Blog-Reference and Blog-Reference and Blog-Reference
With regard to the ongoing Neoliberalism vs MMT slapstick,#1 Lars Syll maintains: “In Wren-Lewis world we don’t need fiscal policy other than when interest rates hit their lower bound (ZLB). In normal times monetary policy suffices. … What Wren-Lewis and other mainstream economists have in mind when they argue this way, is nothing but a version of Say’s law, basically saying that savings have to equal investments and that if the state increases investments, then private investments have to come down (‘crowding out’). As an accounting identity, there is, of course, nothing to say about the law, but as such, it is also totally uninteresting from an economic point of view. What happens when ex-ante savings and investments differ, is that we basically get output adjustments. GDP changes and so makes saving and investments equal ex-post. And this, nota bene, says nothing at all about the success or failure of fiscal policies!”
There is NO such thing as an accounting identity of savings and investments. This erroneous notion is simply due to the fact that economists are too stupid for the elementary mathematics that underlies macroeconomics.#2, #3 Accordingly, neither the Swedish professor, nor Post Keynesians, nor New Keynesians, nor MMTers, nor Anti-Keynesians has spotted the blunder to this day.#4, #5
The scientific incompetence can be traced back to the General Theory: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)
This syllogism is conceptually and logically defective because Keynes NEVER came to grips with 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.)
Let this sink in, the economist Keynes NEVER understood profit, i.e. the fundamental concept of economics. So, Keynes’ I=S is false and by consequence the multiplier and all I=S/IS-LM models. Instead, Q≡I−S is true with Q as macroeconomic profit. The ex-ante/ex-post blather is absolutely beside the point.
Because the profit theory is false the whole analytical superstructure of economics is false. Because economics is proto-scientific garbage, economic policy guidance of both Neoliberals and MMTers is nothing but brain-dead agenda-pushing.#6, #7
#1 The not so funny MMT vs Neoliberalism slapstick
#2 Wikipedia and the promotion of economists’ idiotism (I)
#3 Wikipedia and the promotion of economists’ idiotism (II)
#4 Keynesians ― terminally stupid or worse?
#5 I is never equal S and even Nick Rowe will eventually grasp it
#6 MMT’s true program
#7 Economics as a cover for agenda pushing
Related 'Economics is a science? You must be joking!' and 'Macro ignorance: Why Simon Wren-Lewis does not come to grips with the plain MMT-fraud' and 'The economist as storyteller' and 'Economics: The greatest scientific fraud in modern times' and 'Wikipedia, economics, scientific knowledge, or political agenda pushing?' and 'The GDP-death-blow for the economics profession'. For details see cross-references Accounting and cross-references Refutation of I=S and cross-references Failed/Fake Scientists.