May 22, 2019

MMT and the Green New Deal: Where is the snag? (II)

Comment on Richard Murphy on ‘Growth, MMT and the Green New Deal’

Blog-Reference and Blog-Reference

Strictly speaking, environmental protection is an issue for physicists, chemists, and other scientists. Economists are not scientists because they do not know to this day how the monetary economy works. This does not stop these abysmally incompetent folks from uttering their irrelevant opinion on every issue between heaven and earth.

Richard Murphy claims to have synthesized MMT and GND: “This one takes an explanation because it has become very closely associated with the Green New Deal, which is again at least in part my fault.”

Unfortunately, he gets the economics part of the synthesis badly wrong. In more detail:

1. “Fundamentally it [MMT] suggests that since we came off the gold standard all money is ‘fiat’ currency It’s a promise to pay and nothing more. The promise backed by the power of the state to tax.” FALSE! TRUE: The creation and value of money does NOT depend on the taxing power of the State.#1, #2 ,#3, #4

2. “But the state does not need tax to spend. All spending is effectively settled with money created by banks on demand from a customer. It is not paid for out of a stock of savings. And in the case of a government, it is not paid for out of tax received.” FALSE! TRUE: Spending on current output with newly created money is analogous to the spending of the counterfeiter.#5

3. “Instead gov’t spending is paid for by the government asking its bank ― the Bank of England ― to make payment for it. This is exactly akin to the fact that banks do not lend out customer funds: rather they make the funds they lend by a process of double-entry book-keeping and bank deposits are the result of that process, and not where it starts.” FALSE! TRUE: Money is a generalized IOU. Government deposits and overdrafts are produced simultaneously. The government spending is ‘financed’ by overdrafts at the central bank which have to be eventually repaid.#6

4. “The result is that a government with its own central bank and currency can never run short of money ― because it can instruct that it be made at will. And it can never go bankrupt if it borrows solely in its own currency because it can always create the funds to make payment. But of course, it cannot print money at will ― because inflation will result.” FALSE! TRUE: This is the good old Quantity Theory Fallacy. Continuous deficit spending and growing public debt do NOT cause inflation.#7

5. “So action has to be taken to keep inflation under control ― and that is the real purpose of tax in MMT.” FALSE because of 4.

6. “Its secondary purposes are to Ratify the value of money; Redistribute income and wealth; Reprice market failure; Reorganise the economy; Raise representation in a democracy.” FALSE! TRUE: Because of the macroeconomic Profit Law it holds Public Deficit = Private Profit and this means that the lethal effect of MMT policy is on distribution and that it secures ― intentionally or unintentionally does not matter ― the self-alimentation of the Oligarchy. Nothing could be more anti-democratic than MMT policy.

The claim of MMTers that a Green New Deal can be realized at any time by deficit spending is misleading at best. Technically, of course, there is no problem. However, as a matter of principle, any Green New Deal can be realized with a balanced budget. But in the MMT scheme of things, a balanced budget is something for the Swabian housewife and permanent deficit spending is the prerogative and duty of the Sovereign State.

The point is that MMTers are not so much interested in how the government’s budget is allocated but that the government runs a deficit because it is the deficit as such that produces the macroeconomic profit for the Oligarchy.#8

MMT is NOT science but political agenda pushing in a social/environmental bluff package. MMT and GND together are the dream team for deceiving WeThePeople for the benefit of the Oligarchy.#9

Egmont Kakarot-Handtke

#1 The creation and value of money and near-monies
#2 MMT, money, value, and transcendental Capitalism
#3 The canonical macroeconomic model
#4 MMT: fundamentally false
#5 How counterfeiters save America with an extra profit and make WeThePeople pay for it
#6 How to pay for the war and to be bamboozled by economists
#7 Settling the MMT―Inflation issue for good
#8 MMT and the promotion of Wall Street's idea of social policy
#9 Just one more day: How deficit-spending delays the breakdown of Capitalism

Immediately preceding 

Related 'MMT and the Green New Deal: Where is the snag? (I)' and 'Economists: Trolls with a mortarboard' and 'The half-truths and half-falsehoods of MMT' and 'Fraud comes always in the cloak of philanthropy, salvation, or threat of doom' and 'MMT: If you’ve got a problem, I don’t care what it is, let me help' and 'MMT is NOT bold policy but spineless fraud' and 'Econogenics in action'.


ADDENDUM (re. Andrew (Andy) Crow on May 24, submission closed)

Economists fall into two categories: political economists (= agenda pushers) and theoretical economists (= scientists).

As in every walk of life, there is the genuine thing and the lookalike: “A genuine inquirer aims to find out the truth of some question, whatever the color of that truth. ... A pseudo-inquirer seeks to make a case for the truth of some proposition(s) determined in advance. There are two kinds of pseudo-inquirer, the sham, and the fake. A sham reasoner is concerned, not to find out how things really are, but to make a case for some immovably-held preconceived conviction. A fake reasoner is concerned, not to find out how things really are, but to advance himself by making a case for some proposition to the truth-value of which he is indifferent.” (Haack)

Political economists in general, and MMTers, in particular, are fake scientists. MMT is provably false, i.e. materially and formally inconsistent.

When I as an economist say “Economists are not scientists because they do not know to this day how the monetary economy works.” the word “economists” clearly refers to political economists.

Needless to say, the general public does NOT discriminate between P-economists and T-economists and does not realize that P-economics is fake science. The point to grasp is: MMT is proto-scientific garbage and MMTers are agenda pushers for the Oligarchy.