Anybody with an IQ around room temperature counts as a genius in Washington. Against this benchmark, Stephanie Kelton’s MMT policy proposals look like a rather big idea.
MMT promises to reconcile “the trifecta of growth, employment and price stability”. Note, first of all, that distribution is not mentioned. For good reasons. Distribution is the lethal flaw of MMT.#1
“Adoption of policy based on MMT analysis should keep the economy operating close to optimal output and employment … with the JG playing the dual role of providing a price anchor, on one hand, and on the other, mopping up residual unemployment after the application of functional finance to fiscal policy based on stock-flow consistent macro modeling.”
And here exactly lies the problem. MMT analysis and macro modeling is anything but consistent. Because of this, MMT policy guidance never had valid scientific foundations. MMT is soapbox economics. MMT’s foundational macroeconomic balances equation is provably false and this settles the matter once and for all.#2
According to the axiomatically correct macroeconomic Profit Law, it always holds Public Deficit = Private Profit. Therefore, MMT is a program for the one-percenters and has never been anything else.
The Job Guarantee is the banner that Stephanie Kelton and the rest of the MMT sales team enthusiastically wave in order to cover the one-percenter-agenda. The Huffington Post’s attempt to sell Stephanie Kelton as the incarnation of the triumph of the working class/ninety-nine-percenters over Wall Street/one-percenters is a bad joke.#3
#1 Keynes, Lerner, MMT, Trump and exploding profit
#2 Down with idiocy!
#3 MMT vs Neoliberalism: Just another clown show
Related 'MMT and the promotion of Wall Street's idea of social policy' and 'MMT: The one deadly error/fraud of Warren Mosler' and 'MMT = proto-scientific garbage + deception of the 99-percenters' and 'MMT and grassroots movements' and 'Political economics: Who hijacks British Labour?' and 'Full employment through the price mechanism' and 'Stephanie Kelton sells children into debt slavery' and 'The state of MMT? Stone-dead!'. For the full-spectrum refutation of MMT see cross-references MMT.
***REPLY to Konrad, Calgacus, Kristjan, Tom Hickey on May 21
Sandwichman has compiled the key statements of Zach Carter’s portrait of Stephanie Kelton over there at EconoSpeak. Here is the copy/paste:
• “Everybody wants a piece of Kelton these days because a simple, radical idea she has been workshopping her entire career is the next big thing in Democratic Party politics. She calls it the job guarantee... “
• “Once an outsider, her radical economic thinking won over Wall Street. Now she’s changing the Democratic Party.”
• “A onetime college dropout at California State University in Sacramento, Kelton has managed to earn the esteem of both Sanders and an oddball clique of multimillionaire Wall Street traders.”
• “If you listen to Kelton long enough, you notice that she never refers to “bankers” or “Wall Street” with the derisive tone common among her political allies. She talks instead of “the financial community.””
• “After all, Wall Street took her under its wing before Democrats took her seriously.”
• “Her career had changed tracks. She wasn’t just a clever economist with some quirky ideas anymore. Her credibility with Wall Street began to register as academic clout.”
• “There are thousands of left-wing economists. But it’s hard for the economically inexpert to distinguish brilliant creativity from quackery. Kelton’s social credentials with Wall Street helped her stand out.”
In other words, MMT pushes the agenda of the one-percenters and Stephanie Kelton is the ideal person for emotional social marketing and hijacking the political grassroots movements. The Job Guarantee serves as a door opener for the MMT salespeople. Wall Street’s ultimate goal, though, is deficit spending and the perpetual growth of public debt. #1, #2, #3, #4, #5
Poor Bernie Sanders, his supposedly left-wing economic platform has been written by Wall Street operatives.
#1 MMT: Just another political fraud
#2 MMT: So-called Progressives as trailblazers for Trumponomics
#3 Bill Mitchell, MMT’s fake scientist
#4 MMT: academic snake oil for the people
#5 MMT = proto-scientific garbage + deception of the 99-percenters
***REPLY to Tom Hickey on May 22
You seem to have lost orientation: “Trump syndrome? The crazy seem to be going over the top everywhere, and the news is all gaslighting.”
No, not at all, it’s economics as usual. The whole UBI-JG discussion is pointless because economists in general and MMTers, in particular, lack the true Employment Theory since Keynes wrote the General Theory of Employment, Interest, and Money.#1, #2
Keynes also messed up the Profit Theory.#3
So, neither MMT, nor Keynesianism, nor Walrasianism, nor Marxianism, nor Austrianism has any scientific merits.
This, though, does not matter much because in economics it is NOT the scientific truth-value that counts but the political use-value. To recall, economics started as Political Economy 200+ years ago and is a cargo cult science since then.
Economists are not scientists who try to figure out how the monetary economy works but agenda pushers. This is pretty obvious in the case of MMT and Stephanie Kelton. As Zach Carter plainly states: “After all, Wall Street took her under its wing before Democrats took her seriously.”
This is a good old tradition since Engels took Marx under his wing and Cowles took Koopmans, Arrow, Debreu, etcetera under his wing and it is kept alive by the Koch brothers, George Soros, and “an oddball clique of multimillionaire Wall Street traders” (Carter).
The stupid oligarchs spend their money more on porn stars, the smart oligarchs spend it more on economists. There is nothing to be confused about.
#1 Keynes’ Employment Function and the Gratuitous Phillips Curve Disaster
#2 Full employment through the price mechanism
#3 How Keynes got macro wrong and Allais got it right
***REPLY to Tom Hickey, Andrew Anderson, Matt Franko, Noah Way, Carlitos, Calgacus
There is 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.
Political economics is easy to identify. It applies emotionally charged keywords like democracy, freedom, liberty, slavery, serfdom, poverty, exploitation, inequality, happiness, alienation, capitalism, socialism, Nazi, Commie, WeThePeople, etcetera.
Political economics, clearly, is NOT science. The Original Sin of economics is that science and politics have never been kept properly apart. As a result, economics stagnates for 200+ years at the proto-scientific level. And this means, in turn, that economic policy guidance NEVER had sound scientific foundations.
This holds for Walrasianism, Keynesianism, Marxianism, Austrianism. This, of course, holds also for MMT. MMT is NOT a valid scientific theory, MMTers, like the rest of orthodox and heterodox economists, do not even understand what science is all about.#1 Worse, as the Huffington Post’s portrait of Stephanie Kelton clearly shows, MMT is Wall Street-sponsored agenda pushing for the one-percenters dressed up as progressive social policy.
“The basic idea is that the government can’t run out of money. It creates money just by spending.” (Stephanie Kelton) Because the macroeconomic Profit Law says Public Deficit = Private Profit, MMT’s social policy in effect co-creates the most unequal distribution of income and financial wealth in the history of mankind.
Since Adam Smith/Karl Marx, economics is a scientific fraud and MMT is an integral part of it.#2 Let’s face it, bloggers like you keep economics ― intentionally or unintentionally does not matter ― firmly in the bottomless swamp of political economics.#3 With your senseless blather, you do not contribute to the solution of any economic problem. As useful political idiots, you ARE the problem.#4
#1 Both orthodox and heterodox economists are cargo cult scientists
#2 MMT is idiocy and fraud
#3 Yes, economics is a bogus science
#4 For details of the big picture see cross-references Failed/Fake Scientists
***REPLY to Konrad on May 23
This is the sectoral balances equation, Stephanie Kelton, Warren Mosler and the rest of the MMT salespeople present on any occasion (X−M)+(G−T)+(I−S)=0.#1, #2
This equation is provably false because the balance of the business sector = profit is missing. It is lethal for the foundational macroeconomic equation not to contain the pivotal economic magnitude profit.
This is the axiomatically correct balances equation (X−M)+(G−T)+(I−S)−(Q−Yd)=0. As you can easily see it contains profit Q and distributed profit Yd.
Whoever does not understand the economic content of the two equations is out of economics.
To sum up the thread ‘Stephanie Kelton Has The Biggest Idea In Washington’:
- Stephanie Kelton is an agenda pusher for the one-percenters.
- MMT’s social policy proposals ― the Job Guarantee in particular ― are a political bluff package.
- It is an unassailable scientific fact that Public Deficit = Private Profit.
Whatever counts in Washington as “biggest idea” is with absolute certainty both stupid and corrupt.
#1 Down with idiocy!
#2 MMT: The one deadly error/fraud of Warren Mosler
***REPLY to Matt Franko on May 23
You say: “The academe has a major defect in this discipline... the undergraduate degree program is not rigorous enough in applied mathematics and scientific methods .... this is not a 'hijacking!' you are drifting into conspiracy theory.”
I said: “Theoretical economics (= science) had been hijacked from the very beginning by political economists (= agenda pushers).”
This is a historical fact.#1, #2, #3, #4 The current curriculum is an entirely different matter.#5
MMT is agenda pushing for the one-percenters. The T=Theory in MMT is a misnomer because it refers to science. Science, in turn, is defined by material and formal consistency. MMT’s sectoral balances equation, though, is inconsistent. So, MMT is storytelling cross-dressed as science. In other words, in the case of MMT, political economists (= agenda pushers) have hijacked theoretical economics (= science).#6
The task of theoretical economics is to figure out how the monetary economy works. MMTers have no idea how the price- and profit mechanism works because they do not even know what profit is.#7
#1 Agenda pushers and hijackers vs scientists
#2 Scientific suicide in the revolving door
#3 Funny folks in the big omnibus
#4 Economics: a science without scientists
#5 See cross-references Econ 101/Old Curriculum/New Curriculum
#6 The end of political economics
#7 Rectification of MMT macro accounting
***REPLY to Matt Franko on May 24
You say: “The MMT elites HATE the one-percenters...”
Hate/love are soap-opera criteria. They do NOT apply to science. The criteria that apply here are true/false with truth defined as material and formal consistency.
So, it is a matter of indifference what the MMT elites hate.
Fact is that the sectoral balances equation MMT is built upon is provably false.#1 Because of this, the whole analytical superstructure = theory is false. This is quite compatible with the observation that some MMT propositions are correct or trivially true, just as some propositions in Greek mythology or Grimms fairy tales are correct or trivially true. But the fact that Baker Street exists does not change the meta-fact that Sherlock Holmes is a NONENTITY.
MMT’s sectoral balances equation (X−M)+(G−T)+(I−S)=0 describes a zero-profit economy. Clearly, a zero-profit economy is a NONENTITY.
The MMT elites can tell exciting stories about who they hate or love. That is cheap sales talk. The economic fact of the matter is that according to the macroeconomic Profit Law it holds Public Deficit = Private Profit. Whether they are aware of it or not does not matter, MMTers de facto promote the cause of the one-percenters.#2
The MMT elites are either stupid or corrupt. In any case, they are NO scientists.
#1 Rectification of MMT macro accounting
#2 Keynes, Lerner, MMT, Trump and exploding profit