November 11, 2018

#PublicDeficitIsPrivateProfit #MMT #JustAnotherFraud

Comment on Richard Murphy on ‘Why governments need to issue bonds despite modern monetary theory’


As always, much operational blah blah and the complete loss of the big picture. Not one word about distributional effects.

Because PublicDeficitIsPrivateProfit if deficit up ⇒ profit up ⇒ cash up ⇒ business sector’s need for riskless assets up. Solution Gov-Bonds. Extra benefit: interest on Gov-Bonds redistributes income from WeThePeople via taxes to the Oligarchy. Thank you very much.

MMT deficit-spending/money-creation is the double-whammy for WeThePeople and the double-whopper, i.e. profit+interest, for the Oligarchy.

Bravo, Stephanie Kelton, Warren Mosler, Richard Murphy, and the other Wall Street agenda pushers for caring so heartfelt for the needy people when the TV cameras are on.

Bravo, MMT trolls for making the swindle disappear in the econblogosphere behind a smokescreen of senseless blather.

Egmont Kakarot-Handtke

REPLY to Matt Franko, André on Nov 12

Get out of the Deutsche Bank woods.

Who buys and holds Gov-Bonds? NOT the little guy. It is, in a rather broad term, the Oligarchy that seeks for their idle cash some interest-bearing riskless liquid asset.

Why are Gov-Bonds deemed riskless? Because the Gov can exercise its power of taxation to get the interest from WeThePeople and transfer it to the bondholders. This government service saves the Oligarchy a lot of trouble.

The argument that the little guy needs Gov-Bonds to beef up his small pension is the usual MMT social policy fake in the interest of Wall Street.

By the way, the little guy is usually in debt himself. His credit card debt is securitized and also sold as an asset to people/institutions with surplus cash. These assets bear a risk premium because there is no government that guarantees timely interest and amortization payment through the power of taxation.

In the case of private asset-backed securities, the issuer is sometimes forced to engage the service of private bone breakers to secure timely payment of interest and amortization.

By the way, virtually riskless private bonds have been invented long ago in Italy and have been available, for example, in Germany for 100+ years in the form of Pfandbriefe (mortgage bonds). This construct needs a reliable legal framework. This framework is not in place in the US where Wall Street makes the laws.

REPLY to Calgacus on Nov 13

You say: “Trapped in the (neo)classical reverse causation mode. This is logically impossible; it entails time travel. Spending, including on interest comes first. Then taxation.”

This time travel nonsense is just silly MMT sloganizing. It originates from the false premise that money comes only into the economy through government deficit spending. This is plain wrong.

There are TWO ways to bring money into the economy. The correct way for the central bank to inject fiat money into the economy is by financing a growing wage bill. The incorrect way is the counterfeit-money-printer’s way, that is by deficit-spending/money-creation.#1, #2

The first alternative has NO effect on macroeconomic profit, but the second has. The first alternative is distributionally neutral, while the second feeds the Oligarchy.

By applying a transaction graph#3 one can easily see that government can tax wage income as it is paid out and spend the money later. If this happens in the same period, G=T applies. No time travel anywhere. And no profit for the Oligarchy. No wonder MMTers insist on bringing money into the economy via government deficit-spending.

Again, MMTers in general, and Calgacus in particular, are stupid or corrupt or both.