September 13, 2019

Swabian housewife vs Wall Street loan shark

Comment on Bill Mitchell/Tom Hickey on ‘Germany to play smokes and mirrors again’*


The usual way to defraud people is to frame an issue emotionally and to moralize. That is exactly what Tom Hickey is doing: “The conservative mind equates financial debt with being guilty of moral failure, sin. In fact, in German the same term, Schuld, signifies both debt and guilt, as Michael Hudson so tirelessly points out. So this is conflation of finance and morality is a no-brainer there. … In conservative minds, this manifests as a black and white world in which savers that are virtuous, with the savers supposed funding the profligate borrowers.”

These conservative folks spoil the business of the progressive loan sharks and this is why they are ridiculed and smeared. For this purpose, MMTers have created the rhetorical bugaboo of the Swabian housewife. The Swabian housewife is too narrow-minded to understand that significant deficit-spending/money-creation is needed for everything between repairing the rotten infrastructure, stimulating the ailing economy, reducing unemployment, and fighting global warming.

As the master psychologist Tom Hickey diagnoses: “Deficit hysteria and debt phobia underlies the preference for fiscal austerity, which is often advertised as ‘expansionary fiscal austerity,’ a virtuous thing that stands in contrast to the ‘fiscal profligacy’ and ‘fiscal irresponsibility’ of the ‘degenerate’ liberal mindset.”

No, not at all, the smart Swabian housewife, as well as the sagacious Hamlet#1, have learned from history the four stages of borrowing gone wrong: (i) the lender presents himself as a friendly helper in a calamity, (ii) the lender exploits the borrower via the interest rate, (iii) arrears ― successive debt enslavement, (iv) final expropriation (euphemistically called privatization).

MMTers as promoters of Wall Street’s business interests tell everybody that all these negative effects do not apply to public deficit-spending and public debt of a sovereign state. And that is right, public debt is different from private debt insofar as it is more advantageous for the lender. As a rule, for WeThePeople as a whole, it is better to pay for urgent public spending immediately with taxes than to increase public debt. #2-#5

Deficit-spending/money-creation benefits the Oligarchy because it increases macroeconomic profit according to the Profit Law, i.e. Public Deficit = Private Profit. MMT is a free lunch program for the Oligarchy. Financial wealth and public debt grow in lockstep and the fabulous financial wealth in the USA is roughly equal to humongous public debt. The Profit Law explains how billionaires are able to accumulate that much money and why they can buy all the bonds the Treasury issues and cash in the ultra-safe interest that is reliably taxed from WeThePeople as long as the debt is rolled over which can be very long indeed. This Ponzi scheme creates an extremely skewed distribution of income and wealth and this works as long as public debt grows.

This is the task of MMTers, to propagate the permanent growth of public debt and to play down all negative effects. What still stands in the way of the "progressive" loan sharks and the takeover of Treasury/Central Bank by Wall Street is the smart Swabian housewife.

Egmont Kakarot-Handtke

* Bill Mitchell’s blog
#1 “Neither a borrower nor a lender be, for loan oft loses both itself and friend, and borrowing dulls the edge of husbandry.” (Shakespeare) Remember also the brouhaha about Mandeville’s The Fable of the Bees.
#2 How to pay for the war and to be bamboozled by economists
#3 Is MMT good for WeThePeople or for the Oligarchy?
#4 MMT’s true program
#5 MMT is ALWAYS a bad deal for the 99-percenters

Related 'Deficit cheerleaders ― the Oligarchy’s useful idiots' and 'Bill Mitchell’s dishonorable discharge from the sciences' and 'MMT: The new Center of the Universe of political fraud' and 'Stephanie Kelton sells children into debt slavery' and 'How MMT disgraces itself' and 'MMT: The communicative war on budget-balancers' and 'No MMT illusions! YOU are going to pay for it' and 'Links on Austerity' and 'Prophet Stephanie divines the seizure of the means of production of currency' and 'Keynes, Lerner, MMT, Trump, etc. and exploding profit' and 'MMT undermines democracy' and 'MMT Progressives: The knife in the back of WeThePeople'. For the full-spectrum refutation of MMT see cross-references MMT.

Note: It makes a difference whether the deficit is caused by consumptive or investive spending. The argument above refers to consumptive deficit-spending/money-creation.

REPLY to Matt Franko on Sep 14

You say: “Over here if you take a course in Finance or Accounting... if you get a question on a test to figure something out...if you instead start writing about f-ing Hamlet or some shit you will immediately fail..”

I wonder why you have not figured out that MMT macro accounting is mathematically defective. The proof has been given elsewhere. If you had more than two brain cells you would have realized that the MMT balances equation (I−S)+(G−T)+(X−M)=0 lacks the balance of the business sector which accountants call profit.#1, #2

MMTers do not get the basics of economics right and this, obviously, includes you. As Macbeth said about MMT: “… it is a tale told by an idiot, full of sound and fury, signifying nothing.”

Whatever diploma you have ― Art or Philosophy or Accounting does not matter ― it is not worth more than toilet paper.

#1 Correct macroeconomic accounting gives one the Profit Law as Q≡Yd+(I−S)+(G−T)+(X−M).
#2 For details of the big picture see cross-references Accounting


FT Feb 2 Swabian housewife makes up her mind

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