May 29, 2019

No MMT illusions! YOU are going to pay for it

Own post, no external Blog-Reference

For the average citizen, the essence of smartness is to get more out of the social trough than to put into it. Or, in monetary terms, to get stuff and to make others pay for it. Or, in national terms “I will build a great, great wall … and I will have Mexico pay for that wall.” Most people never get above this pig-trough world view which, after all, serves for 150+ years now as one of the axioms of economics, i.e. “HC3 Agents independently optimize subject to constraints” (Weintraub) or in plain text: people seek to make the difference between utility and disutility as big as they possibly can, or in the words of the founding fathers “Just in the same manner does Political Economy presuppose an arbitrary definition of man, as a being who invariably does that by which he may obtain the greatest amount of necessaries, conveniences, and luxuries, with the smallest quantity of labour and physical self-denial with which they can be obtained in the existing state of knowledge.” (J. S. Mill)

The obvious logical problem with the pig-trough world view is that it cannot work for all: it is impossible that all get more out of the trough than they throw into it. This is, as Marx realized, the fundamental problem of capitalism: “How can they continually draw 600 p. st. out of circulation, when they continually throw only 500 p. st. into it? From nothing comes nothing. The capitalist class as a whole cannot draw out of circulation what was not previously in it.” Neither Marx nor the rest of scientifically incompetent economists have answered this fundamental question of economics to this day.#1

Because of their pig-trough thinking, people fall since time immemorial for gold-makers, snake oil sellers, bubble blowers, and all types of wealth creators, chief among them economists: “… in the introduction to Book IV we read that Political Economy ‘proposes to enrich both the people and the sovereign,’ and it is this definition which expresses both what Smith wanted above everything and what interested his readers more than anything else.” (Schumpeter)#2

Pig-trough psychology explains the political attractiveness of MMT. MMT answers the question of How are you going to pay for it? with deficit-spending/money-creation. Posing as real Progressives, MMTers do not criticize governments for permanently increasing the public debt but only for not handing over the money to needy people or GND world savers but to farmers or other unworthy folks: “Have you noticed that when the president unilaterally directs $16 bn in bailout payments to agricultural interests, no one says: but how will you pay for it?”#4

This rhetorical question stirs up outrage and deflects from political fraud, i.e. from the economic fact that deficit-spending/money-creation is in the end to the disadvantage of WeThePeople and to the advantage of the Oligarchy.#5

The economic fact of the matter is: either the budget is balanced then WeThePeople pay for government spending through open taxation, or the government deficit-spends then WeThePeople pay through stealth taxation, i.e. through an almost unnoticeable one-off price hike (NO inflation). Because the macroeconomic Profit Law entails Public Deficit = Private Profit the financial wealth of the Oligarchy grows in lockstep with public debt. For the overall profit of the business sector, it does NOT matter at all whether the deficit spending goes to the military, the farmers, or the Green New Deal. #6, #7, #8

So, the answer to the question Who pays? is always and everywhere: WeThePeople pay in real terms no matter whether the budget is balanced or money is created out of nothing. WeThePeople pay vastly more in the case of deficit-spending/money-creation (because of the interest on public debt) than in the case of budget balancing.

Economists in general and MMTers, in particular, are a hazard to their fellow citizens because they are either stupid or corrupt or both.#9

Egmont Kakarot-Handtke


#1 The Profit Theory is False Since Adam Smith
#2 Fraud comes always in the cloak of charity, salvation, or threat of doom
#3 How to pay for the war and to be bamboozled by economists
#4 Twitter, Chris Hayes
#5 Dear idiots, MMTers are Wall Street’s agenda pushers
#6 How to pay for the war and to be bamboozled by economists
#7 MMT and the Green New Deal: Where is the snag? (II)
#8 MMT and the Green New Deal: Where is the snag? (I)
#9 Econogenics in action

Related 'Gold-making, wine from water, M-C-M+, perpetuum mobile, free lunch, beating the stock market, and the perennial human dream' and 'Economics between science and magic' and 'How MMT makes everybody happy' and 'The Magic Money Tree is real ― too bad that the magic is fraud' and 'Keynes, Lerner, MMT, Trump, etc. and exploding profit' and 'The Kelton-Fraud'. For details of the big picture see cross-references MMT.

***
Wikimedia AXEC152