December 31, 2020

Occasional Tweets: The secret code of society

 

December 29, 2020

Occasional Tweets: Too stupid for science

 

December 28, 2020

Occasional Tweets: Research in the woods

 

December 24, 2020

Occasional Tweets: Employment and allocation

 

December 22, 2020

Occasional Tweets: COV19 is a godsend for the Oligarchy

 

December 21, 2020

MMT refuted in three easy steps

Comment on Asad Zaman on ‘ABC’s of Modern Monetary Theory (MMT)’


(1) MMT claims to be science. Roughly speaking, science means material and formal consistency of a theory. The proof has been given that the macroeconomic foundations of MMT are defective. Because the foundations are false the whole analytical superstructure is false.#1 So, MMT policy guidance has NO sound scientific foundations. It is just political agenda-pushing.

(2) For lack of scientific content, the economic policy arguments of MMTers consist of simple assertions or commonsense truisms e.g. the government never runs out of money. This is trivially true for a fiat money system but holds also for the counterfeiter. The essence of MMT policy is deficit-spending/money-creation for every calamity between unemployment and climate change. Deficit-spending has a positive impact on macroeconomic profit. The macroeconomic Profit Law implies Public Deficit = Private Profit. So, MMT causes present and future distributional problems.#2

(3) MMTers present themselves as progressive Friends-of-the-People. This is a political fraud because deficit-spending/money-creation ultimately benefits the Oligarchy and NOT WeThePeople.#3

MMTers cannot refute (1)-(3) in a scientifically valid manner. So they resort to the usual rhetorical tricks: denial, evasion, distraction, blocking, and shit-throwing. MMTers are NOT scientists but clowns and useful idiots in the political Circus Maximus.#4

Egmont Kakarot-Handtke


#1
⇒ Section Provably False/MMT
#2
#3
#4

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#PointOfProof
Dec 20 submission
Dec 25 missing

December 19, 2020

Occasional Tweets: Morons and agenda pushers

 
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For more on moron / moronic see AXECquery.

December 18, 2020

Occasional Tweets: The sectoral balances equation

 

December 17, 2020

Occasional Tweets: Fire economists ― too stupid for science

 


 

Occasional Tweets: Brace for a profit explosion (I)

 

December 16, 2020

Lethal blunder

Comment on Ole Peters/Kaivey on ‘Everything We’ve Learned About Modern Economic Theory Is Wrong’


Yes, economics is proto-scientific garbage. But this has NOTHING to do with ergodicity yet ALL with the foundational economic concept of profit.


Egmont Kakarot-Handtke


Related 'Profit'. For details of the big picture see cross-references Profit/Distribution.

December 15, 2020

Occasional Tweets: Mental breakdown of MMT

 



December 13, 2020

Occasional Tweets: Public deficit, money, and profit

 

December 11, 2020

Occasional Tweets: COV19 is a godsend for the Oligarchy

 

Occasional Tweets: Keep economists out of the way

 

 

For details of the big picture see cross-references Failed/Fake Scientists

December 9, 2020

Occasional Tweets: Economics as part of the entertainment industry

 

From the debt economy to the gift economy: how America is brainwashed to love budget deficits

Comment on James Galbraith on ‘Reconsideration of Fiscal Policy: A Comment’*


COV19 is a godsend for the Oligarchy. The 3-sector macroeconomic Profit Law Q≡(G−T)+(I−S)+Yd implies Public Deficit (G−T) = Private Profit Q. The current acceleration of deficit-spending/money-creation will result in the biggest profit explosion ever.

Government deficit-spending, of course, increases public debt and it roughly holds: Financial assets of the Oligarchy ≈ Public debt of WeThePeople. As a result, the inequality of income/wealth increases in the process.#1

While not much can be said against short-term deficit-spending in an emergency situation, some people are concerned about the longer-term effects of a continuously increasing public debt. MMTers, the proponents of permanent deficit-spending/money-creation, claim that there is nothing to worry about and that the debt-hysteria over several centuries was just that: much ado about an economic non-event.

Because MMT is a refuted approach and MMTers are agenda pushers for the Oligarchy their arguments have to be taken as tranquilizers for the general public. The question is still open whether there is an upper limit for the public debt. Economists have come up with the answer that there is nothing to worry about as long as the economy grows faster than the debt, i.e. r < g, which is as trivially true as it is idiotic.

Neither mainstream economics nor MMT has sound scientific foundations. So the macroeconomic analysis of deficits and debt has to be first of all based on correct premises.

As the new analytical starting point, the elementary production-consumption economy is defined with this set of macroeconomic axioms‡: (A0) The objectively given and most elementary configuration of the economy consists of the household and the business sector which in turn consists initially of one giant fully integrated firm. (A1) Yw=WL wage income Yw is equal to wage rate W times working hours. L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X.

Under the conditions of market-clearing X=O and budget-balancing C=Yw in each period, the price is given by P=W/R, i.e. the market-clearing price is determined by the wage rate, which takes the role of the nominal numéraire, and the productivity. This is the most elementary form of the macroeconomic Law of Supply and Demand. For the graphical representation see Figure 1.#2


Monetary profit for the economy as a whole is defined as Q≡C−Yw and monetary saving is defined as S≡Yw−C. It always holds Q≡−S, in other words, the business sector’s profit equals the household sector’s dissaving. Vice versa, the business sector’s loss equals the household sector’s saving. This is the most elementary form of the macroeconomic Profit Law.

With the government included, the Profit Law reads Q≡(G−T)−S+Yd. And under the condition of S=0, Yd=0 one gets Public Deficit = Private Profit. So, the deficit of the public sector reappears one to one as monetary profit of the business sector. If the public sector issues bonds to cover the deficit, the business sector has the exact amount at hand to buy them, no matter how large the public deficit is.

To simplify things, it is assumed that the profit of the business sector is fully distributed to the owners, i.e. the Oligarchy. Distributed profit is not spent but used to buy government bonds. The receivers of distributed profit income Yd and the receivers of wage income Yw make up the household sector.

In the first period, the state sector spends G, and taxes T are zero, so deficit spending equals G and for the profit of the business sector holds Q equals G. This profit is distributed, so Yd equals Q. Total income of the household sector is Yw+Yd and C=Yw and S=Yd.

In the next period, public expenditures increase because of the interest on public debt. This amount is taxed from the wage income receivers and paid out to the bondholders, i.e. to the Oligarchy. The disposable income of WeThePeople is reduced Yw−T and that of the Oligarchy is increased Yd+T. The budget deficit remains the same (G+T)−T. The Oligarchy spends T on consumption, so total demand does not change. 

In principle, this simplified process of deficit-spending/money-creation can continue period after period. What happens is that public debt increases continuously and with it the interest = tax payments of WeThePeople.

The debt is never reduced, so it has to be rolled over at maturity. To avoid this, the government can issue perpetual bonds. Remains the problem that interest = tax T sooner or later becomes equal to wage income Yw and disposable income of the wage income receivers approaches zero. So, there is an absolute upper limit for the growth of debt. This limit vanishes only if the interest rate on perpetual bonds is zero. However, a debt that is never repaid and yields no interest is not a debt but a gift. For a gift economy, the MMT assertion that the amount of public debt does not matter is trivially true.

As long as the interest rate on perpetual bonds is greater than zero, there is an upper limit for the growth of public debt. This limit may be so far in the future that it is not of practical importance for the present generation but just because it is beyond the time horizon it does not vanish.

As a matter of fact, with growing public debt and a given positive interest rate on perpetual bonds, the disposable income of WeThePeople falls continuously from the present onward and their living standard continuously deteriorates. The never-mentioned negative distributional effects are the ultimate reason why the MMT policy of permanent deficit-spending/money-creation is a political fraud.#3, #4

Egmont Kakarot-Handtke


#2 Wikimedia AXEC31


‡ Reminder: The Axioms and Laws are protected by Trademark®. For details see Terms of Use.

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Wikimedia AXEC168



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Twitter Dec 20



Twitter Jan 7, 2021



Twitter Jan 19


Twitter Mar 11 Interest payments in comparison


Twitter Mar 11 Interest rates, interest costs


Twitter Mar 18 Interest payments as a share of household income


Twitter Mar 20 Share of public debt owned by the one-percenters aka size of the cash cow


Twitter May 14



Twitter May 20 Another attempt to optically reduce the interest burden of WeThePeople by relating it to a big number



Twitter May 30 Next attempt to fudge the interest burden of WeThePeople



Twitter Sep 13  Future debt service payments



Twitter Oct 14 Average interest rate on public debt

December 8, 2020

MMT — an exercise in newspeak

Comment on David Andolfatto/Tom Hickey on ‘Does the National Debt Matter?’*


MMTers deceive WeThePeople by
  • calling macroeconomic profit private sector saving,#1
  • calling public debt government-issued assets,
  • claiming that national debt does not matter and either does not have to be repaid or not paid interest on or both.

The three essential things to know about MMT are
  • MMT is scientifically worthless because MMTers don't get macrofoundations right,
  • MMT is political agenda pushing for the benefit of the Oligarchy,
  • deficit-spending/money-creation matters for distribution. MMT is the biggest redistribution program ever.#2

Egmont Kakarot-Handtke


* For details see Twitter thread



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Wikimedia AXEC152b

December 4, 2020

Occasional Tweet: The counterfeiter never runs out of money

 


For the full-spectrum refutation of MMT see cross-references MMT. 

December 2, 2020

Occasional Tweets: How Keynes messed up macrofoundations

 


For details of the big picture see cross-references Keynesianism and Ch. 13, The indelible scientific disgrace of economics, in Sovereign Economics.

For more about macrofoundations see AXECquery.

MMT works just fine (for the Oligarchy)

 Comment on Editor on ‘U.S. billionaires and the pandemic’*


The macroeconomic 3-sector ProfitLaw Q≡(G−T)+(I−S)+Yd implies Public Deficit = Private Profit, meaning that the MMT policy of deficit-spending/money-creation is a free lunch for the Oligarchy.#1, #2

The COV19-triggered acceleration of deficit-spending/money-creation will result in the biggest profit explosion ever. Thus, COV19 is a godsend for the Oligarchy. Politically, this is old stuff in a new package.#3

MMT policy works just fine ― for the Oligarchy.#4

Egmont Kakarot-Handtke





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Source: RWER

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US Deficit in 2020

Source: Google

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Source: The Balance

Twitter Jan 3, 2020


Twitter Jan 4


Twitter Mar 15 Debt 2021


Twitter Oct 7