January 23, 2019

The misleading nitty-gritty defense of MMT principles

Comment on Bill Mitchell on ‘Operationalising core MMT principles’

Blog-Reference

Yes, there is a lot of idiotic critique of MMT. Yes, there are tons of rubbish on the Internet about MMT from some “economics PhD student at a low-tier US university” or non-economists who either play dumb in order to derail a discussion or claim to know how to rectify economics and to save humanity and the planet.#1

This is nothing new in economics: “A sure sign of a crisis is the prevalence of cranks. It is characteristic of a crisis in theory that cranks get a hearing from the public which orthodoxy is failing to satisfy.” (Joan Robinson)

Bill Mitchell takes it upon him to defend MMT against all types of misinterpretation and rubbish by going at great length into the details of Inflation Theory and of the practical realization of a Job Guarantee. His arguments are sound and there is not much to say against them except that they are beside the point.

By addressing a lot of nitty-gritty stuff, Bill Mitchell deflects from the fact that MMT has been refuted at the level of principles. The formal inconsistency of MMT has been proved, the material inconsistency is testable.#2, #3, #4 The fact of the matter is that MMT is dilettante macroeconomics.

Bill Mitchell’s defense of MMT is as absurd as the answer of a bloodletter#5 who is told that his underlying theory of humors is false and that bloodletting does more harm than good: “What do you want, my handling of leeches is second to none and I have practically demonstrated this time and again.”

The fault of MMT does NOT lie at the operational level of how money can be created out of nothing and spent into the economy for all kinds of social purposes but at the level of theory.

This is the core of MMT’s scientific failure. The false MMT balances equation reads (I−S)+(G−T)+(X−M)=0, the correct equation reads (I−S)+(G−T)+(X−M)−(Q−Yd)=0 and it boils down to Public Deficit = Private Profit. In other words, the MMT policy of permanent deficit-spending/money-creation amounts to a permanent free lunch for the Oligarchy. MMT policy is NOT social as claimed, just the opposite.

Because the foundational sectoral balances equation is false the whole analytical superstructure of MMT is false. Because the theory is false, the policy is counter-productive and it does not matter much whether the operational execution is perfect or not.

Bill Mitchell fills his blog with the nitty-gritty defense of MMT policy but never addresses the refutation of the theoretical foundations of this policy. Compared to the low-IQ critique of an “economics PhD student at a low-tier US university” and other trolls, Bill Mitchell’s defense is well-argued and convincing at the operational level. Unfortunately, he cannot disprove that MMT does not satisfy the scientific criteria of material and formal consistency. Bill Mitchell never addresses the argument that MMT amounts to bloodletting WeThePeople.

Egmont Kakarot-Handtke


#1 Debunking idiots does not prove that MMT is valid
#2 MMT sucks
#3 The final implosion of MMT
#4 Down with idiocy!
#5 “Bloodletting, whether by a physician or by leeches, was based on an ancient system of medicine in which blood and other bodily fluids were regarded as ‘humours’ that had to remain in proper balance to maintain health. It is claimed to have been the most common medical practice performed by surgeons from antiquity until the late 19th century, a span of almost 2,000 years.” (Wikipedia)