January 14, 2019

Stephanie Kelton’s legendary Plain-Sight-Ink-Trick

Comment on Z. Byron Wolf on ‘Debt? What debt? At \$22 trillion, here’s the argument the national debt doesn’t matter’*

Blog-Reference

Stephanie Kelton argues: “When the government spends more than it collects in the form of taxes (and other payments), we label it ‘deficit spending.’ But that’s only part of the story. To complete the picture, suppose the government spends \$100 into the economy but only taxes \$90 back out. The result is a surplus equal to \$10 that shows up somewhere in the non-government part of the economy. In other words, the government’s ‘red ink’ becomes our ‘black ink.’ Their deficits are our financial surpluses. So where does the ‘debt’ come into play? Whenever the government runs a deficit, it sells government bonds called U.S. Treasuries. This is usually referred to as ‘borrowing,’ but that’s actually misleading. What’s really happening is that the government is allowing people to trade in their dollars for a bond that pays some interest. A pretty good deal if you happen to be lucky enough to hold some of that \$22 trillion.”

Indeed. The government’s ‘red ink’ becomes our ‘black ink.’ We are the lucky ones, WeThePeople, right? Wrong!

Macroeconomics gives one this balances equation (X−M)+(G−T)+(I−S)−(Q−Yd)=0 which boils down to Q=(G−T) which says that macroeconomic profit Q (= black ink) is equal to the government’s deficit (G−T) (= red ink) if the other variables are taken out of the picture for a moment, i.e. Public Deficit = Private Profit.

Stephanie Kelton’s provably false MMT balances equation reads (X−M)+(G−T)+(I−S)=0, which reduces to S=(G−T) which says “a surplus S shows up somewhere in the non-government part of the economy” (= black ink) which is equal to the government’s deficit (G−T) (= red ink) if the other variables are taken out of the picture for a moment.

Note that the business sector’s profit Q becomes “a surplus somewhere in the non-government part of the economy” S. This is a clear case of obfuscation.

In other words, the government’s ‘red ink’ becomes our their ‘black ink’ i.e. our=WeThePeople has to be corrected to their=the Oligarchy.#1, #2 So, for the most elementary case the correct relationship reads: The government's red ink is the Oligarchy's black ink. From this follows with regard to public debt: WeThePeople owes it, Oligarchy owns it.

MMT’s Stephanie Kelton is a political fraudster who deceives WeThePeople.#3

Egmont Kakarot-Handtke

* CNNpolitics
#1 MMT and the single most stupid physicist
#2 Down with idiocy!
#3 The Kelton-Fraud

Related 'Why the MMT benefactors of humanity never talk about profit' and 'Stephanie and Noah ― economics at the intellectual zero lower bound' and 'Profit, income, and the Humpty Dumpty Fallacy' and 'MMT and the magical profit disappearance' and 'Dear idiots, government deficits do NOT fund private savings' and 'The page where Stephanie Kelton gets macroeconomics wrong' and 'Proof of MMT's inconsistency' and 'Profit' and 'MMT refuted in three easy steps'. For the full-spectrum refutation of MMT see cross-references MMT.

For more about sectoral balances see AXECquery.
For more about Public Deficit = Private Profit see AXECquery.

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COMMENT on peterc on Ivan Horrocks — Job guarantee programmes: back to the future? on Jan 15

MMT is three things: theory, policy, activism.

The theory is provably false. Because of this, MMT policy proposals have no sound scientific foundations. This, though, does not matter much for the MMT activists because these folks present themselves as the can-do good guys, the real Progressives, the benefactors of WeThePeople who care for the unemployed, the vulnerable, the poor pensioners, the indebted students, and the environment. The activists use MMT as a grab bag of arguments without any concern about consistency, truth, or scientific validity.

MMT activists, like all political agenda pushers, give a shit on theory/science/truth but on occasion put on the cloak of science in order to enhance respectability/credibility/ authority. Academic MMTers are not different from the rest of economists who claim to do science since Adam Smith/Karl Marx but only push a political agenda and deceive the general public with a fake Nobel.

In sum, MMT is bad theory, MMT is bad policy, MMTers are bad people. MMT is not much different from Walrasianism, Keynesianism, Marxianism, and Austrianism.

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Twitter Jun 04, 2021 Continous deliberate deception of WeThePeople by academic economics