September 6, 2020
MMT and the unbearable lightness of public debt slavery
Comment on Calgacus on ‘Anthropologist David Graeber, the man behind "We are the 99%" slogan, dead at 59’
I said “To recall, Debt: The First 5000 Years is about all forms of debt slavery” and referred to a post of mine.#1.
You answered, “Egmont, were it true that MMT sells children into debt slavery, I would oppose it.”
This if-my-grandma-had-wheels-she-would-be-an-omnibus counterfactual does NOT count as a refutation of my argument.
While nobody denies that debt slavery/bondage#2 is a historical fact and still practice in many countries, MMTers assert that no such thing can ever happen with the MMT policy of deficit-spending/money-creation as long as the debt is internal, i.e. not denoted in foreign currency.
Of course, purely internal debt slavery happens also but WeThePeople a.k.a. the 99-percenters normally do not realize it.
MMT policy is a two-step process:
1. According to the macroeconomic Profit Law it holds PublicDeficit = PrivateProfit. While the Oligarchy gets a free lunch, WeThePeople are taxed in real terms via a one-off unnoticeable price hike (NO inflation!). Deficit-spending increases public debt but WeThePeople do not care much because they think that this is a matter of the state. This is an error. For public debt holds WeThePeople owe the debt and the Oligarchy owns the corresponding financial assets.
2. Now, there is an interest rate greater than zero on the public debt. Because the public debt is not paid off but grows continuously through deficit-spending, the interest has to be paid for an indefinite time by children, grandchildren, etcetera.
At this point, MMTers apply Lerner’s Lie: “… if our children or grandchildren repay some of the national debt these payments will be made to our children or grandchildren and to nobody else.”
No, rather, the children or grandchildren of WeThePeople will pay annuity/interest to the children or grandchildren of the Oligarchy. They will pay it in the form of taxes. And this is why WeThePeople realize NOTHING. They hate the IRS and the taxman who, as a matter of fact, acts merely on behalf of the Oligarchy who owns the financial assets as the other side of the public debt.
In real terms, the disposable income of WeThePeople’s children, and thus their part of the output is reduced while the opposite applies to the Oligarchy’s children.
When the veil of money/deficit/debt/tax is taken away, the situation is not much different from the children of WeThePeople working part-time on the plantation of the children of the Oligarchy.#4 Therefore, it is economically correct to say that the deficit cheerleader Stephanie Kelton sells children into debt slavery.
Needless to emphasize that academic MMTers and their social media applause trolls stick to Lerner’s Lie and pose as progressive Friends-of-the-People. The fact is that they are merely the useful idiots of the Oligarchy.
#4 For the broader issue of slavery/debt/interest see Leaf Garrit, British Abolition, Another Massive Taxpayer Heist
Related 'Q: How are you going to pay for it? MMT: By stealth taxation!' and 'How to pay for the war and to be bamboozled by economists' and 'How Stephanie Kelton brain-washes a lovely young English girl' and 'How Keynesians, Lernerians, MMTers make the Oligarchy great' and 'Keynes, Lerner, MMT, Trump, etc. and exploding profit'.