stupid for elementary algebra. Consequently, he botched the long-overdue Paradigm Shift from microfoundations to macrofoundations. This initial blunder means that the entire field of economics (both micro and macro) is provably false. But scientific principles have not really mattered in economics for over 200 years: “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) So, folks like Mr.Keynes are just turning over the scientific dung heap again and again and are spreading the hope that a breakthrough is just around the corner. Like von Mises's approach, Keynes's approach has always been scientifically worthless. However, for a theatrical performance on the academic stage, vacuous political discussions, and selling the remaining stock of obsolete books to a low-IQ audience, it's good enough.

— AXEC (@EgmontHandtke) November 10, 2026

Occasional X: The foul spirit of political economics (CDXLIV)

“Every time the neoliberal narrative runs out of arguments in the face of inequality, poverty wages, or capitalism’s recurring crises, they resort to a crude myth: Marx never worked, lived on charity, and was a lazy bum.” (Omar Montoya Suárez) The representative economist does not know the difference between denunciation and refutation. Denunciation is the modus operandi in politics; refutation is the modus operandi in science. Refutation is the proof that a theory/hypothesis is materially/formally inconsistent. Marx may have been an evil person; however, his approach may have been scientifically valid nonetheless. Evil character and false theory/hypotheses are incommensurate things. Marx's economic theory belongs to the scientific sphere and has to be refuted according to scientific methodology. Because Marx got the foundational concept of economics —profit— wrong, his remaining communicative contributions reduce to psycho-social-political-philosophical blather. Unfortunately, this part has dominated public opinion to this day. Ultimately, the idiocy of the discussion consists of the intentional/unintentional muddling of economics, sociology, psychology, history, politics, philosophy, gossip, and shithrowing. Marx/Engels called their common project Scientific Socialism‡, but its scientific content has been zero from the beginning. Marx/Engels and their followers never understood science. For proof, see the working paper ⇒ Profit for Marxists https://t.co/P1NOW4FyXK Also Here is the long-overdue scientific death certificate for Marx and Marxists. https://t.co/9SwjuSW8Ca Marxianism still has no scientific truth-value, only political use-value. It is still good for playing low-IQ communicative games, but for nothing else. In the scientific sphere, Marx is still a zero. In the political/ philosophical sphere, confused blather is the norm; here Marxianism has its ecological niche as a Weltanschauung together with all other occult/ esoteric/ voodoo/ religious/ etc. aberrations of the human mind. Marx goes down the scientific drain because he was a lousy scientist, and not because he was an evil character. To think/talk much about his character is disinfotainment. On the other hand, to refute denunciations does not make a false theory true. It's also disinfotainment. Marx has been refuted according to scientific criteria. The rest is communicative junk. ‡ “Scientific socialism, primarily associated with Karl Marx and Friedrich Engels, is a materialist, historical approach to understanding society, viewing history as a progression driven by economic conditions and class struggle, …” (Google AI, Scientific Socialism)

— AXEC (@EgmontHandtke) November 10, 2026

Occasional X: The foul spirit of political economics (CDXLIII)

What the average citizen thinks is one thing; what the representative economist thinks is another. Unfortunately, the representative economist is very poor at thinking. The major approaches (Walrasianism, Keynesianism, Marxianism, Austrianism, and their derivatives) are mutually contradictory, axiomatically false, and materially/formally inconsistent. They all got profit wrong. When the subject's foundational concepts are inconsistent, the entire analytical superstructure is scientifically worthless. Economic policy guidance has never had valid scientific foundations. The representative economist is NOT, and never has been, a competent scientist but an agenda pusher / useful idiot / impostor / phrase monger / storyteller / troll / pseudo-psychologist / self-gloryfier / 'good-cause' fighter / clown in the political Circus Maximus. Political economists are card-carrying members of the Idiocracy.

— AXEC (@EgmontHandtke) November 10, 2026