April 19, 2019

MMT: economics for suckers

Comment on Dylan Matthews on ‘Modern Monetary Theory, explained’*


Dylan Matthews frames his contribution as follows: “I’ll explain MMT theories about deficits, inflation, and employment, and what it all means for Democratic Party politics in 2020 and beyond.”

Clearly, Dylan Matthews delivers another example of political blather. He still has not realized that economics in general and MMT, in particular, cannot be taken seriously.#1 And he is obviously not aware that economics is a failed/fake science from Adam Smith onward to MMT.

The general public does not know that there is political economics and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda, the goal of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics anything goes; in theoretical economics, the scientific standards of material and formal consistency are observed.

Economics consists of the major approaches Walrasianism, Keynesianism, Marxianism, Austrianism that are mutually contradictory, axiomatically false, and materially/ formally inconsistent. What can be observed is the pluralism of provably false theories.

Because MMT, too, is provably false, i.e. materially/formally inconsistent, MMT policy guidance has no sound scientific foundations. MMT does not provide a scientifically valid theory but is political agenda pushing for the Oligarchy in a scientific/social bluff package.#2, #3

Dylan Matthews gives a fair account of the current state of the discussion except for the fact that he does not mention that MMT is refuted on all counts.

The failure of MMT is due to the fact that its underlying macroeconomic foundations are false.#4 The lethal blunder of MMT is that it is built upon a provably false sectoral balances equation, i.e. upon (I−S)+(G−T)+(X−M)=0.#5 The axiomatically correct balances equation reads (I−S)+(G−T)+(X−M)−(Q−Yd)=0. Because all variables are measurable with the precision of two decimal places, the issue can be decided by mathematical proof and empirical test. However, NO MMTer has ever answered to the proof of material/formal inconsistency. MMTers are simply too busy with pushing their political agenda. After all, in the political Circus Maximus, nobody cares about true/false.

Accordingly, this is Dylan Matthews’ political bottom line: “The rise of MMT could allow Democrats to embrace the de facto fiscal policy of Republican presidents, who tend to explode the deficit to finance pet initiatives like tax cuts and defense spending, leaving Democrats to clean up afterward. MMT could be Democrats’ way of saying, ‘We don’t want to be suckers anymore’.”#6

True, if Republicans can deceive voters so can Democrats. And MMT is as good as any other economic approach for an academic con job.#7

Egmont Kakarot-Handtke

* Vox
#1 MMT sucks
#2 For the full-spectrum refutation of MMT see cross-references MMT
#3 Economics, MMT, and the capture of science by the political mob
#4 Macroeconomics ― dead since Keynes
#5 From Keynes’ fatal blunder to the true economic model
#6 Dear idiots, it is deficit spending that creates the distribution people complain about
#7 Economists: “a bevy of camp-following whores”

Wikimedia AXEC118d


LINKS on Sam Fleming/Chris Giles’ Why America is learning to love budget deficits on Apr 26

Sam Fleming and Chris Giles quote: “The winning formula for the Democrats is they are going to have to endorse some of these relatively fiscally extreme positions to get nominated,” says one Democratic strategist, speaking of the 2020 presidential contenders. “The threats of debt and deficits have not panned out. We have been running deficits and debt for 30 years and where is the crowding out, the inflation and the soaring interest rates?”

Of course, there was neither inflation nor soaring interest rates. This has never been more than hallucinations of scientifically incompetent economists. Instead, what the policy of deficit-spending/money-creation has produced is the insane distribution of income and financial wealth. For details see:

► Dear idiots, it is deficit spending that creates the distribution people complain about
► MMT: Distribution is the drawback NOT Inflation
► Keynes, Lerner, MMT, Trump, etc. and exploding profit
► MMT: economics for suckers
► Dear idiots, MMTers are Wall Street’s agenda pushers
► Safe assets ― how the State pampers the Oligarchy
► MMT: fundamentally false
► Economics, MMT, and the capture of science by the political mob
► MMT is an economic policy fraud
► Macroeconomics: Economists are too stupid for science
► The canonical macroeconomic model

Apr 26