#Economics#AllYouNeedToKnow
— AXEC (@EgmontHandtke) December 25, 2025
“President Trump says the current financial system is outdated and will soon be replaced with a state-of-the-art cryptocurrency framework …” (Bitcoin Teddy)
The current monetary system is bad, but crypto is even worse.
For the axiomatically…
Showing posts sorted by date for query crypto. Sort by relevance Show all posts
Showing posts sorted by date for query crypto. Sort by relevance Show all posts
December 25, 2025
Occasional X: Clueless economists / Money (LXXVIII)
November 6, 2023
Occasional X: Clueless economists / Money (IV)
#Economics
— E.K-H (@AXECorg) November 6, 2023
With a view to the #CBDC future, the #BlackEconomy needs an ANONYMOUS #MediumOfExchange. Like #Cash, #Crypto avoids the transparency of #eMoney. The volume of Crypto is a metric for the private/public #Corruption of a country.
For more about crypto see AXECquery.
***
Twitter/X Aug 19, 2025
Twitter/X Sep 8, 2025 Crypto cloud, debt, dollar
Twitter/X Oct 11, 2025 Crypto whale
Twitter/X Oct 12, 2025 President Trump and crypto
Twitter/X Nov 5, 2025
Twitter/X Dec 12, 2025
Twitter/X Feb 2, 2026 Bitcoin, senior management
Twitter/X Feb 3, 2026 Cyrypto as strategic reserve currency
Twitter/X Feb 3, 2026 Crypto, blockchain, centralization
Twitter/X Feb 6, 2026 That's wrong, a crypto price above 0 means financial manipulation
Twitter/X Feb 7, 2026 Crypto as an intelligence test: China is No. 1
Twitter/X Feb 23, 2026 Crypto is only incredible to those who believe everything
Twitter/X Mar 13, 2026
November 25, 2022
Occasional Tweets: eMoney ― the false start
With a view to the #CBDC future, the #BlackEconomy needs an ANONYMOUS #MediumOfExchange. Like #Cash, #Crypto avoids the transparency of #eMoney. The volume of Crypto is a metric for the private/public #Corruption of a country.
— E.K-H (@AXECorg) November 25, 2022
Twitter/X Mar 13, 2026 and also
November 17, 2022
Occasional Tweets: How many academic economists are members of the crypto sales force?
#Econ#FailedFakeScience
— E.K-H (@AXECorg) November 17, 2022
Waiting for the academic #Economists to come forward for self-incrimination of why they joined the #Crypto sales force. Reminder “the decentralization of money offered by bitcoin has its theoretical roots in The Denationalisation of Money” (Wikipedia) pic.twitter.com/oS6yviJKNR
***
Twitter Jun 30, 2022
January 9, 2022
Occasional Tweets: The value of counterfeit currency
#Crypto derives its “value” from the fact that the #BlackEconomy needs an ANONYMOUS medium of exchange. It privatizes #Seigniorage. The volume of #Crypto is a metric for the private/public corruption of an #Economy.
— E.K-H (@AXECorg) January 9, 2022
Criminals and the monetary orderhttps://t.co/Iq1lVxePy1
For more about the value of money see AXECquery.
For more about counterfeit currency see AXECquery.
October 9, 2021
Occasional Tweets: Counterfeit Currency
#Economics#Money
— E.K-H (@AXECorg) October 9, 2021
It is neither your money nor the state's money. The #MMT policy of #DeficitSpendingMoneyCreation amounts to the Central Bank's issuance of #CounterfeitCurreny.
Criminals and the monetary orderhttps://t.co/Iq1lVxePy1 pic.twitter.com/or7Pfr33yA
In the final analysis, money is information. Not a thing. Coins or paper are data carriers. With #eMoney, money evolves to its pure form. Needless to emphasize that #CBDC needs a sophisticated legal/institutional framework. The anonymity of #Cash/#Crypto is a sine qua non for OC.
— E.K-H (@AXECorg) October 10, 2021
June 20, 2021
Occasional Tweets: Money and crime
Imagine, the current fiat money system is fully replaced by E-Money, i.e. ALL transactions are carried out with high efficiency/transparency over the accounts at the Central Bank. Bad for crime. To prepare for this future, OC has created its own private/anonymous Crypto Currency.
— E.K-H (@AXECorg) June 20, 2021
Related 'Criminals and the monetary order' and 'Political fraud and the silence of academia' and the paper 'The Dark-Matter Theory of Fiat Money'.
***
Twitter/X Jan 21, 2026 The patent of crypto/bitcoin/anonymous cash in 2001 with Glenn Lilly as the inventor
Twitter/X Feb 2, 2026 The Bitcoin goldmine is ready in 2008
Twitter/X Jul 5, 2026 Winners and losers of crypto
November 29, 2019
Economic backstabbing: Bill Mitchell hits again
Comment on Bill Mitchell on ‘Impending British Labour loss may reflect their ambiguous Brexit position’
Blog-Reference
The macroeconomic Profit Law implies, with regard to the government sector, that Public Deficit = Private Profit. As a consequence, the MMT policy of deficit spending/money-creation ultimately benefits the Oligarchy and NOT WeThePeople. However, this is not obvious because it happens in an indirect manner via the price mechanism. #1 Running budget surpluses hits the ninety-nine-percenters directly by increasing unemployment and the one-percenters indirectly by reducing macroeconomic profit.
The political consequence is this: The one-percenters and their useful academic/ journalistic spokespersons should consistently argue FOR deficit spending and the ninety-nine-percenters and their academic/journalistic spokespersons should consistently argue AGAINST it. In the political debate, though, logical consistency is not the primary concern, but propagandistic success is. So we see representatives of the one-percenters arguing for budget-balancing and representatives of the ninety-nine-percenters arguing for deficit-spending. #2
MMTers claim to be the real Progressives and fighters for the interests of WeThePeople. The economic fact of the matter, though, is that the MMT policy of deficit-spending/money-creation is for the benefit of the Oligarchy.
One of the most aggressive agenda pushers is Bill Mitchell. In the run-up to the election, he first denounced the Labour leadership as crypto-neoliberals for their Fiscal Credibility Rule, i.e. the commitment to balance the budget over the business cycle and their intention to reduce the public debt in the longer term. #3, #4 In their new Manifesto, Labour announces massive deficit spending on infrastructure. This is in line with MMT policy guidance, but does not end Bill Mitchell’s fight against British Labour.
• “As I have noted many times in the past, there was always a problem with the statements that British Labour were making prior to the election in terms of its spending promises and maintaining that it would also be bound by its Fiscal Credibility Rule. I was vilified by Labour apparatchiks a the related academic hacks for maintaining this position but as time has past it is obvious I was correct.”
• “Apparently the ‘Rule’ has been changed. You don’t change a ‘Rule’ that is seen to be workable. The point that have made often is that, by tying themselves into this neoliberal straitjacket, the British Labour Party limited the political space they would have to operate in.”
• “We have seen many times in history, how fortuitous fiscal interventions … are stopped in their tracks with damaging consequences, because of media and political pressure over the rising deficits, all because the public have been conditioned by these neoliberal fiscal rules to think the deficits signal an impending catastrophe. In the British case, the ‘Rule’ is unnecessary. It reflects an irrational paranoia among the Left in Britain about the relative strength of the financial markets vis-a-vis the legislative and regulative capacity of the elected government.”
In conclusion, the elected Labour leadership still does not satisfy the demands of the self-declared progressive academic Friends-of-the-People: “There is a lot to like about that Manifesto from a progressive perspective. However, in my mind, there were two unresolved tensions that I think damage the Party’s credibility. The first, is its, yes, continued embrace of neoliberal macroeconomic frames, epitomised by its so-called Fiscal Credibility Rule that has already had to be changed because so-called independent analysts agreed with my assessment that the manifesto and the ‘Rule’ were inconsistent.”
The economic fact of the matter is that public deficit-spending/money-creation is a free lunch program for the Oligarchy. The market economy has already been on the life support of the State for a long time. #5 Profit is in the main produced by public deficits, and financial wealth roughly equals public debt. The Oligarchy, in turn, uses the opulent free lunches to corrupt the State’s legislative, executive, and judiciary institutions and ― not to forget ― academia.
The political world is upside down: the legitimate representatives of WeThePeople are smeared as crypto-neoliberals by fake Progressives who push the agenda of the Oligarchy. #6
Egmont Kakarot-Handtke
#1 Q: How are you going to pay for it? MMT: By stealth taxation!
#2 Links on Austerity
#3 Bill Mitchell’s pure MMT teachings for British Labour
#4 How MMT disgraces itself
#5 Keynes, Lerner, MMT, Trump, etc. and exploding profit
#6 How Randall Wray takes the piss out of the House Budget Committee
Related 'Swabian housewife vs Wall Street loan shark' and 'Is MMT Alt-Right? No, it is fake science' and 'Bill Mitchell’s dishonorable discharge from the sciences' and 'MMT, voodoo, and dead horse beating' and 'Bill Mitchell ― Wall Street’s hitman keeps an eye on MMT defeatists' and 'Bill Mitchell’s pure MMT teachings for British Labour'.
Blog-Reference
The macroeconomic Profit Law implies, with regard to the government sector, that Public Deficit = Private Profit. As a consequence, the MMT policy of deficit spending/money-creation ultimately benefits the Oligarchy and NOT WeThePeople. However, this is not obvious because it happens in an indirect manner via the price mechanism. #1 Running budget surpluses hits the ninety-nine-percenters directly by increasing unemployment and the one-percenters indirectly by reducing macroeconomic profit.
The political consequence is this: The one-percenters and their useful academic/ journalistic spokespersons should consistently argue FOR deficit spending and the ninety-nine-percenters and their academic/journalistic spokespersons should consistently argue AGAINST it. In the political debate, though, logical consistency is not the primary concern, but propagandistic success is. So we see representatives of the one-percenters arguing for budget-balancing and representatives of the ninety-nine-percenters arguing for deficit-spending. #2
MMTers claim to be the real Progressives and fighters for the interests of WeThePeople. The economic fact of the matter, though, is that the MMT policy of deficit-spending/money-creation is for the benefit of the Oligarchy.
One of the most aggressive agenda pushers is Bill Mitchell. In the run-up to the election, he first denounced the Labour leadership as crypto-neoliberals for their Fiscal Credibility Rule, i.e. the commitment to balance the budget over the business cycle and their intention to reduce the public debt in the longer term. #3, #4 In their new Manifesto, Labour announces massive deficit spending on infrastructure. This is in line with MMT policy guidance, but does not end Bill Mitchell’s fight against British Labour.
• “As I have noted many times in the past, there was always a problem with the statements that British Labour were making prior to the election in terms of its spending promises and maintaining that it would also be bound by its Fiscal Credibility Rule. I was vilified by Labour apparatchiks a the related academic hacks for maintaining this position but as time has past it is obvious I was correct.”
• “Apparently the ‘Rule’ has been changed. You don’t change a ‘Rule’ that is seen to be workable. The point that have made often is that, by tying themselves into this neoliberal straitjacket, the British Labour Party limited the political space they would have to operate in.”
• “We have seen many times in history, how fortuitous fiscal interventions … are stopped in their tracks with damaging consequences, because of media and political pressure over the rising deficits, all because the public have been conditioned by these neoliberal fiscal rules to think the deficits signal an impending catastrophe. In the British case, the ‘Rule’ is unnecessary. It reflects an irrational paranoia among the Left in Britain about the relative strength of the financial markets vis-a-vis the legislative and regulative capacity of the elected government.”
In conclusion, the elected Labour leadership still does not satisfy the demands of the self-declared progressive academic Friends-of-the-People: “There is a lot to like about that Manifesto from a progressive perspective. However, in my mind, there were two unresolved tensions that I think damage the Party’s credibility. The first, is its, yes, continued embrace of neoliberal macroeconomic frames, epitomised by its so-called Fiscal Credibility Rule that has already had to be changed because so-called independent analysts agreed with my assessment that the manifesto and the ‘Rule’ were inconsistent.”
The economic fact of the matter is that public deficit-spending/money-creation is a free lunch program for the Oligarchy. The market economy has already been on the life support of the State for a long time. #5 Profit is in the main produced by public deficits, and financial wealth roughly equals public debt. The Oligarchy, in turn, uses the opulent free lunches to corrupt the State’s legislative, executive, and judiciary institutions and ― not to forget ― academia.
The political world is upside down: the legitimate representatives of WeThePeople are smeared as crypto-neoliberals by fake Progressives who push the agenda of the Oligarchy. #6
Egmont Kakarot-Handtke
#1 Q: How are you going to pay for it? MMT: By stealth taxation!
#2 Links on Austerity
#3 Bill Mitchell’s pure MMT teachings for British Labour
#4 How MMT disgraces itself
#5 Keynes, Lerner, MMT, Trump, etc. and exploding profit
#6 How Randall Wray takes the piss out of the House Budget Committee
Related 'Swabian housewife vs Wall Street loan shark' and 'Is MMT Alt-Right? No, it is fake science' and 'Bill Mitchell’s dishonorable discharge from the sciences' and 'MMT, voodoo, and dead horse beating' and 'Bill Mitchell ― Wall Street’s hitman keeps an eye on MMT defeatists' and 'Bill Mitchell’s pure MMT teachings for British Labour'.
December 29, 2017
The creation and value of money and near-monies
Comment on Clint Ballinger on ‘Of Bitcoins and balance sheets: the real lesson from Bitcoin’
Blog-Reference
Clint Ballinger argues: “The national government creates the numeraire for the system (the 'Dollar' in the US, the 'Pound' in the UK, etc.) and, in addition to spending directly into the economy in that numeraire, the government allows a public/private system (publicly regulated private banking system) to operate with the same numeraire. This creates a single system for the public, but in fact, arises from two separate but linked balance sheet expansions.
But why do the tokens from either of these balance sheet expansions have and maintain value?
The government maintains the value of its balance sheet tokens by demanding that some of its tokens, once a year, must be paid back to the government. This guarantees that everyone in that nation will accept and value the tokens from the national balance-sheet expansion.
The tokens that arise from the public/private bank balance-sheet expansion maintain their value analogously ― by the obligation to repay bank loans.
Together, the obligation to pay taxes and the obligation to repay bank loans maintain the value of a currency. Note that both of these rest on the government/legal system of a nation.”
The claim that the value of money depends ultimately on the taxing power of the state is, of course, plain MMT nonsense.
Time to finally settle the theory of money. Because economics is a failed science, it has to be reconstructed from scratch. Walrasian microfoundations and Keynesian macrofoundations have to be scrapped.
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 (1), i.e., the market-clearing price is equal to unit wage costs. This is the most elementary form of the macroeconomic Law of Supply and Demand. For the graphical representation, see Figure 1. #1
The price is determined by the wage rate, which takes the role of the nominal numéraire, and productivity. The quantity of money is NOT among the price determinants. This puts the commonplace Quantity Theory to rest.
The real value of money is ultimately given by productivity. From (1) follows W/P=R, i.e., real wage = productivity. The value of money has NOTHING AT ALL to do with the taxing power of the state. In the production-consumption economy with budget balancing and market clearing, the wage income receivers always get the whole output O=RL.
Monetary profit for the economy as a whole is defined as Qm≡C−Ywand monetary saving as Sm≡Yw−C. It always holds Qm≡−Sm, in other words, the business sector’s surplus = profit (deficit = loss) equals the household sector’s deficit = dissaving (surplus = saving). This is the most elementary form of the macroeconomic Profit Law. Under the condition of budget balancing, total monetary profit is zero.
What is needed for a start is two things: (i) a central bank that creates money on its balance sheet in the form of deposits, and (ii) a legal system that declares the central bank’s deposits as legal tender.
Deposit money is needed by the business sector to pay the workers who receive the wage income Yw per period. The need is only temporary because the business sector gets the money back if the workers fully spend their income, i.e., if C=Yw.
Overdrafts are needed by the household sector for consumption expenditures if the households want to spend before they get their income. This time sequence is no problem for the central bank because the temporary overdrafts vanish with wage payments.
For the case of a balanced budget C=Yw, the idealized transaction sequence of deposits/overdrafts of the household sector at the central bank over the course of one period is shown in Figure 2. #2
The household sector’s deposits/overdrafts are ZERO at the beginning and end of the period. The business sector’s transaction pattern is the exact mirror image. Money, that is, deposits at the central bank, is continually created and destroyed during the period under consideration. There is NO such thing as a fixed quantity of money. The central bank plays an ACCOMMODATIVE role and simply supports the AUTONOMOUS market transactions between the household and the business sector.
From this follows the average stock of transaction money as M=κYw, with κ determined by the transaction pattern. In other words, the average stock of money M is determined by the AUTONOMOUS transactions of the household and business sector and created out of nothing by the central bank. The economy NEVER runs out of money if the central bank does a good job.
The transaction equation reads M=κYw=κPX=κPRL in the case of budget balancing and market clearing, and this yields the commonplace correlation between the average stock of money M and price P for a given employment level L, except for the fact that M is the DEPENDENT variable.
Money comes into existence on the balance sheet of the central bank as soon as the central bank enters an overdraft for the business sector on the asset side and a deposit of an equal amount on the liability side (step 1). This deposit is then transferred to the household sector as wage payment (step 2) and returns in the form of consumption expenditures (step 3). #3
Now, commercial banks are introduced. They can create and destroy ‘money’ technically exactly in the same way as the central bank, except for the fact that it is bank money and not central bank money. The crucial condition for the functioning of the two-monies system is that the business sector and household sector accept bank money as practically identical to central bank money.
To be sure, in the strict sense, bank deposits are NOT money; only central bank deposits are money. This becomes clear as soon as the households/firms try to exchange huge amounts of bank money for central bank money. This is known as a bank run. In this case, the central bank has to step in and help the banks out with the one and only genuine money. The best way to prevent bank runs from ever happening is the unconditional guarantee of the central bank to exchange bank money anytime and in any amount into central bank money.
So, the private sector = banks can create near-money that works under the appropriate institutional conditions just as central bank money. The real value of near money is the same as central bank money. Acceptance and the real value of money and near-money do NOT depend on the state’s taxing power.
Problems arise if money is not brought into circulation in the right way. Roughly speaking, as long as the central bank or the private banks or whoever else finances the wage bill Yw, and the wage rate W moves exactly with the productivity, the price P remains according to (1) absolutely constant. The real value of money/near money rises and falls ultimately with productivity.
However, if the money is brought into circulation at the demand side, such that the household sector takes up credit and spends it on consumption goods, things are radically different. The market-clearing price rises, and this reduces the real value of wage income. The output is now redistributed between income spenders and credit spenders, i.e. P1=(C+Ccr)/O > P=C/O with C=Yw and O=X. #4
Secondly, the business sector now makes a profit, i.e., Qm=Ccr. It holds that the household sector’s deficit (dissaving) is equal to the business sector’s surplus (profit). If the money is brought into circulation by the government’s deficit spending it holds Public Deficit = Private Profit. Hence, MMTers as champions of state money creation and deficit-spending are ultimately ― knowingly or unknowingly does not matter ― agenda-pushers for the one-percenters. #5
With regard to Bitcoin, it follows that it is not even remote money, like a traveler’s check, for example, because the issuer does not guarantee to exchange it back at any time one-to-one into bank money or central bank money. The value of Bitcoin depends solely on the expectation that another private person will eventually exchange it for money or near-money or a financial or real asset. #6
Egmont Kakarot-Handtke
#1 Graphic AXEC31 Elementary production-consumption economy
#2 Graphic AXEC98 Idealized transaction pattern, household sector, balanced budget
#3 Basics of monetary theory: the two monies
#4 MMT, money creation, stealth taxation, and redistribution
#5 MMT is ALWAYS a bad deal for the 99-percenters
#6 Primary and Secondary Markets
Related 'The ultimate ― analytical ― origin of money'.
Blog-Reference
Clint Ballinger argues: “The national government creates the numeraire for the system (the 'Dollar' in the US, the 'Pound' in the UK, etc.) and, in addition to spending directly into the economy in that numeraire, the government allows a public/private system (publicly regulated private banking system) to operate with the same numeraire. This creates a single system for the public, but in fact, arises from two separate but linked balance sheet expansions.
But why do the tokens from either of these balance sheet expansions have and maintain value?
The government maintains the value of its balance sheet tokens by demanding that some of its tokens, once a year, must be paid back to the government. This guarantees that everyone in that nation will accept and value the tokens from the national balance-sheet expansion.
The tokens that arise from the public/private bank balance-sheet expansion maintain their value analogously ― by the obligation to repay bank loans.
Together, the obligation to pay taxes and the obligation to repay bank loans maintain the value of a currency. Note that both of these rest on the government/legal system of a nation.”
The claim that the value of money depends ultimately on the taxing power of the state is, of course, plain MMT nonsense.
Time to finally settle the theory of money. Because economics is a failed science, it has to be reconstructed from scratch. Walrasian microfoundations and Keynesian macrofoundations have to be scrapped.
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 (1), i.e., the market-clearing price is equal to unit wage costs. This is the most elementary form of the macroeconomic Law of Supply and Demand. For the graphical representation, see Figure 1. #1
The price is determined by the wage rate, which takes the role of the nominal numéraire, and productivity. The quantity of money is NOT among the price determinants. This puts the commonplace Quantity Theory to rest.
The real value of money is ultimately given by productivity. From (1) follows W/P=R, i.e., real wage = productivity. The value of money has NOTHING AT ALL to do with the taxing power of the state. In the production-consumption economy with budget balancing and market clearing, the wage income receivers always get the whole output O=RL.
Monetary profit for the economy as a whole is defined as Qm≡C−Ywand monetary saving as Sm≡Yw−C. It always holds Qm≡−Sm, in other words, the business sector’s surplus = profit (deficit = loss) equals the household sector’s deficit = dissaving (surplus = saving). This is the most elementary form of the macroeconomic Profit Law. Under the condition of budget balancing, total monetary profit is zero.
What is needed for a start is two things: (i) a central bank that creates money on its balance sheet in the form of deposits, and (ii) a legal system that declares the central bank’s deposits as legal tender.
Deposit money is needed by the business sector to pay the workers who receive the wage income Yw per period. The need is only temporary because the business sector gets the money back if the workers fully spend their income, i.e., if C=Yw.
Overdrafts are needed by the household sector for consumption expenditures if the households want to spend before they get their income. This time sequence is no problem for the central bank because the temporary overdrafts vanish with wage payments.
For the case of a balanced budget C=Yw, the idealized transaction sequence of deposits/overdrafts of the household sector at the central bank over the course of one period is shown in Figure 2. #2
The household sector’s deposits/overdrafts are ZERO at the beginning and end of the period. The business sector’s transaction pattern is the exact mirror image. Money, that is, deposits at the central bank, is continually created and destroyed during the period under consideration. There is NO such thing as a fixed quantity of money. The central bank plays an ACCOMMODATIVE role and simply supports the AUTONOMOUS market transactions between the household and the business sector.
From this follows the average stock of transaction money as M=κYw, with κ determined by the transaction pattern. In other words, the average stock of money M is determined by the AUTONOMOUS transactions of the household and business sector and created out of nothing by the central bank. The economy NEVER runs out of money if the central bank does a good job.
The transaction equation reads M=κYw=κPX=κPRL in the case of budget balancing and market clearing, and this yields the commonplace correlation between the average stock of money M and price P for a given employment level L, except for the fact that M is the DEPENDENT variable.
Money comes into existence on the balance sheet of the central bank as soon as the central bank enters an overdraft for the business sector on the asset side and a deposit of an equal amount on the liability side (step 1). This deposit is then transferred to the household sector as wage payment (step 2) and returns in the form of consumption expenditures (step 3). #3
Now, commercial banks are introduced. They can create and destroy ‘money’ technically exactly in the same way as the central bank, except for the fact that it is bank money and not central bank money. The crucial condition for the functioning of the two-monies system is that the business sector and household sector accept bank money as practically identical to central bank money.
To be sure, in the strict sense, bank deposits are NOT money; only central bank deposits are money. This becomes clear as soon as the households/firms try to exchange huge amounts of bank money for central bank money. This is known as a bank run. In this case, the central bank has to step in and help the banks out with the one and only genuine money. The best way to prevent bank runs from ever happening is the unconditional guarantee of the central bank to exchange bank money anytime and in any amount into central bank money.
So, the private sector = banks can create near-money that works under the appropriate institutional conditions just as central bank money. The real value of near money is the same as central bank money. Acceptance and the real value of money and near-money do NOT depend on the state’s taxing power.
Problems arise if money is not brought into circulation in the right way. Roughly speaking, as long as the central bank or the private banks or whoever else finances the wage bill Yw, and the wage rate W moves exactly with the productivity, the price P remains according to (1) absolutely constant. The real value of money/near money rises and falls ultimately with productivity.
However, if the money is brought into circulation at the demand side, such that the household sector takes up credit and spends it on consumption goods, things are radically different. The market-clearing price rises, and this reduces the real value of wage income. The output is now redistributed between income spenders and credit spenders, i.e. P1=(C+Ccr)/O > P=C/O with C=Yw and O=X. #4
Secondly, the business sector now makes a profit, i.e., Qm=Ccr. It holds that the household sector’s deficit (dissaving) is equal to the business sector’s surplus (profit). If the money is brought into circulation by the government’s deficit spending it holds Public Deficit = Private Profit. Hence, MMTers as champions of state money creation and deficit-spending are ultimately ― knowingly or unknowingly does not matter ― agenda-pushers for the one-percenters. #5
With regard to Bitcoin, it follows that it is not even remote money, like a traveler’s check, for example, because the issuer does not guarantee to exchange it back at any time one-to-one into bank money or central bank money. The value of Bitcoin depends solely on the expectation that another private person will eventually exchange it for money or near-money or a financial or real asset. #6
Egmont Kakarot-Handtke
#1 Graphic AXEC31 Elementary production-consumption economy
#2 Graphic AXEC98 Idealized transaction pattern, household sector, balanced budget
#3 Basics of monetary theory: the two monies
#4 MMT, money creation, stealth taxation, and redistribution
#5 MMT is ALWAYS a bad deal for the 99-percenters
#6 Primary and Secondary Markets
Related 'The ultimate ― analytical ― origin of money'.
For more details about money, see AXECquery.
In the political realm, there is rhetoric, storytelling, and obfuscation. In the scientific realm, there is axiomatization, consistency/proof, and clarity.
In the political realm, Humpty Dumpty rules: “‘When I use a word,’ Humpty Dumpty said in rather a scornful tone, ‘it means just what I choose it to mean — neither more nor less.’ ‘The question is,’ said Alice, ‘whether you can make words mean so many different things.’ ‘The question is,’ said Humpty Dumpty, ‘which is to be master — that’s all’.” #1
In the scientific realm, Aristotle rules: “When the premises are certain, true, and primary, and the conclusion formally follows from them, this is demonstration, and produces scientific knowledge of a thing.”
Economists never got above the level of proto-scientific storytelling and political agenda pushing. #2
Money is clearly defined and measurable with the precision of two decimal places. Money (liability side of the central bank’s balance sheet) is different from bank money, near-money, remote-money, pseudo-money, quasi-money, counterfeit money, crypto money, clay tablets, bullion, IOU, etcetera.
Needless to emphasize that the representative economist in general, and the MMTer in particular, have until this very day NO clear idea of the basic concepts of his subject matter, e.g. profit, income, money, and so on. But he has a lot to blather about democracy, the mob, and liberalism.
#1 Humpty Dumpty is back again
#2 Confused Confusers: How to Stop Thinking Like an Economist and Start Thinking Like a Scientist
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REPLY to Matt Franko, Tom Hickey Dec 30In the political realm, there is rhetoric, storytelling, and obfuscation. In the scientific realm, there is axiomatization, consistency/proof, and clarity.
In the political realm, Humpty Dumpty rules: “‘When I use a word,’ Humpty Dumpty said in rather a scornful tone, ‘it means just what I choose it to mean — neither more nor less.’ ‘The question is,’ said Alice, ‘whether you can make words mean so many different things.’ ‘The question is,’ said Humpty Dumpty, ‘which is to be master — that’s all’.” #1
In the scientific realm, Aristotle rules: “When the premises are certain, true, and primary, and the conclusion formally follows from them, this is demonstration, and produces scientific knowledge of a thing.”
Economists never got above the level of proto-scientific storytelling and political agenda pushing. #2
Money is clearly defined and measurable with the precision of two decimal places. Money (liability side of the central bank’s balance sheet) is different from bank money, near-money, remote-money, pseudo-money, quasi-money, counterfeit money, crypto money, clay tablets, bullion, IOU, etcetera.
Needless to emphasize that the representative economist in general, and the MMTer in particular, have until this very day NO clear idea of the basic concepts of his subject matter, e.g. profit, income, money, and so on. But he has a lot to blather about democracy, the mob, and liberalism.
#1 Humpty Dumpty is back again
#2 Confused Confusers: How to Stop Thinking Like an Economist and Start Thinking Like a Scientist
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