Blog-Reference and Blog-Reference and Blog-Reference
Jared Bernstein posed some ‘Questions for the MMTers’ and offered a welcome opportunity for the loudspeakers of MMT to make their strong points. Needless to emphasize that they also repeated with enthusiasm their foundational error/mistake/blunder/fraud.
It is this: “There are three sectoral balances: a domestic private sector, a government sector, and a foreign sector. While any one of these can run a deficit (or surplus), the sum of the balances must sum to zero ― that is, they balance (for every deficit there is a surplus). In the US, the private sector almost always runs a surplus (“saves”) and the foreign sector has run persistent surpluses (the other side of the coin to our current account deficits) since the days of Reagan. That means ― by simple identity ― that our government sector runs deficits.”
The fact of the matter is that there are FOUR macroeconomic sectors (household sector, business sector, government sector, and Rest of the World) but in the MMT presentations one sector is missing, more specifically, the balance of the business sector = profit is nowhere to be seen.#1
MMT is built upon this 3-sector macroeconomic balances equation (I−S)+(G−T)+(X−M)=0.#2 Why are two sectors ― the household and the business sector ― lumped together into the “private sector”?
Now, the balance of the household sector is saving/dissaving and the balance of the business sector is profit/loss. By lumping the two sectors together profit vanishes from sight.
The axiomatically correct 4-sector balances equation reads (I−S)+(G−T)+(X−M)−(Qm−Yd)=0 with Qm monetary profit and Yd distributed profit. And from this equation follows Public Deficit = Private Profit given the balances of the household sector and the Rest of the World.
The correct equation tells everybody that MMTers' relentless propagation of deficit spending for social purposes is nothing but agenda-pushing for the one-percenters. The problem of MMT policy is NOT overheating or inflation, the real problem is distribution.
MMTers are either stupid because they do not know what profit is, or corrupt because they deceive the ninety-nine-percenters or a mixture of both.#3 Jared Bernstein failed to ask the crucial question.#4
#1 Down with idiocy!
#2 Wikipedia Modern Monetary Theory
#3 MMT and grassroots movements
#4 For the full-spectrum refutation of MMT see cross-references MMT
You say “Egmont Kakarot-Handtke argues above that because MMTers lump the household and business sectors together into one “private sector”, this hides the alleged fact that the bulk of a public sector deficit flows to the business sector rather than the household sector.”
Actually, I say that the lumping together of the household sector and the business sector to the “private sector” is for macroeconomics what is called an accounting fraud on the firm’s level.#1
Of course, it could also be an error/mistake/blunder but this is improbable because of the hiding of the fact that Public Deficit = Private Profit, i.e. Qm≡(G−T) given the other balances, is necessary to sell MMT policy measures as a social benefit.#2 And this, in turn, is necessary because MMT is NOT economics but campaign support for Warren Mosler’s candidacy for governor of the US Virgin Islands as announced on Jan 11.
This, of course, holds also for MMT’s alleged full employment policy.#3
So, Ralph Musgrave, Kelton, Mitchell, Tcherneva, Wray, Fullwiler, Forstater, Kaboub, Pettifor, Keen, Tymoigne, Willingham, Grumbine, and all the MMT rest cannot be taken seriously as economists but at best as useful idiots for Warren Mosler.
#1 Down with idiocy!
#2 Keynes, Lerner, MMT, Trump and exploding profit
#3 Full employment through the price mechanism
Related 'Krugman and the scientific implosion of economics' and 'Barkley Rosser, fake scientist'. For details of the big picture see cross-references Failed/Fake scientists and cross-references The Representative Economist.
You say “All Warren has ever said he wants out of this is a chance to see his nations economy run at its full potential for once in his life”
I am enthusiastic about what Berlusconi, Trump, Mosler, etc. promise to do for the little guy and the forgotten worker but I do not understand why these folks always have to cook the macroeconomic and microeconomic books first.
Perhaps the MMT academics can explain why they violate scientific standards and promote the money-making of the Bunga-Bunga one-percenters?