Blog-Reference and Blog-Reference and Blog-Reference on Aug 9
Lars Syll summarizes: “Few issues in politics and economics are nowadays more discussed ― and less understood ― than public debt. … The pros and cons of public debt have been put forward for as long as the phenomenon itself has existed, but it has, notwithstanding that, not been possible to reach anything close to consensus on the issue ― at least not in a long time-horizon perspective.”
True, after 200+ years, economics is still at the proto-scientific level. Both orthodox and heterodox economists have failed. Economists do not know to this day how the price- and profit mechanism works. The reason is simple, economists are incompetent scientists. To this day, they do not know what profit is and therefore they collectively talk mind-blowing nonsense about deficit-spending/money-creation/and public debt.
To make matters short, the axiomatically correct macroeconomic Profit Law for an evolving economy is given here without further explanation. It holds, with Qm monetary profit/loss, Sm monetary saving/dissaving, I investment expenditures, G government spending, T taxes, X export, M import, Yd distributed profit Qm≡Yd+(X−M)+(G−T)+(I−Sm) in the open economy with distributed profit.
This reduces to Public Deficit = Private Profit, i.e. Qm≡(G−T). And this, in turn, gives the following simplified credit cycle: (i) Public deficit spending → profit of the business sector up, (ii) profit distribution to the one-percenters up, (iii) one-percenters buy bonds, (iv) ninety-nine-percenters get taxed, taxes are transferred in the form of interest to the one-percenters for the duration of the bonds, (v) old bonds are replaced by new bonds on maturity, (vi) steps (iv) and (v) are repeated for an indefinite time, (vi) Eventual redemption of bonds requires taxation of the ninety-nine-percenters and transfer to the one-percenters. The business sector makes a loss.
From this stylized credit cycle follows immediately that Lerner’s dictum: “Very few economists need to be reminded that if our children or grandchildren repay some of the national debt these payments will be made to our children or grandchildren and to nobody else. Taking them all together they will no more be impoverished by making the repayments than they will be enriched by receiving them.” is one of the worst deceptions economists have put on the ninety-nine percenters.
MMTers are presently the most enthusiastic champions of deficit spending/money creation. It holds:#1
(i) The macroeconomic foundations of MMT are provably false. More specifically, the MMT balances equation is proto-scientific garbage. This holds also for Post-Keynesianism.
(ii) Because of (i) the whole analytical superstructure of MMT is false.
(iii) Because MMT policy guidance boils down to deficit-spending/money- creation, MMT policy directly and immediately increases macroeconomic profit. Effects on employment/prices are uncertain and secondary.
(iv) Because of (iii) MMTers are the naturally useful idiots of the one-percenters.
(v) The MMT sales crowd promotes an economic theory, which has been definitively falsified, in social media and in the econblogosphere by pretending that MMT policy is for the benefit of the ninety-nine percenters.
(vi) MMT academics do NOT promote science but provide a cover for the agenda of the one-percenters.
(vii) The observable unequal distribution of income and financial wealth is the empirical proof (a) of the axiomatically correct Profit Law, and (b), that the deficit-agenda-pushing from Keynes to Lerner to MMT and to Lars Syll has been very successful.
(viii) MMT is the easily recognizable tip of the iceberg of political corruption of economics.
#1 For the full-spectrum refutation of MMT see cross-references MMT
Related 'Keynes, Lerner, MMT, Trump, Biden and exploding profit' and 'Keynesianism as ultimate profit machine' and 'Too much ado about deficit spending' and 'MMT-Refutation for Dummies' and 'Orthodoxy is refuted ― but MMT also'.