Occasional X: Clueless economists / Money (CXLXXIV)

“It is an indisputable fact that quantity theory is nothing but a tautology. There is another point too. Cochrane has also pointed this out. Correlation does not imply causation. The direction of the relationship between inflation and the money supply is not from the money supply to inflation, as foolish monetarists claim, but more strongly from inflation to the money supply.” (Baki Demirel) No, money is not among the determinants of the price. That's false macroeconomics. The microbrained representative economist has never had any idea of the difference between transaction money and money as a store of value. Let's clarify some basics about transaction money with the summary in table AXEC237d ⇓. Microfoundations are methodologically false. First, a Paradigm Shift is required. Therefore, the elementary production-consumption economy is given with three macroeconomic axioms in lines 1, 2, 3. Under the initial analytical conditions of market-clearing and budget-balancing, this yields the price P in line 5. The price is the dependent variable here. That's a starting condition. Methodologically, the formula in line 5 replaces the silly Supply-Demand-Equilibrium cross. In the initial state, the price is equal to unit wage costs W/R. The workers get the whole product O. The profit Qm for the business sector is zero. Price increases can come only from wage rate increases or from productivity decreases. The quantity of money is not a determinant. The methodologically right approach to start with in Monetary Theory is that transaction money is pure fiat money at the Central Bank. Symmetric fiat money is zero at the beginning and the end of a given period; see line 16. It is periodically created out of nothing and returns to nothing. There's no problem here; money is endogenous. It's a medium. The quantity of the medium is determined by the autonomous transactions between the business and the household sector. (i) If the wage rate W doubles in line 5, the price doubles, and the average quantity of transaction money M doubles in line 16. It is still zero at the period's beginning and end. If tested, this yields a proportionality between price P and the average quantity of transaction money M. However, this is NOT causality. The common cause is the doubling of the wage rate W. However, empirically this correlation between P and M seems to be a strong indication that the Quantity Theory holds. (ii) If the real variable employment L is doubled, output O in line 2 and wage income Yw in line 1 double. The market-clearing/budget-balancing price P remains unchanged in line 5. The average quantity of transaction money M doubles in line 16. Now, there is no relationship between the price and the average quantity of transaction money. The Quantity Theory fails. Reality is a mix of (i) and (ii). 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. This gives rise to profit Qm in line 11 and the average quantity of money M in lines 16, 18, because of ρE>1. Here, money as a store of value emerges. 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 fiat 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 most economical solution. The problems arise with sectoral balances, i.e., ρE≠1, and with licit/illicit money creation. For the axiomatically correct Monetary Theory, see the working paper ⇒ The Dark-Matter Theory of Fiat Money https://t.co/0QSqFFrVUX

— AXEC (@EgmontHandtke) November 11, 2026

Occasional X: Clueless economists / Money (CXLXXIII)

“Essential reminder. Inflation is always a monetary phenomenon.” (Daniel Lacalle) No, money is not among the determinants of the price. That's false macroeconomics. The microbrained representative economist has never had any idea of the difference between transaction money and money as a store of value. Let's clarify some basics about transaction money with the summary in table AXEC237d ⇓. Microfoundations are methodologically false. First, a Paradigm Shift is required. Therefore, the elementary production-consumption economy is given with three macroeconomic axioms in lines 1, 2, 3. Under the initial analytical conditions of market-clearing and budget-balancing, this yields the price P in line 5. The price is the dependent variable here. That's a starting condition. Methodologically, the formula in line 5 replaces the silly Supply-Demand-Equilibrium cross. In the initial state, the price is equal to unit wage costs W/R. The workers get the whole product O. The profit Qm for the business sector is zero. Price increases can come only from wage rate increases or from productivity decreases. The quantity of money is not a determinant. The methodologically right approach to start with in Monetary Theory is that transaction money is pure fiat money at the Central Bank. Symmetric fiat money is zero at the beginning and the end of a given period; see line 16. It is periodically created out of nothing and returns to nothing. There's no problem here; money is endogenous. It's a medium. (i) If the wage rate W doubles in line 5, the price doubles, and the average quantity of transaction money M doubles in line 16. It is still zero at the period's beginning and end. If tested, this yields a proportionality between price P and the average quantity of transaction money M. However, this is NOT causality. The common cause is the doubling of the wage rate W. However, empirically this correlation between P and M seems to be a strong indication that the Quantity Theory holds. (ii) If the real variable employment L is doubled, output O in line 2 and wage income Yw in line 1 double. The market-clearing/budget-balancing price P remains unchanged in line 5. The average quantity of transaction money M doubles in line 16. Now, there is no relationship between the price and the average quantity of transaction money. The Quantity Theory fails. Reality is a mix of (i) and (ii). 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. This gives rise to profit Qm in line 11 and the average quantity of money M in lines 16, 18, because of ρE>1. Here, money as a store of value emerges. 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 fiat 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 most economical solution. The problems arise with sectoral balances, i.e., ρE≠1, and with licit/illicit money creation. For the axiomatically correct Monetary Theory, see the working paper ⇒ The Dark-Matter Theory of Fiat Money https://t.co/0QSqFFrVUX

— AXEC (@EgmontHandtke) November 11, 2026

Occasional X: The foul spirit of political economics (CDXLIV)

“Every time the neoliberal narrative runs out of arguments in the face of inequality, poverty wages, or capitalism’s recurring crises, they resort to a crude myth: Marx never worked, lived on charity, and was a lazy bum.” (Omar Montoya Suárez) The representative economist does not know the difference between denunciation and refutation. Denunciation is the modus operandi in politics; refutation is the modus operandi in science. Refutation is the proof that a theory/hypothesis is materially/formally inconsistent. Marx may have been an evil person; however, his approach may have been scientifically valid nonetheless. Evil character and false theory/hypotheses are incommensurate things. Marx's economic theory belongs to the scientific sphere and has to be refuted according to scientific methodology. Because Marx got the foundational concept of economics —profit— wrong, his remaining communicative contributions reduce to psycho-social-political-philosophical blather. Unfortunately, this part has dominated public opinion to this day. Ultimately, the idiocy of the discussion consists of the intentional/unintentional muddling of economics, sociology, psychology, history, politics, philosophy, gossip, and shithrowing. Marx/Engels called their common project Scientific Socialism‡, but its scientific content has been zero from the beginning. Marx/Engels and their followers never understood science. For proof, see the working paper ⇒ Profit for Marxists https://t.co/P1NOW4FyXK Also Here is the long-overdue scientific death certificate for Marx and Marxists. https://t.co/9SwjuSW8Ca Marxianism still has no scientific truth-value, only political use-value. It is still good for playing low-IQ communicative games, but for nothing else. In the scientific sphere, Marx is still a zero. In the political/ philosophical sphere, confused blather is the norm; here Marxianism has its ecological niche as a Weltanschauung together with all other occult/ esoteric/ voodoo/ religious/ etc. aberrations of the human mind. Marx goes down the scientific drain because he was a lousy scientist, and not because he was an evil character. To think/talk much about his character is disinfotainment. On the other hand, to refute denunciations does not make a false theory true. It's also disinfotainment. Marx has been refuted according to scientific criteria. The rest is communicative junk. ‡ “Scientific socialism, primarily associated with Karl Marx and Friedrich Engels, is a materialist, historical approach to understanding society, viewing history as a progression driven by economic conditions and class struggle, …” (Google AI, Scientific Socialism)

— AXEC (@EgmontHandtke) November 10, 2026

Occasional X: Clueless economists / Money (CXLXXII)

“M= PY/V or PY = MV? You'd think after decades of extremely sophisticated causal econometrics, the most basic correlation isn't causation of all would not keep resurfacing. Money tracks nominal income in every theory, including FTPL, because central banks supply money passively, and demand is proportional to nominal income.” (John Cochrane) The microbrained representative economist has been weak on macroeconomics in general and the Theory of Money in particular. He has never had any idea of the difference between transaction money and money as a store of value. Let's clarify some basics with the summary in table AXEC237d ⇓. Microfoundations are methodologically false. First, a Paradigm Shift is required. Therefore, the elementary production-consumption economy is given with three macroeconomic axioms in lines 1, 2, 3. Under the initial analytical conditions of market-clearing and budget-balancing, this yields the price P in line 5. The price is the dependent variable here. That's a starting condition. Methodologically, the formula in line 5 replaces the silly Supply-Demand-Equilibrium cross. In the initial state, the price is equal to unit wage costs W/R. The workers get the whole product O. The profit Qm for the business sector is zero. The methodological right approach to start with in Monetary Theory is that transaction money is pure fiat money at the Central Bank. Symmetric fiat money is zero at the beginning and the end of a given period; see line 16. It is periodically created out of nothing and returns to nothing. There's no problem here; money is endogenous. If the wage rate W doubles in line 5, the price doubles, and the average quantity of transaction money M doubles in line 16. It is still zero at the period's beginning and end. If tested, this yields a proportionality between price P and the average quantity of transaction money M. However, this is NOT causality. The common cause is the doubling of the wage rate W. However, empirically this correlation seems to be a strong indication that the Quantity Theory holds. If the real variable employment L is doubled, output O in line 2 and wage income Yw in line 1 double. The market-clearing/budget-balancing price P remains unchanged in line 5. The average quantity of transaction money M doubles in line 16. Now, there is no relationship between the price and the average quantity of transaction money. The Quantity Theory fails. 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 most economical solution. The problems arise (i) with sectoral balances, and (ii) with illicit money creation. For the axiomatically correct Monetary Theory, see the working paper ⇒ The Dark-Matter Theory of Fiat Money https://t.co/0QSqFFrVUX

— AXEC (@EgmontHandtke) November 10, 2026

Occasional X: Clueless economists / Money (CXLXXI)

“A famous quote by Milton Friedman says that “inflation is always and everywhere a monetary phenomenon.” A natural question, then, is whether money supply growth is a reliable predictor of inflation. A new analysis covers this topic.” (Michael McCracken & Lillian Fu, St. Louis Fed) Milton Friedman has been weak on macroeconomics in general and the Theory of Money in particular. He has never had any idea of the difference between transaction money and money as a store of value. Let's clarify some basics with the help of table AXEC237d ⇓. Microfoundations are methodologically false. First, a Paradigm Shift is required. Therefore, the elementary production-consumption economy is given with three macroeconomic axioms in lines 1, 2, 3. Under the initial analytical conditions of market-clearing and budget-balancing, this yields the price P in line 5. The price is the dependent variable here. That's a starting condition. Methodologically, the formula in line 5 replaces the silly Supply-Demand-Equilibrium cross. In the initial state, the price is equal to unit wage costs W/R. The workers get the whole product O. The profit Qm for the business sector is zero. The methodological right approach to start with in Monetary Theory is that transaction money is pure fiat money at the Central Bank. Symmetric fiat money is zero at the beginning and the end of a given period; see line 16. It is periodically created out of nothing and returns to nothing. There's no problem here; money is endogenous. If the wage rate W doubles in line 5, the price doubles, and the average quantity of transaction money M doubles in line 16. It is still zero at the period's beginning and end. If tested, this yields a proportionality between price P and the average quantity of transaction money M. However, this is NOT causality. The common cause is the doubling of the wage rate W. However, empirically this seems to be a strong indication that the Quantity Theory holds. If the real variable employment L is doubled, output O in line 2 and wage income Yw in line 1 double. The market-clearing/budget-balancing price P remains unchanged in line 5. The average quantity of transaction money M doubles in line 16. There is no relationship between the price and the average quantity of transaction money. The Quantity Theory fails. 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/0QSqFFstKv

— AXEC (@EgmontHandtke) November 9, 2026

Occasional X: Clueless economists / Money (CXLXX)

“By the late 1960s, France noticed the gap between printed dollars and actual gold and started converting. Nixon stopped this by closing the gold window on August 15, 1971. Pure fiat with no anchor whatsoever.” (Handre) The storyteller Handre is weak on macroeconomics in general and the Theory of Money in particular. He has never had any idea of the difference between transaction money and money as a store of value. Let's clarify some basics with the help of table AXEC237c ⇓. Microfoundations are methodologically false. First, a Paradigm Shift is required. Therefore, the elementary production-consumption economy is given with three macroeconomic axioms in lines 1, 2, 3. Under the initial analytical conditions of market-clearing and budget-balancing, this yields the price P in line 5. The price is the dependent variable here. That's a starting condition. The formula in line 5 replaces the silly Supply-Demand-Equilibrium cross. In the initial state, the price is equal to unit wage costs W/R. The workers get the whole product O. The profit Qm for the business sector is zero. The methodological right approach to start with in Monetary Theory is that transaction money is pure fiat money at the Central Bank. Symmetric fiat money is zero at the beginning and the end of a given period; see line 16. It is periodically created out of nothing and returns to nothing. There's no problem here; money is endogenous. If the wage rate W doubles in line 5, the price doubles, and the average quantity of transaction money M doubles in line 16. It is still zero at the period's beginning and end. If tested, this yields a proportionality between price P and the average quantity of transaction money M. However, this is NOT causality. The common cause is the doubling of the wage rate W. However, empirically this seems to be a strong indication that the Quantity Theory holds. If the real variable employment L is doubled, output O in line 2 and wage income Yw in line 1 double. The market-clearing/budget-balancing price P remains unchanged in line 5. The average quantity of transaction money M doubles in line 16. There is no relationship between the price and the average quantity of transaction money. It is now assumed that transaction money is backed by gold and the stock of gold is limited. As a consequence, the doubling of employment L cannot happen if M cannot increase proportionally, because the ratio of M to gold is fixed. The gold anchor becomes a brake that hinders the economy's real growth and the proper functioning of the fiat system. The obvious solution is to cut the anchor. This happened in 1971. It has no inflationary consequences. The real growth goes on smoothly. 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 9, 2026

Occasional X: How it works (DXXXIX)

“Private markets contain mechanisms to guide economic actors. Property rights over the means of production incentivize owners to use resources efficiently because they reap the rewards for doing so and bear the costs of failing to do so.” (Christopher Coyne & Abigail Hall) Actually, private markets contain mechanisms to systematically guide economic actors to corrupt/criminal behavior. The representative economist never understood cross-over exploitation. He never understood profit, and consequently, how the economic system works. Scientific incompetence and utter ignorance are the representative economist's normal mental states. Left/center/right does not matter. The proof is given in table AXEC221b ⇓. Microfoundations are methodologically false. First, a Paradigm Shift is required. Therefore, the elementary production-consumption economy is given with three macroeconomic axioms in lines 1, 4, 7. Under the initial analytical conditions of market-clearing and budget-balancing, this yields the price P in line 16. The price is the dependent variable here. In the initial state, the price is equal to unit wage costs W/R. The workers get the whole product O. The profit Qm for the business sector is zero. Then, the business sector is split. The axioms are differentiated in lines 1-2, 4-5, 7-8 Now, the wage rate W in firm 1 is lowered arbitrarily; otherwise, both firms are identical in every respect. As a result, the market price P decreases in line 12. The profit of firm 1 increases in line 19; firm 2 makes a loss in line 20. Total profit remains zero. The household sector as a whole still gets the whole product O, but the workers of firm 1 can buy less with their lower wage income; the workers of firm 2 can buy more with their unchanged wage rate W and a lower price P. The Invisible Hand redistributes. The firm that somehow manages to pay less for the same labor input increases profit Qm. Firm 2 makes a loss and will go bankrupt if it does not also make a wage cut. As a result, firm 1 wins the race to the bottom. The workers of firm 1 cannot evade the wage cut and move to firm 2 because it no longer hires or doesn't exist any longer. This process of cross-over exploitation is inherent to Capitalism and inevitably leads to higher concentration. Cross-over exploitation means that one firm gains at the cost of the others, and that one group of workers gains at the cost of the others. That means that there are no classes with a common interest. Politically, intra-sectoral competition incentivizes 'class treason'. Both the economic and the political sphere favor the corrupt persons in a State, if unchecked. As a rule of thumb, the evolutionary outlook of free-market economies is not socially progressive but inherently degenerative. If profit is positive in the initial state, firm 1 increases profit, and firm 2 decreases it. If a firm can undercut minimum wage regulations, it can be said that the criminal firm wins and the honest firm loses. What remains in the long run is a degenerated/corrupted free-market economy. Other incentives work in the same direction. A firm can increase its productivity and profits with the adoption of an invention. This is the first half of the chain of interrelations. The other firms then make a loss and are pushed to the brink of bankruptcy. The first firm has an incentive to keep the invention secret, because if the other firm can adapt, the profit lead vanishes again. The systemic incentive is to restrict the spread of innovation. The Schumpeter effect only appears if knowledge is public. On closer inspection, economics is revealed as intra-sectoral cross-over exploitation among firms and among households. Ultimately, the market is not primarily an allocation mechanism but a quasi-Darwinian selection mechanism that increases the survival chances of the corrupt entrepreneur and decreases them for the honest.

— AXEC (@EgmontHandtke) November 9, 2026

Occasional X: How it works (DXXXVII)

“Remember that no matter who or what a worker may be, if he works for wages he is in precisely the same economic position that you are. He is in your class; he is your brother; he is your comrade.” (Eugene Debs) No, there are no classes. Eugene Debs never understood cross-over exploitation. He never understood profit, and consequently, how the economic system works. Utter ignorance is the representative economist's normal mental state. Left/center/right does not matter. The proof is given in table AXEC221b ⇓. Microfoundations are methodologically false; therefore, the elementary production-consumption economy is given with three macroeconomic axioms in lines 1, 4, 7. Under the initial analytical conditions of market-clearing and budget-balancing, this yields the price P in line 16. The price is the dependent variable here. In the initial state, the price is equal to unit wage costs W/R, and is equal for both firms. The workers get the whole product O. The profit Qm for both firms and the business sector as a whole is zero. Then, the business sector is split. The axioms are differentiated in lines 1-2, 4-5, 7-8 Now, the wage rate W in firm 1 is lowered arbitrarily; otherwise, both firms are identical in every respect. As a result, the market price P decreases in line 12. The profit of firm 1 increases in line 19; firm 2 makes a loss in line 20. Total profit remains zero. The household sector as a whole still gets the whole product O, but the workers of firm 1 can buy less with their lower wage income; the workers of firm 2 can buy more with their unchanged wage rate W and a lower price P. The firm that somehow manages to pay less for the same labor input increases profit Qm. Firm 2 makes a loss and will go bankrupt if it does not also make a wage cut. As a result, firm 1 wins the race to the bottom. The workers of firm 1 cannot move to firm 2 because it no longer hires or doesn't exist any longer. This process of cross-over exploitation is inherent to Capitalism and inevitably leads to higher concentration. Cross-over exploitation means that one firm gains at the cost of the others, and that one group of workers gains at the cost of the others. That means that there are no classes with a common interest. Eugene Debs got the fundamentals wrong. If profit is positive in the initial state, firm 1 increases profit, and firm 2 decreases it. If a firm can undercut minimum wage regulations, it can be said that the criminal firm wins and the honest firm loses. What remains in the long run is a degenerated/ corrupted free-market economy. Whether OC takes over the State is an open question. On closer inspection, economics is revealed as intra-sectoral cross-over exploitation among firms and among households. Ultimately, the market is not primarily an allocation mechanism but a quasi-Darwinian selection mechanism that increases the survival chances of the corrupt entrepreneur and decreases them for the honest.

— AXEC (@EgmontHandtke) November 8, 2026

Occasional X: The foul spirit of political economics (CDXXXVII)

“The core Keynesian error is treating consumption as the engine of wealth. Keynes fixated on aggregate demand, the total spending flowing through an economy, as the variable governments must manage. Boost it artificially, and you rescue the economy. Production precedes consumption. …Government stimulus spending doesn't create resources. It redirects them. When Washington borrows a billion dollars and injects it into infrastructure or green energy, it pulls that capital away from whatever private actors would have funded.” (Handre) Economic debate suffers from the fact that economics is a failed/fake science. Economists do not know what profit is, and consequently, how the economic system works. It's been that way ever since Adam Smith. Both Keynesianism and Austrianism is proto-scientific garbage. The free-market economy runs on profit. Macroeconomic profit Qm is given by the axiomatically correct Profit Law Qm:=(I−Sm)+(G−T)+(X−M)+Yd. The Law implies Qm≔(I−Sm)>0 for Early Capitalism, and it implies Qm≔(G−T)>0 for Late Capitalism. Keynes observed that investment expenditures I were insufficient; therefore, the balance (I−Sm) was too low. He proposed to compensate the shortfall with a bigger balance (G−T) of public deficit spending. Handre's claim that this “pulls capital away from whatever private actors would have funded” is a hallucination because the actual problem was that there never were private actors in the wings to fund private investment I in the first place. In the monetary economy, investment is not restricted by the household sector's saving Sm. If Sm is zero, investment is fully financed by credit and retained profit. In free-market economies, public debt has increased with minor interruptions for 200+ years. So, Qm≔(G−T)>0 is a crucial ingredient of Capitalism's life elixir. Everybody understands that the overriding principle of economics is that macroeconomic profit is greater than zero; otherwise, firms start going bankrupt, and the breakdown begins. All other principles are secondary at best. Neither utility maximization nor profit maximization nor efficient resource allocation keeps the economy above the zero-profit cutoff. Currently, the free-market economy is temporarily saved from breakdown by the deficit-spending/money-creating duo of Treasury/Central Bank, i.e., the State. This means that the premise of legacy economics, i.e., that the unfettered free-market economy is a self-adjusting, self-stabilizing, and self-optimizing system, is axiomatically false. This means that economics is a failed/fake science. Ultimately, this means that the representative economist is too stupid to understand the elementary algebra that underlies macroeconomic accounting. Austrians can't get beyond their microeconomic/ behavioral horizon. Math was never their strong suit. From the fact that the free-market economy thrives on positive/increasing macroeconomic profit, which, in turn, stems mainly from the State's deficit-spending/money-creation, it follows immediately that budget-balancing/debt-reduction turns macroeconomic profit into loss, and this means that the free-market economy cannot dismount from the debt tiger. Because of deficit-spending/money-creation, i.e., of the free lunches for the Oligarchy, the distribution of income/wealth becomes progressively more extreme. As the debt grows, the number of millionaires/billionaires/zillionaires grows exponentially. Since the household sector is taxed for interest, there is an absolute upper limit for the growth of public debt, which is given by public_debt times avg_interest_rate ≦wage_income. Economic problems, though, start much earlier because of other irreducible items in the budget (military, health, etc.) and a not exactly known upper tax-to-income limit. The breakdown of the free-market economy is a systemic inevitability. The important thing is not whether it will happen, but when. The current system can only exist as a nominally growing economy. If debt growth stops, macroeconomic profit approaches zero, and the economy implodes. Austrians correctly observe the lethal weaknesses of the free-market system. Their communicative modus operandi is to simply attribute all economic misdevelopments to the State and to advertize the unchained entrepreneur as the economic savior who is eagerly waiting in the wings. The fact is, behind the wings there has never been anything.

— AXEC (@EgmontHandtke) November 7, 2026

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

Occasional X: The foul spirit of political economics (CDXXXII)

“For decades, both right and left politicians bought into neoliberal economics. It’s not a pretty story. jamestalarico says 'trickle-down economics is not a theory, it is theft.'” (Evonomics, The Next Evolution of Economics) Trickle-down economics is not theft; it's just another perverse catchword for the system's modus operandi. The folks at Evonomics do not understand profit and, by consequence, how the economic system works. That's self-defeating for an economist, but economists are not scientists. What has evolved in economics is not science but political propaganda. This is the modus operandi: The free-market economy runs on profit. Macroeconomic profit is given by the axiomatically correct Profit Law Qm:=(I−Sm)+(G−T)+(X−M)+Yd. The Profit Law implies PublicDeficit=PrivateProfit Qm:=(G−T)>0, i.e., macroeconomic profit is (co-)produced by deficit-spending/money-creation, i.e., the growth of public debt. In free-market economies, public debt has increased with minor interruptions for over 200 years. Therefore, Qm:=(G−T)>0 has been a critical factor for Capitalism's survival. The free-market economy is temporarily saved from breakdown by the deficit-spending/money-creating duo of treasury/central bank, i.e., the State. This means that the premise of legacy economics, i.e., that the unfettered free-market economy is a self-adjusting, self-stabilizing, and self-optimizing system, is axiomatically false. This means that economics is failed/fake science. Economists are not scientists. They are mostly silly wafflers for a low-IQ audience. Evonomics is a case in point. The free-market polity is an Oligarchy with parliament / treasury / central bank / capital markets / big business / three-letter agencies as integral parts. With the other determinants excluded for the moment, private financial wealth grows with public debt. Eventually, WeTheOligarchy owns the financial assets, and WeThePeople owe the public debt and are taxed for interest on government bonds as long as the debt is rolled over. Interest payments on the debt reduce their disposable income for an indefinite time. The government taxes WeThePeople on behalf of WeTheOligarchy. This profit/interest/tax triple-whopper produces wealth for WeTheOligarchy and debt and real-income reductions for WeThePeople. On closer inspection, WeTheOligarchy gets three free lunches. This explains the observable distribution. To call this trickle-down is an obvious inversion of the system's modus operandi. It works no longer. This is where Evonomics comes in with a new story. In addition to legitimate monetary operations, the central bank is well-positioned to carry out or support illicit operations that are economically equivalent to putting counterfeit money into circulation. The volume of illicit deficit spending and money creation, as well as the quantity of Dark Money in circulation, is not publicly known. Therefore, Profit Theory, Distribution Theory, and Monetary Theory have no empirical leg to stand on. The financial subsector, big business, and billionaires recycle some of their profits and financial wealth to control major public, private, and political institutions. Thus, they corrupt the polity. Economics is no exception. In essence, this is how the self-alimentation and self-preservation of WeTheOligarchy work. Capitalism thrives on free lunches that are ultimately supplied by the duo of treasury/central bank, i.e., the State. Trickle-down has been one of the biggest propaganda hoaxes of all time. The modus operandi is still what it always was. Evonomics won't change anything.

— AXEC (@EgmontHandtke) November 6, 2026

Occasional X: Clueless economists / Science (CCCXCIII)

“Robbins was deeply alarmed by the rising tide of government interventionism, and seeking an intellectual heavyweight to challenge Keynes’s dominance, he invited the young Austrian economist to deliver a series of lectures on business cycle theory. Hayek’s presentations were a sensation, leading to his immediate appointment as the Tooke Professor of Economic Science and Statistics at the LSE.” (Creative Deduction) The discussion between Keynes and Hayek is just another episode in the endless inconclusive blather between incompetent scientists. Keynes failed to understand the concept of profit because he was too stupid for the elementary algebra that underlies macroeconomic accounting. Therefore, he didn't understand how the economic system works. Keynesian policy guidance has never had valid scientific foundations. 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. Keynes has been provably false from the start. However, this never meant that Austrianism was any better. Everybody understands that macroeconomic profit must be greater than zero. Otherwise, firms go bankrupt, and the breakdown starts. Therefore, profit has existential primacy in the free-market economy. Macroeconomic profit Qm is given by the axiomatically correct Profit Law Qm:=(I−Sm)+(G−T)+(X−M)+Yd. The Law implies Qm:=(G−T)>0, i.e., macroeconomic profit is (co-)produced by deficit-spending/money-creation, i.e., the growth of public debt. In the free-market economies, public debt has increased with minor interruptions for 200+ years. So, Qm:=(G−T)>0 has been a crucial ingredient of Capitalism's life elixir. The free-market economy is temporarily saved from implosion by the deficit-spending/money-creating duo of Treasury / Central Bank, i.e., the State. This means that the premise of Austrian economics, i.e., that the unfettered free-market economy is a self-adjusting, self-stabilizing, and self-optimizing system, is axiomatically false. And this means that Austrianism has always been proto-scientific garbage, just like Keynesianism. It's just the usual discussion between two blind men about color. To this day, neither Keynesians nor Austrians understand how profit and the price system work. In economics, the Paradigm Shift is long overdue. Neither Keynesians nor Austrians will survive it intellectually.

— AXEC (@EgmontHandtke) November 5, 2026

Occasional X: The foul spirit of political economics (CDXXX)

“But charigng of interest is bad, right? And there is no economic reason for it. As Marx says 'it's usury!!!' :-D” (Inclamiente) Generally speaking, interest is justified in a monetary economy if the interest difference of the given stocks covers the wage and risk costs for administering the total active/passive portfolio of the central-bank/ banking-subsector. If it is higher, the banking subsector makes a profit; if it is lower, banks go bankrupt. Among private households, the interest rate above the banks' interest rate of equal risk/lack of securitization may be called usury. Marx had nothing to say about how the economy works because he did not understand profit — the pivotal concept of Capitalism. Manifest inconsistency is an advantage in religion/politics, but a lethal disadvantage in science. To expect scientific knowledge from Marx or his sorry followers is as good as to expect rain from the chief's rain dance.

— AXEC (@EgmontHandtke) November 4, 2026

Occasional X: The foul spirit of political economics (CDXXVIII)

“The beauty of Marx is that as long as the agents are not all lobotomized like you, what they believe, what guides their decisions, doesnt really matter. (Moulaga expropriator) Marx had no clue about what the foundational concept of economics —profit— is. That's self-defeating. The crucial point with Marx/ Socialism/ Communism/ Capitalism is whether Marx understood how the monetary economy works. This presupposes an understanding of the concept of profit. Because Marx was too stupid for elementary logic/algebra, his economics has been failed/fake science from the beginning. For proof, see the working paper Profit for Marxists https://t.co/pslUNCu2Ef As far as his sociology is based on economics, it has no valid scientific foundations. Scientific competence cannot be replaced with politico-philosophical blather. However, for a low-IQ audience, Marx still delivers plausible psycho-social explanations.

— AXEC (@EgmontHandtke) November 3, 2026

Occasional X: The foul spirit of political economics (CDXXIII)

“Hayek has taught us this lesson about pricing, over and over again. Free-market prices have an important role to play in our society, in our economy. They convey precious information.” (Walter Block) Hayek never understood profit and, by logical consequence, how the markets function. His efficiency story is a benign interpretation of what the price mechanism, i.e., the Invisible Hand of the Oligarchy, really does. The free-market system is, in the last instance, a quasi-Darwinian selection mechanism, i.e., the economic analog to triage in medicine. For example, during a famine, only the rich person can pay the high price of bread and survive. In contrast, the poor person leaves the market empty-handed to die of starvation. The market's primary function is NOT efficient information-processing/resource-allocation (Hayek's hallucination) but the redistribution of the Quality-of-Life. In economically extreme situations, the Invisible Hand kills anonymously. Because the price mechanism is a powerful tool, the most important task of an economist ― who is smart enough to know on which side his bread is buttered ― is to praise its informational magic, its efficiency, or its welfare effects. This distracts from the fact of selection. The optical illusion is this: the price is co-determined by nominal demand, and demand depends on different earnings, profit distribution, and different accumulated wealth. The price structure distributes, in any period, real output/wealth to already existing financial wealth. It distributes the Quality-of-Life. The problem is that richness often does not come from merit but from fraud, exploitation, organized crime, primitive accumulation, stealing innovative ideas, or from big-style printing counterfeit money. The quasi-Darwinian free-market selection mechanism increases the survival chances of the corrupt and decreases it for the honest. For details, see How it works https://t.co/lqv0W118dK The price mechanism has not much to do with abstract optimal allocation of resources but makes sure that the Quality-of-Life is ultimately allocated to the Oligarchy. Everybody understands that macroeconomic profit must be greater than zero. Otherwise, firms go bankrupt, and the breakdown starts. Therefore, profit has existential primacy in the free-market economy, not utility/profit-maximizing free people on free-markets or optimal allocation. The axiomatically correct macroeconomic profit formula reads: Qm:=Yd+(I−Sm)+(G−T)+(X−M). It holds for every monetary economy, independently of political ideology. Macroeconomic profit is equal in Capitalism and Socialism according to the Profit Law. The Profit Law implies Public-Deficit-is-Private-Profit Qm:=(G−T)>0, i.e., macroeconomic profit is (co-)produced by deficit-spending/money-creation, i.e., the growth of public debt. In free-market economies, public debt has increased with minor interruptions for over 200 years. Therefore, Qm:=(G−T)>0 must be considered a critical factor for Capitalism's survival. Capitalism is temporarily saved from breakdown by the deficit-spending/money-creating duo of Treasury/Central Bank, i.e., the State. The State has existential primacy, not the free-market or the price system. Capitalists and Socialists have never really understood what profit was. Friedrich Hayek never came intellectually above the microeconomic level and fell foul of the Fallacy of Composition. He was not a competent scientist but a political agenda pusher. More precisely, Hayek was a political agenda pusher for the Oligarchy in the guise of science. He added intellectual corruption to the system of financial corruption.

— AXEC (@EgmontHandtke) November 2, 2026

Occasional X: How it works (DXXXIII)

“American military spending is only possible because the dollar is the reserve currency. This is not an opinion. It is arithmetic. The United States runs persistent deficits that would be unsustainable for any other country. It finances those deficits by issuing Treasury bonds.” (Sony Thang) With its double deficit, America has been the profit-maker for itself and the Rest of the World. That goes hand in hand with the dollar's role as a reserve currency. The free-market economy runs on profit. Macroeconomic profit is given by the axiomatically correct Profit Law Qm:=(I−Sm)+(G−T)+(X−M)+Yd. The Profit Law implies PublicDeficit=PrivateProfit Qm:=(G−T)>0, i.e., macroeconomic profit is (co-)produced by deficit-spending/money-creation, i.e., the growth of public debt. The Law implies also that America's foreign trade deficit, i.e., Qm:=(X−M)<0, is profit for the rest of the world, i.e., Qm:=(X−M)>0, which takes the form of currency reserves. In free-market economies, public debt has increased with minor interruptions for over 200 years. Therefore, Qm:=(G−T)>0 has been a critical factor for Capitalism's survival. The free-market economy is temporarily saved from breakdown by the deficit-spending/money-creating duo of treasury/ central bank, i.e., the State. This means that the premise of legacy economics, i.e., that the unfettered free-market economy is a self-adjusting, self-stabilizing, and self-optimizing system, is axiomatically false. This means that economics is failed/fake science. Economists are not scientists. They are mostly silly wafflers for a low-IQ audience. The free-market polity is an Oligarchy with parliament / treasury / central bank / capital markets / big business / three-letter agencies as integral parts. With the other determinants excluded for the moment, private financial wealth grows with public debt. Eventually, WeTheOligarchy owns the financial assets, and WeThePeople owe the public debt and are taxed for interest on government bonds as long as the debt is rolled over. Interest payments on the debt reduce their disposable income for an indefinite time. The government taxes WeThePeople on behalf of WeTheOligarchy. This profit/interest/tax triple-whopper produces wealth for WeTheOligarchy and debt and real-income reductions for WeThePeople. Via the foreign trade balance, America distributes part of its macroeconomic profit around the world. In addition to legitimate monetary operations, the central bank is well-positioned to carry out or support illicit operations that are economically equivalent to putting counterfeit money into circulation. The volume of illicit deficit spending and money creation, as well as the quantity of Dark Money in circulation, is not publicly known. Therefore, Profit Theory, Distribution Theory, and Monetary Theory have no empirical leg to stand on. The financial sub-sector, big business, and billionaires recycle some of their profits and financial wealth to control major public, private, and political institutions. Thus, they corrupt the polity. The direction of academic scientific research is controlled by grants. In essence, this is how the self-alimentation and self-preservation of WeTheOligarchy work. Capitalism thrives on free lunches that are ultimately supplied by the duo of treasury/ central bank, i.e., the State. America is still the source of profit free-lunches for itself and the Rest of the World. It's not the absolute amount of military spending that counts; it's the DEFICIT that counts; roughly speaking: ALL government spending (including social spending and interest on government bonds) minus ALL taxes.

— AXEC (@EgmontHandtke) November 2, 2026

Occasional X: How it works (DXXXII)

Why the Worst Get on Top is the title of Ch. 10 in Friedrich Hayek's book The Road to Serfdom. In the free-market economy, profit may provide a strong incentive to corruption/organized crime. According to quasi-Darwinian logic, the most corrupt survives. The proof is given in table AXEC221b ⇓. Microfoundations are methodologically false; therefore, the elementary production-consumption economy is given with three macroeconomic axioms in lines 1, 4, 7. The business sector is split into two identical firms in lines 1-2, 4-5, 7-8. Under the initial analytical conditions of market-clearing and budget-balancing, this yields the price P in line 16. For a start, the price is the dependent variable here. In the initial state, the price is equal to unit wage costs W/R, and equal for both firms. The workers get the whole product O. The profit Qm for both firms and the business sector as a whole is zero. Now, the wage rate W in firm 1 is lowered arbitrarily; otherwise, both firms are identical in every respect. As a result, the market price P decreases in line 12. The profit of firm 1 increases in line 19; firm 2 makes a loss in line 20. Total profit remains zero. The household sector as a whole still gets the whole product O, but the workers of firm 1 can buy less with their lower wage income; the workers of firm 2 can buy more with their unchanged wage rate W and a lower price P. The firm that somehow manages to pay less for the same labor input increases profit Qm. Firm 2 makes a loss and will go bankrupt if it does not also make a wage cut. As a result, firm 1 wins the race to the bottom. The workers of firm 1 cannot move to firm 2 because it no longer hires or doesn't exist any longer. This process of cross-over exploitation is inherent to capitalism and inevitably leads to higher concentration. If a firm can undercut minimum wage regulations, it can be said that the criminal firm wins and the honest firm loses. What remains in the long run is a degenerated/ corrupted free-market economy. On closer inspection, economics is revealed as the story of intra-sectoral cross-over exploitation among the firms of the business sector and among the households of the household sector. Sociologically, this means there are no classes with a common interest. Ultimately, the market is not primarily an allocation mechanism but a quasi-Darwinian selection mechanism that increases the survival chances of the corrupt and decreases them for the honest. This is why guilds have emerged historically. Basically, they are self-organized associations of the honest against the corrupt, with honor as the guiding behavioral principle. Honor was replaced with the freedom of licit/illicit profit maximisation, which favors the corrupt.

— AXEC (@EgmontHandtke) November 1, 2026

Occasional X: Clueless economists / Price Mechanism (XX)

“Liberty is competition and incessant conflict, the mother of all progress, in which only the most capable can triumph, and the weakest, as in nature, are condemned to annihilation.” (Gustave Le Bon) Not true. Instead, profit may provide a strong incentive to corruption/organized crime. In the free-market economy, not the most 'capable' but the most corrupt survives. The proof is given in table AXEC221b ⇓. The elementary production-consumption economy is given with three macroeconomic axioms in lines 1, 4, 7. The business sector is split into two identical firms in lines 1-2, 4-5, 7-8. Under the initial conditions of market-clearing and budget-balancing, this yields the price P in line 16. The price is the dependent variable here. In the initial state, the price is equal to unit wage costs W/R, and equal for both firms. The workers get the whole product O. The profit Qm for both firms and the business sector as a whole is zero. Now, the wage rate W in firm 1 is lowered arbitrarily; otherwise, both firms are identical in every respect. As a result, the market price P decreases in line 12. The profit of firm 1 increases in line 19; firm 2 makes a loss in line 20. Total profit remains zero. The household sector as a whole still gets the whole product O, but the workers of firm 1 can buy less with their lower wage income; the workers of firm 2 can buy more with their unchanged wage rate W and a lower price P. The firm that somehow manages to pay less for the same labor input increases profit Qm. Firm 2 makes a loss and will go bankrupt if it does not also make a wage cut. As a result, firm 1 wins the race to the bottom. The workers of firm 1 cannot move to firm 2 because it no longer hires or doesn't exist any longer. This process of cross-over exploitation is inherent to capitalism and inevitably leads to higher concentration. If a firm can undercut minimum wage regulations, it can be said that the criminal firm wins and the honest firm loses. What remains in the long run is a degenerated/corrupted free-market economy. On closer inspection, economics is revealed as the story of intra-sectoral cross-over exploitation among firms and among households. Ultimately, the market is not primarily an allocation mechanism but a quasi-Darwinian selection mechanism that increases the survival chances of the corrupt and decreases them for the honest.

— AXEC (@EgmontHandtke) October 31, 2026

For more about the quasi-Darwinian process, see AXECquery. 

Occasional X: How it works (DXXIX)

“Earnings come from revenue, not debt. Debt pays for the capex that shows up later.” (Kyle Thompson) “You realize that someone's revenue is someone else's debt-funded expense?” (zerohedge) Neither Kyle Thompson nor zerohedge understands the relationship between revenue, profit, and debt; and, by logical consequence, how the economic system works. The free-market economy runs on profit. Macroeconomic profit is given by the axiomatically correct Profit Law Qm:=(I−Sm)+(G−T)+(X−M)+Yd. The Profit Law implies PublicDeficit=PrivateProfit Qm:=(G−T)>0, i.e., macroeconomic profit is (co-)produced by deficit-spending/money-creation, i.e., the growth of public debt. In free-market economies, public debt has increased with minor interruptions for over 200 years. Therefore, Qm:=(G−T)>0 has been a critical factor for Capitalism's survival. The free-market economy is temporarily saved from breakdown by the deficit-spending/money-creating duo of treasury/central bank, i.e., the State. This means that the premise of legacy economics, i.e., that the unfettered free-market economy is a self-adjusting, self-stabilizing, and self-optimizing system, is axiomatically false. This means that economics is failed/fake science. Economists are not scientists. They are mostly silly wafflers for a low-IQ audience. If they are good at disinfotainment, they are rewarded the EconNobel for 'economic sciences', which is the most prestigious fraud for the self-stabilisation of a failed/fake science. In essence, private/public deficit-spending is how the self-alimentation and self-preservation of WeTheOligarchy work. It has nothing to do with optimal allocation of resources, free people on free markets, or democratic consumer choices. The financial wealth of WeTheOligarchy has ultimately been printed by the central bank. It's roughly equal to the public debt of WeThePeople. By currently exploding the deficit, President Trump is exploding the number of millionaires/ trillionaies/ zillionaires until the smooth recycling of public debt by government bonds goes on and WeThePeople can be taxed for the interest that the State collects for WeTheOligarchy.

— AXEC (@EgmontHandtke) October 31, 2026

Occasional X: The futile attempt to recycle Kalecki (XVIII)

“Assessment: AXEC is partly right about accounting, but substantially overstates his conclusions. My rating: 4/10 for the economic argument as a whole. His emphasis on accounting consistency, profits and financial balances is valuable. However, his claim that Kalecki never understood profit is poorly supported, and his assertion that an economy must implode whenever aggregate monetary profit becomes negative is not established by his equation.” (James Young)‡ One of the unavoidable stomach-churners in economics is that scientifically incompetent folks pontificate about methodology. One of the dumbest phrases in economics is: That's an accounting identity, but economics is about human behavior. No, psychology and sociology are about human behavior; economics is about the economic system. Accounting relationships are systemic laws, and, best of all, they are testable. To be sure, utility maximization is not a testable proposition. Actually, it is much worse; for example, here are the neo-Walrasian axioms: “HC1 economic agents have preferences over outcomes; HC2 agents individually optimize subject to constraints; HC3 agent choice is manifest in interrelated markets; HC4 agents have full relevant knowledge; HC5 observable outcomes are coordinated, and must be discussed with reference to equilibrium states.” (Weintraub) This behavioral axiom set consists of psycho-social hallucinations; its variables are NONENTITIES, and therefore its conclusions are not testable in principle. Equilibrium is the worst petitio principii of all. Every theory/model that contains the concept of equilibrium/disequilibrium is proto-scientific garbage. Economic methodology has been a scientific disaster from the Founding Fathers onward. Unfortunately, Keynes messed up the unavoidable Paradigm Shift from microfoundations to macrofoundations. See the graphic AXEC172a https://t.co/ynvCeZQGlx. Kalecki was somewhat better, but he, too, messed up profit and distributed profit. Profit is a balance, and distributed profit is a flow. Because of his methodological blunder, he got the concepts of income and saving wrong. In the elementary case, income is NOT the sum of wage income and profit, but of wage income and distributed profit. That's the first axiom in line 1. See also Kalecki got it wrong, Allais got it right https://t.co/MybEzLGDkg In table AXEC238a ⇓, the case of profit distribution is consistently dealt with. From the objective systemic axiom set in lines 1-3 follows that profit is equal to distributed profit, i.e., Qm:=Yd, if the expenditure ratio ρE of both wage income Yw and distributed profit Yd is 1 (line 15). In this case, the Capitalists reproduce their profit by fully spending their distributed profit on consumption. Thereby, they get a part of the real product O, without ever having contributed to its production. This is what Kalecki's famous punch line: they get what they spend, ultimately means. In principle, the Capitalists as a whole can make their profit as big as they want. Practically, they don't, because normally there is retained profit, and distributed profit is mostly saved. Luckily, there are other sources of profit Qm:=Yd+(I−Sm)+(G−T)+(X−M). Keynes and Kalecki are only special cases of the methodologically correct AXEC macrofoundations and, by implication, of the systemic Profit Law. Strictly speaking, Keynes, Kalecki and their followers were too stupid for the elementary math that underlies macroeconomic accounting. Note well that no behavioral economist ever arrived at the systemic Profit Law. Profit is the foundational variable of the subject matter. All behavioral profit explanations are provably false. Because profit is false, the whole of legacy economics is scientifically worthless. Against this backdrop, Kalecki was a real progress. ‡ It has been established in the working paper Mathematical Proof of the Breakdown of Capitalism https://t.co/2NkX9FRklW

— AXEC (@EgmontHandtke) October 30, 2026