Occasional X: Clueless economists / Money (CXLXIX)

“If you double everyones money (cash/debt), prices will increase roughly 2x.” (Tony Watson) That's the sloppy Quantity Theory. It is plausible, but failed/fake science. Tony Watson has never had any idea of the difference between transaction money and money as a store of value. He has no idea of economics in general, and the Theory of Money, in particular. The first thing in Monetary Theory is that transaction money is zero at the beginning and the end of a given period; see line 16 in AXEC237c ⇓. It is periodically created out of nothing and goes back to nothing. There's no problem here; money is endogenous. If the wage rate W doubles in line 5, the price doubles, and the quantity of transaction money doubles in line 16. It is still zero at the period's beginning and end. If tested, it yields a proportionality between price P and the quantity of transaction money M. However, this is NOT causality. The common causality is the doubling of the wage rate. For 200+ years, economics has claimed to be a science. But it still is not. The major approaches (Walrasianism, Keynesianism, Marxianism, Austrianism, and their derivatives) are mutually contradictory, axiomatically false, and materially/formally inconsistent. They all got profit wrong. When the subject's foundational concepts are inconsistent, the entire analytical superstructure is scientifically worthless. As a result, economic policy guidance has never had valid scientific foundations. The Quantity Theory is a good example of this. That money is created out of nothing and backed by nothing is NOT the critical point of a fiat money system. The point is whether money is injected (i) on the left side of the business sector's national account in the form of wages, or (ii) on the right side in the form of additional nominal demand, i.e., in the form of deficit spending. The case of deficit-spending/money-creation, i.e., increasing consumptive public debt, is equivalent to bringing counterfeit money into circulation, which in real terms amounts to stealing stuff from WeThePeople. National debt is roughly equal to the financial wealth of WeTheOligarchy. Ultimately, most of WeTheOligarchy's financial wealth is printed by the Central Bank. This is not a 'problem', but the defining characteristic of Capitalism. The problem with the Central Bank is NOT that it creates money out of nothing, but that it creates profit out of nothing. If the Central Bank is only allowed to create transaction money to meet the needs of businesses and households, then fiat money is the ideal solution. The problems arise with sectoral balances. For the axiomatically correct Monetary Theory, see the working paper ⇒ The Dark-Matter Theory of Fiat Money https://t.co/0QSqFFrVUX

— AXEC (@EgmontHandtke) November 7, 2026