February 18, 2019

Misrepresenting MMT

Comment on Dirk Ehnts on ‘The Economist misrepresents MMT’

Blog-Reference and Blog-Reference

Dirk Ehnts complains about The Economist: “I am not happy with the reporting, which includes false statements in general and also misrepresentations of what MMT is.” and then continues: “In my own book on ‘Modern Monetary Theory and European Macroeconomics’, which was published by Routledge in 2017, I discuss the balance sheet approach to macroeconomics that MMT truly is.”

On page 151 under the heading Sectoral balances one reads (Sp−I)+(T−G)+(IM−EX)=0. This sectoral balances equation is false because it lacks the most important balance of the market economy, i.e. the profit of the business sector.#1, #2, #3

The false MMT balances equation can be traced back to Keynes. Keynes NEVER understood the foundational magnitude of economics, i.e. profit: “His Collected Writings show that he wrestled to solve the Profit Puzzle up till the semi-final versions of his GT but in the end he gave up and discarded the draft chapter dealing with it.” (Tómasson et al.)

The correct balances equation reads (S−I)+(T−G)+(IM−EX)−(Yd−Q)=0 with Q as monetary profit and Yd as distributed profit income.

Neither Post-Keynesians nor Anti-Keynesians nor MMTers, though, have realized/rectified Keynes’ foundational blunder to this day.#4 Economists are simply too stupid for the elementary mathematics that underlies macroeconomics.

In his self-delusion, Dirk Ehnts cites John Maynard Keynes approvingly: “I give you the toast of the Royal Economic Society, of economics and economists, who are the trustees not of civilization, but of the possibility of civilization”.

This contrasts with historical reality as summarized by Napoleon: “Late in life … he claimed that he had always believed that if an empire were made of granite the ideas of economists if listened to, would suffice to reduce it to dust.” (Viner)

In their utter scientific incompetence, economists are the demolition men of civilization.#5

Egmont Kakarot-Handtke

#1 Rectification of MMT macro accounting
#2 Wikipedia and the promotion of economists’ idiotism (II)
#3 MMT and the magical profit disappearance
#4 Keynesians ― terminally stupid or worse?
#5 Econogenics in action

Related 'Free the academy from economics' and 'Trust in economics as a science?' and 'MMT: The fusion of Wall Street and Academia' and 'MMT: A free lunch for the Oligarchy' and 'Refuting MMT’s  Macroeconomics Textbook' and 'Trump and MMT: Make profits great again'. For the full-spectrum refutation of MMT see cross-references MMT.