February 27, 2019

A battle for hearts and minds ― economics redefined

Comment on Tom Hickey on ‘Fed Chair Powell gets it wrong, just as did Bill Dudley’


Tom Hickey declares war: “The battle line is drawn, with the ruling elite and neoclassical economists at the center and the flanks occupied by Austrians and Libertarians on the right and clueless progressives on the left, with corporate media in the background, facing off with the MMT economists at the center flanked by MMT advocates, backed by a public that agrees with genuine progressive goals. Now it is a battle for hearts and minds.”

The opioid crisis obviously takes a heavy toll on economists. MMTers like Tom Hickey are currently losing the rest of their lamentable capacity to differentiate between policy blather and reality.

Whatever the Fed chairman says is self-promotion as a competent and responsible representative of an institution that claims to be committed to the well-being of WeThePeople. No sober person takes this speech-writer stuff literally.

The Fed’s task is to keep the economy going. This is a political mandate. Accordingly, the performance of Wall Street is engineered by the Fed and the performance of the real economy is engineered by Fed/Treasury. This team will do “Whatever it takes” to keep the system going and this includes running deficits up to the stratosphere.

MMTers are simply intoxicated by their own rhetoric when they believe that they tell Fed/Treasury something new by pointing out that there is no operational restriction to deficit-spending/money-creation. Wake up MMTers, governments all over the world know this and practice it since time immemorial. The proof is in the public debt of globally $184 trillion and $22 trillion alone in the USA.

And, mind you, this amount is the official number. How can MMTers be sure that Fed/Treasury is not doing MMT deficit-spending/money-creation all along without showing it on the official accounts? After all, the Pentagon is on record of losing sight of trillions every year.

There are two worlds: the communicative world and the real world. Political agenda pushers deal with the world of make-believe only scientists deal with reality. Economists are NOT scientists.

The reality is that the free-market economy is on the life support of the state. The macroeconomic Profit Law implies Public Deficit = Private Profit and this means that permanent deficit spending is necessary to prevent the monetary economy from collapsing. This holds for Capitalism and Socialism alike.

Of course, neither the government nor the Fed nor the Treasury can tell WeThePeople that they are riding the tiger and cannot dismount.

But, luckily, there are the useful idiots of MMT who tell WeThePeople that deficit-spending/money-creation is needed for worthy social purposes and for the survival of humanity and the planet. Nobody can argue against rescuing humanity.

Deficit-spending/money-creation, of course, make of one problem today two problems in the future. However, this can go on for a long time. Best of all, when things go wrong, the responsible politician steps before the cameras and tells WeThePeople that it was the fault of these MMTers with their reckless social/environmental deficit spending.

There is NO war between misguided right-wing Fed hardliners and progressive left-wing MMTers. The battle for hearts and minds is just a communicative clown show in the political Circus Maximus.#2

Note that neither Fed nor MMT arguments have sound scientific foundations. Economics is a failed/fake/cargo cult science Both, mainstream economics and MMT is proto-scientific garbage. What economics needs is to flush Walrasianism, Keynesianism, Marxianism, Austrianism, MMT, and the pluralism of provably false theories down the drain.

Egmont Kakarot-Handtke

#1 For the full-spectrum refutation of MMT see cross-references MMT
# 2 The economist as stand-up comedian

Related 'Economists: Trolls with a mortarboard'. For details of the big picture see cross-references Failed/Fake Scientists.

LINK NOTE on Feb 28

On Twitter,#1 Warren Mosler cites approvingly Macrotourist#2: “Nice to see MMT articles like this: Trump is the most MMT-like-President ever elected.”

Actually, this is long known
► MMT = Trumponomics
► MMT: So-called Progressives as trailblazers for Trumponomics

#1 Twitter
#2 Macrotourist

REPLY to Noah Way on Feb 28

You say: “According to MMT, taxes regulate economic activity. Thus inflation ― where there is too much money in circulation, and its value decreases ― is corrected by taxation, which removes money from circulation, thereby increasing the value of what remains.”

Your inflation theory is roughly the old Quantity Theory, i.e. too much money chasing too few goods. So, to begin with, your inflation theory is false.#1, #2

Furthermore, the “value of money” depends on productivity and not on taxation or on the quantity of money.#3

#1 Economics as tireless production of proto-scientific garbage: inflation theory as an example
#2 Dear idiots, government deficits do NOT cause inflation
#3 The creation and value of money and near-monies