Blog-Reference and Blog-Reference
“MMT is not, as its opponents seem to think, primarily a set of policy ideas. Rather, it is essentially a description of how a modern credit economy actually works – how money is created and destroyed, by governments and by banks, and how financial markets function. … Governments create money by spending and extinguish it via taxation.” (J. K. Galbraith)
This is not quite correct. It is the Central Bank that creates/destroys money. Roughly speaking, there are two ways of bringing money into the (closed) economy, (i) by financing the wage bill of the business sector, (ii) by deficit-spending of the household- or government sector.
The unhindered creation of fiat money for the payment of the wage bill is the correct way of bringing money into the economy. MMT’s government deficit-spending is the incorrect way. Why? Because of the macroeconomic Profit Law, it holds Public Deficit = Private Profit, in other words, bringing money at the demand side into the economy creates a free lunch for the Oligarchy.
In the most elementary case, transaction money is created by wage payments and destroyed by consumption spending.#1
MMT theory is provably false.#2, #3 Because of this, MMT policy guidance has NO sound scientific foundations. Because of the macroeconomic Profit Law, i.e. Public Deficit = Private Profit, MMT policy serves the Oligarchy. Fabulous financial wealth is the mirror image of fabulous public debt ($22 trillion).
MMT is NOT a scientifically valid theory but political agenda pushing for the Oligarchy in a scientific/social bluff package.#4
* Project Syndicate
#1 From MMT misunderstandings to the true Theory of Money
#2 The half-truths and half-falsehoods of MMT
#3 Refuting MMT’s Macroeconomics Textbook
#4 For the full-spectrum refutation of MMT see cross-references MMT
“MMT is not, as its opponents seem to think, primarily a set of policy ideas. Rather, it is essentially a description of how a modern credit economy actually works …” (J. K. Galbraith)
MMT is an economic theory and the point at issue is whether it is true or false.
You answer a scientific question with your personal political credo: “Libertarian mantra: Completely abolish the initiation of violence.”
Politics and science have to be strictly kept apart because the former always corrupts the latter.
Austrians are excluded from any scientific discussion because they are too stupid to understand that there is a crucial qualitative difference between science and political blather.
Austrianism and MMT are scientifically worthless. And more is not to say about the whole matter.
“For the umpteenth time, Axec trotts out his moronic ‘law’, i.e. that ‘Public Deficit = Private Profit’ which apparently means that all deficit dollars end up in the pockets of the super rich. Since when does 100% of an increase in demand for the products of a particular firm, or sector of the economy or for the products made by the economy as a whole end up in the pockets of the rich?”
You would not ask this question if you had done your macroeconomic homework.
► Essentials of Constructive Heterodoxy: Profit
► Essentials of Constructive Heterodoxy: Employment
► Go! ― test the Profit and Employment Law
This is how deficit spending works in the most elementary case. If the total wage income of the household sector is 100 in a given period and the household sector spends all on consumption, then the macroeconomic profit of the business sector is zero. If the total wage income of the household sector is 100 and the household sector spends all on consumption and the government sector applies deficit-spending/money-creation of 10, then there is a one-off price hike and the profit of the business sector is 10. Generalization: Public Deficit = Private Profit.#1
Easy to understand if one has more than two brain cells.
#1 For the interrelationship of the macroeconomic Profit- and Employment Law see Wikimedia