Occasional X: Clueless economists / Science (CCCXIV)

“You open by quoting Klant on scientific standards and then immediately declare that Austrian economics 'has been proven to be logically inconsistent' because we 'get profit wrong.' This is still just an assertion.” (Yang)

Austrians never had any idea of science, and Yang is no… pic.twitter.com/8Z3K575hyX

— AXEC (@EgmontHandtke) May 9, 2026

Related: 'Economists: scientists or political clowns?' and 'The curious non-existence of profit in economics' and 'Profit: after 200+ years still elusive' and 'The miracle cure of economists’ micro-macro schizo' and 'Clueless economists / Science (CCXCXIII)'

Occasional Tweets: To become an economist it is helpful to be schizo

 

#Economics#FailedFakeScience#Economists' alleged “Struggle for a Better World” contradicts their own behavioral #Axiom of INDIVIDUAL #UtilityMaximization. Economics is methodologically self-contradictory since Adam Smith. See cross-referenceshttps://t.co/MzGiF9gpXa

— E.K-H (@AXECorg) January 16, 2023

For more about schizo see AXECquery. 

Occasional Tweets: Economics ― still trapped in micro-macro schizo

 

There is NO choice between micro- & macroeconomics. BOTH are proto-scientific garbage. The way forward is a #ParadigmShift from false micro- & macrofoundations to axiomatically true #MacroFoundations.

The miracle cure of economists’ micro-macro schizohttps://t.co/EkQwt9rmYE pic.twitter.com/h9B1yACBTA

— E.K-H (@AXECorg) January 5, 2023

Occasional Tweets: MMT is not science but brain-dead political agenda-pushing

 

#MMT policy has NO valid scientific foundations. Stephanie Kelton's Deficit Myth is scientifically refuted and proven to be political agenda-pushing for the #Oligarchy.

The page where Stephanie Kelton gets macroeconomics wrong https://t.co/CNFDkXM1Ki

— E.K-H (@AXECorg) December 26, 2021

***

Twitter Dec 27, 2021 "MMT is not a policy" and other schizophrenic MMT claims

Related 'Totally schizo ― MMT and policy'

For more about MMT as a scientific lens see AXECquery.

Occasional Tweets: The father of modern economics suffered from micro-macro schizo

 

#Economics#FailedScience#FakeScience#Economists#StupidOrCorruptOrBoth

The history of economic thought is the history of scientific failure.

The father of modern economics and his imbecile kidshttps://t.co/HM0cpzXZbA pic.twitter.com/0Atb8J8Q0n

— E.K-H (@AXECorg) August 13, 2021

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

Occasional Tweets: Not so smart, those MMT agenda pushers

 

Some #MMTers claim that #MMT is #Science, others that it is pure description. MMT is none of these. It is NOT a lens for seeing how the monetary economy works but a cover for political #AgendaPushing.

Totally schizo ― MMT and policyhttps://t.co/kN9sMWf7X2 pic.twitter.com/0cd6NmaeXK

— E.K-H (@AXECorg) March 10, 2021

 

For more about MMT as a lens see AXECquery.

MMT: Corbynism is dead, British Labour is next

Comment on Bill Mitchell on ‘An evolving 6-point plan for British Labour’*

Blog-Reference and Blog-Reference

MMT policy boils down to deficit-spending/money-creation. According to the macroeconomic Profit Law, it holds Public Deficit = Private Profit. #1 So, MMT policy is for the benefit of the Oligarchy. The natural enemy of the Oligarchy is WeThePeople and all institutions that promote their interests. The logical thing to do for MMTers is to weaken or destroy these institutions. In the case of British Labour, this means to drive a wedge between members/voters and the party’s leadership. This is what Bill Mitchell as academic loudspeaker of MMT, has done with considerable intensity for a long time. #2, #3

Bill Mitchell’s method has not been very subtle but consisted in the main of presenting himself as a true Progressive and smearing the Labour leadership as closet neoliberals who torture the working class with Austerity. #4, #5

Whether Bill Mitchell’s interference in UK affairs had any effect on the anti-Corbyn coup is open to anybody’s guess; what is remarkable is that the agent of the Oligarchy is not yet finished with undermining British Labour.

The Corbynism corpse not yet cold, Bill Mitchell comes forward with the 6-point plan for a Labour Party that suits the Oligarchy:

“3. Sack/ignore all the advisors who advocated neoliberal fiscal rules as being clever. They were stupid and unworkable and the fact that the Labour Party changed the Rule in the weeks before the election when the IFS pointed out that they were incompatible with the Manifesto, a view I had presented when the Rule first came out, is testament to that.

4. Maintain the progressive Manifesto without the neoliberal frames and structures. #6

5. Begin this 5-year period of isolation by mounting a massive education campaign to allow British voters to truly understand the capacities of the currency-issuing government, which will make it much easier to disabuse arguments that start with ‘How will we pay for it?’. In that sense, I advise the British Labour Party to commission a series of workshops on Modern Monetary Theory (MMT), starting February when I will next be in the UK.”

Note that MMT is (i) refuted on all counts, (ii) scientifically worthless, (iii) against the interest of WeThePeople, (iv) for the benefit of the Oligarchy, and (v), that Bill Mitchell as an Australian academic has neither any scientific nor any political legitimacy to interfere with what is exclusively the business of the Legitimate Sovereign of the UK. #7

Note further that economics is NOT a science and economists are NOT scientists, but for 200+ years now, the useful idiots of the Oligarchy.

Egmont Kakarot-Handtke


* Billy Blog
#1 Q≡Yd+(I−S)+(G−T)+(X−M) ⇒ Q≡G−T Legend: Q overall monetary profit, G−T>0 public deficit.
#2 Mission accomplished: Economists as useful idiots of the Oligarchy
#3 How Bill Mitchell stalks Jeremy Corbyn
#4 MMT Progressives: The knife in the back of WeThePeople
#5 MMTers are false Progressives and false Friends-of-the-People
#6 MMT: The communicative war on budget-balancers
#7 MMTers are false Progressives and false Friends-of-the-People

Related 'Bill Mitchell’s pure MMT teachings for British Labour' and 'Totally schizo ― MMT and policy' and 'Economic backstabbing: Bill Mitchell hits again' and 'Very busy these days: Wall Street’s agents' and 'MMT: A Trojan Horse for Labour courtesy of the Oligarchy' and 'MMT’s true program' and 'Thinking about economic policy for future PM Corbyn'. For details of the big picture, see cross-references MMT and cross-references Political Economics/Stupidity/Corruption.

***

Billy Blog Dec 19

Billy Blog Nov 26, 2020, British Labour remains unelectable

Source: Twitter

Twitter May 7, 2021

Twitter May 12, 2021

Twitter Aug 18, 2021 Finished off by business consulting

Twitter Jan 4, 2023

Twitter/X Jul 5, 2024 Five years later

Twitter/X Oct 30, 2025  Financial background

MMT and the woes of useful political idiots

Comment on Bill Mitchell on ‘Why the financial markets are seeking an MMT understanding’

Blog-Reference and Blog-Reference

“One of the shifts I have observed in the last year or so in the way that Modern Monetary Theory (MMT) is being discussed in the public domain and the type of speaking invitations I am receiving is a growing interest from large financial market entities, who have not bought into the visceral, knee-jerk attacks from the populist academic type economists (Krugman, Summers, Rogoff, and all the rest that have jumped on their bandwagon).”

First of all, academic economists like Krugman, Summers, Rogoff, et tutti quanti are failed/fake scientists and cannot be taken seriously. Fighting these folks and mainstream economics as a whole delay only their burial at the Flat-Earth-Cemetery.#1

Mainstream economics is cargo cult science and the representative economist is not a scientist but a political agenda pusher. The pivotal issue of science is the truth/falsity of the theory in question, the pivotal issue of agenda-pushing is how effective the propaganda is and how the number of followers can be increased. Success is measured in likes and has no relation whatsoever to scientific content but depends alone on the political narrative.

MMT’s critique of mainstream economics is fully justified. The claim of MMTers that their approach is superior is justified. The reason is that MMT is macrofounded while mainstream economics is microfounded which is the lethal methodological defect. Unfortunately, from all this does NOT follow that MMT is scientifically true, i.e. materially/formally consistent, and it does NOT follow that MMT policy is, as claimed, for the benefit of WeThePeople.#2 MMT policy is clearly for the benefit of the Oligarchy. So, what holds for loudspeakers of the mainstream holds also for Bill Mitchell and other loudspeakers of MMT: economists are either stupid or corrupt or both.

There cannot be the slightest doubt that the policy of deficit-spending/money-creation benefits the Oligarchy because it increases macroeconomic profit according to the Profit Law which entails Public Deficit = Private Profit. Thus the Oligarchy’s financial wealth and public debt (currently $22 trillion) grow in lockstep.

Bill Mitchell’s core message is: “… we will learn how to understand how fiscal deficits impact on the non-government sector and expand the net financial assets in that sector and how fiscal surpluses do exactly the opposite.” What Bill Mitchell does not explain is that alone the financial assets of the Oligarchy are expanded and that WeThePeople are left with an expanding public debt that will eventually cause insoluble problems.#3

MMT is a communicative success among big money: “In September, I will be talking with some of the largest investment funds in Europe and Britain (and the Globe). I know some of my American MMT colleagues are doing similar presentations.”

This poses a slight problem because Bill Mitchell has to dispel the impression that he and other MMTers are in bed with the Oligarchy. How does he get around that?

“I think there is something to be said for people of influence being educated in a sound MMT understanding ― which is not to say I support the sort of influence they exert. However, on the other hand, I realise their motivation is not purely benign ― a thirst for knowledge etc. These entities are about profit making and will seek out anything that helps them achieve those goals. So for me, as an educator, the challenge is avoiding becoming another paid consultant in that process. I want them to understand our work but I don’t want to be part of their profit-making process. It is not an easy task. … But I see an advantage in fostering dissonance within the mainstream economics profession ― to expose the myths that are pumped out by the dominant paradigm in my profession, which undoubtedly leads to poor policy outcomes that damage the well-being of so many people.”

So, everyone can see that those mainstreamers are the bad guys and MMTers are the good guys: “We immediately perceive that the ideas that mainstream economics pump out that our governments are financially constrained are false and if this new awareness becomes the norm, then our democracies become enriched ― politicians have to defend their positions more transparently and their ideologies (who they want to transfer riches to) become more exposed and obvious.”

What is indeed obvious is that the MMT policy of deficit-spending/money-creation transfers riches to the Oligarchy and that the chief propagandist Bill Mitchell tells WeThePeople that this enriches democracy. That is after he has educated the intellectual slackers of Wall Street first: “An MMT understanding does not lead to conclusions that deficits from currency-issuing, national government do not matter. This is one of those popularised myths that the attackers are propagating because they think it will finish MMT off forever. The smartest operators in the financial markets are those who know otherwise. Only the less educated financial market players have bought the spin from the mainstream economists that ranges from deficits are typically not desirable to they should be avoided at all costs. Financial market operators should never be joining lobbies that proclaim the deficits are bad and should be avoided. Quite the contrary.”

The contrary is Public Deficit = Private Profit. Even the dullest Wall Streeter understands this equation.

Egmont Kakarot-Handtke


#1 For details of the big picture see cross-references Failed/Fake Scientists
#2 For the full-spectrum refutation of MMT see cross-references MMT
#3 How to pay for the war and to be bamboozled by economists

Related 'Dear idiots, MMTers are Wall Street’s agenda pushers' and 'Very busy these days: Wall Street’s agents' and 'Hype does not help: MMT is toast' and 'How MMT enlightens Washington' and 'MMT, Warren Mosler, and the little helpers from Wall Street and Academia' and 'Stephanie Kelton and the self-destructive stupidity of the super-rich' and 'Totally schizo ― MMT and policy' and 'Why the MMT benefactors of humanity never talk about profit' and 'Is MMT good for WeThePeople or for the Oligarchy?'

Totally schizo ― MMT and policy

Comment on Bill Mitchell on ‘The European Union once again reveals why it should be dissolved’

Blog-Reference and Blog-Reference

Bill Mitchell, the MMT loudspeaker, does not get tired of claiming that MMT is a scientific lens for seeing economic reality as it is and not a policy: “There is no MMT program!”. And all this is under the headline “Seize the Means of Production of Currency.”#1 Schizo!

Next, he flagellates the ECB and the europhile Left: “Yet, meanwhile, over in Frankfurt, the ECB is merrily funding government deficits ― totally in contravention of the European law, if was properly interpreted by the courts ― and they all turn a blind eye and create loopholes in the rules that allow them to do anything they want. And the Europhile progressives blithely carry on as if a few reforms are all that is needed to make this monstrosity a progressive paradise.”

However, last week he flagellated Mr. Weidmann for declaring that he intends to respect the law that defines the ECB’s mandate: “… we have to ensure that the prohibition of monetary financing is respected.”#2 Schizo!

It is pretty evident that MMT is NOT a lens for seeing how the monetary economy works but a cover for political agenda pushing. As Tom Hickey reveals: “The Left is hopelessly lost, and that leaves the field to the Right to deal with neoliberalism. I am seeing less on economics and finance per se, and more on the political fight going on among different camps, including those that are promoting the MMT POV as the optimal way to approach policy. While I am encouraged by the strides that MMT has made in breaking into the political ring, with the highly competent Stephanie Kelton as public face, the MMT position is as yet far from strong, since it is mostly allied with a Left that is fractured and largely incompetent.”

The problem is that the MMT policy guidance of deficit-spending/money-creation has NO sound scientific foundations#3 and that the “highly competent Stephanie Kelton” and other MMT academics are not Friends-of-the-People but stupid/corrupt agenda pushers for the Oligarchy.#4 Schizo!

Egmont Kakarot-Handtke


#1 MMT’s true program
#2 MMT: The communicative war on budget-balancers
#3 For the full-spectrum refutation of MMT see cross-references MMT
#4 Stephanie Kelton’s legendary Plain-Sight-Ink-Trick

Related 'Is MMT good for WeThePeople or for the Oligarchy?' and 'How the MMT fraud works' and 'The MMT fraud in slow motion, so that even economists can get it' and 'The MMT fraud hides behind the false "We"' and 'The Kelton-Fraud' and 'Very busy, those Wall Street propaganda folks' and 'Political fraud and the silence of academia'.

From Keynes’ fatal blunder to the true economic model

Comment on Merijn Knibbe on ‘What’s in a model … (an economic one, that is)’

Blog-Reference

Merijn Knibbe refers to a post of Noah Smith: “This time he however stated: ‘accounting is not a model of the economy’. Which is wrong. The national accounts are a model of the economy. And economists have to learn it is. The way the entities are conceptually defined matters as this also defines the monetary relations we see.”

Under the heading Formal Models vs. Guru-Based Theories Noah Smith demanded: “These days, most economic theories are collections of mathematical models. If you want to know what the theory says, you can parse out the models and see for yourself. You don’t have to go ask Mike Woodford what New Keynesian theory says. You don’t have to go ask Ed Prescott what RBC theory says. You can go read a New Keynesian model or a Real Business Cycle model and figure it out on your own. MMT is different. There are many wordy explainers and videos that will explain some of the concepts behind MMT, or tell you some of MMT’s policy recommendations. But that’s different than having a formal model of the economy.”#1

The problem with economics is this: microfoundations are false and because of this, ALL microeconomic models are false. Supply-demand-equilibrium is proto-scientific garbage. However, macrofoundations are also false and because of this, ALL macroeconomic models are false since Keynes. Proofs have been given elsewhere.#2

The question of correct macrofoundations is closely related to macroeconomic accounting. Merijn Knibbe is spot on: “National accounts do use a model of the economy, the accounting identities are based on the fundamental social properties of money and monetary transactions but for the way we measure them a conceptual model is key.”

The problem with both orthodox and heterodox economists is that they are too stupid for the elementary mathematics that underlies macroeconomic accounting.#3, #4, #5

From the overall failure of economics follows that a new theory has to be macrofounded but not Keynesian because Keynes messed things up. What is required is the Paradigm Shift from false microfoundations and false Keynesian macrofoundations to true macrofoundations.

From true macrofoundations follows the macroeconomic Profit Law as Q≡Yd+(I−S)+(G−T)+(X−M). The Profit Law, in turn, yields the correct macroeconomic sectoral balances equation (I−S)+(G−T)+(X−M)−(Q−Yd)=0 which compares to the false Keynesian/Post-Keynesian/MMT equation (I−S)+(G−T)+(X−M)=0. The equations are testable with the precision of two decimal places. Exactly here, macroeconomic accounting is needed in order to settle matters empirically.

Because neither orthodox nor heterodox economists got the foundational concepts, the elementary math, and the basic accounting identities right, ALL macroeconomic models are provably false from Keynes onward to this day.#6

Egmont Kakarot-Handtke


#1 Noah Smith Examining an MMT model in detail
#2 The miracle cure of economists’ micro-macro schizo
#3 Wikipedia and the promotion of economists’ idiotism (II)
#4 The Common Error of Common Sense: An Essential Rectification of the Accounting Approach
#5 For details of the big picture see cross-references Accounting
#6 The canonical macroeconomic model

MMT: fundamentally false

Comment on Warren Mosler's ‘MMT White Paper’

Blog-Reference

The purpose of Warren Mosler’s White Paper is “to publicly present the fundamentals of MMT.”

This is the first fundamental proposition:
“MMT Alone Recognizes that the US Government and its Agents are the Only Supplier of That Which it Demands for Payment of Taxes
That is, the currency itself is a simple public monopoly.
The US government levies taxes payable in US dollars
The $US to pay those taxes can only originate from the US government and its agents.
The $US to purchase US Treasury securities can only originate from the US Government and its agents.
The economy has to sell goods and services to the US Government or borrow from the US Government, or it will not be able to pay its taxes or purchase US Treasury securities.
Ramifications: 1. The US government and its agents, from inception, necessarily spend first, only after that can taxes be paid or state securities purchased.”

Because the first MMT axiom is false, the rest of MMT is false.

MMT lacks sound macroeconomic foundations. As the correct analytical starting point, the elementary production-consumption economy is defined with this set of macroeconomic axioms: (A0) The economy consists of the household and the business sector, which, in turn, consists initially of one giant fully integrated firm. (A1) Y_w=WL wage income Y_w is equal to the 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=Y_w in each period, the price is given by P=W/R (1a). The price P is determined by the wage rate W, which takes the role of the nominal numéraire, and the productivity R.#1 The elementary production-consumption economy is shown under the label of Graphic. #2

What is needed for a start is two things: (i) a central bank which creates money on its balance sheet in the form of deposits, and (ii) a legal system which declares the central bank’s deposits as legal tender. These institutions have to be established by the state.

Deposit money is needed by the business sector to pay the workers who receive the wage income Y_w 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=Y_w. Overdrafts are needed by the household sector for consumption expenditures if the households want to spend before they get their income.

For the case of a balanced budget C=Y_w, the idealized transaction pattern of deposits/overdrafts of the household sector at the Central Bank over the course of one period is shown under the label of Graphic. #3

The household sector’s deposits/overdrafts are zero at the beginning and end of the period. Money 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 supports the autonomous market transactions between the household and the business sector. From this follows the average stock of transaction money as M=κY_w, with κ determined by the transaction pattern.

If employment L is doubled, the average stock of transaction money M doubles. In a well-designed fiat money economy, growth is not hampered by a lack of a transaction medium.

Ramifications: (i) The state is needed for the institutional setup of the monetary order, (ii) the state is NOT needed for injecting money into the economy, (iii) what is needed is an accommodative Central Bank, (iv) neither the state nor the Central Bank interferes with the autonomous transactions of the household and business sector, (v) money is a generalized IOU, (vi) money is created and destroyed by the transactions between the household and the business sector, (vii) the value of money is given by W/P=R (1b), i.e. is equal to the productivity, (viii) the value of money does NOT depend on the (average) stock of money M, (ix) the functionality of monetary institutions and the value of money does NOT depend on the taxing power of the state.

If the state deficit-spends money into the elementary production-consumption economy, it follows from the macroeconomic Profit Law #4, #5 that Public Deficit = Private Profit.

Bringing money into the economy by public deficit spending is NOT distributionally neutral, just the opposite: it is a free lunch for the Oligarchy.

So, MMT is not only scientifically worthless#6 but economically harmful to the ninety-nine-percenters.

Egmont Kakarot-Handtke


#1 Geometrical Exposition of Structural Axiomatic Economics
#2 Graphic AXEC31 Elementary production-consumption economy
#3 Graphic AXEC98 Idealized transaction pattern
#4 Profit Law Q≡Y_d+(I−S)+(G−T)+(X−M)
#5 How counterfeiters save America with an extra profit and make WeThePeople pay for it
#6 Refuting MMT’s Macroeconomics Textbook

Related 'Understanding public deficits, money, and profit' and 'The miracle cure of economists’ micro-macro schizo' and 'The Third Way: Towards the Happy Zero-Tax Economy'.

***

COMMENT on Brad DeLong on Mar 28 and Blog-Reference MNE

Science is NOT about love/hate but true/false. So, to begin with, the question Why Does Everyone Hate MMT? leads directly into the bottomless swamp of political economics. #1

The problem with MMT is that it is axiomatically false. #2 Because employment and distribution theory is provably false, MMT’s policy guidance has NO sound scientific foundations. This, though, applies also to New Keynesianism. IS-LM is refuted on all counts. #3 This answers the question Why is the MMT vs Mainstream debate utterly absurd?

Brad DeLong summarizes: “Perhaps the key to the eagerness of Wray to dismiss me (and James Montier) for saying that MMT is Lerner+ is sociological. Perhaps MMT is not model-based (‘IS-LM with a near-vertical IS curve’) and not idea-based (‘Functional Finance’) so that it can be guru-based.”

Whether MMT is sociology-based, model-based, idea-based, or guru-based is a mute question. Theories are axiom-based, and the macroeconomic axioms of MMT are provably false.#4 By consequence, the whole analytical superstructure is untenable.

Macrofoundations are false for 80+ years, microfoundations are false for 150+ years. Methodologically, mainstream economics is even worse than MMT’s proto-scientific garbage.


#1 Love and hate in economics: the PsySoc shell game
#2 MMT: fundamentally false
#3 Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It
#4 For the full-spectrum refutation of MMT, see cross-references MMT

Related 'MMT for beginners' and 'Warren Mosler: scientific dilettante and political fraudster' and 'MMT sucks' and 'MMT Progressives: The knife in the back of WeThePeople' and 'MMT: The fusion of Wall Street and Academia' and 'MMT: A free lunch for the Oligarchy'.

Refuting MMT’s Macroeconomics Textbook

Comment on Bill Mitchell on ‘Macroeconomics ― MMT Textbook’*

Blog-Reference and Blog-Reference Mar 14 and Blog-Reference

MMT is, of course, accurate as far as the refutation of Orthodoxy/Neoclassics is concerned. Standard economics is scientifically indefensible. There is no need for further discussions about the current state of economics. This is where we stand today: provably false
• profit theory, for 200+ years,
• microfoundations, for 150+ years,
• macrofoundations, for 80+ years,
• the application of elementary logic and mathematics since the founding fathers.

However, the critique of Orthodoxy has run its course: “… it takes a new theory, and not just the destructive exposure of assumptions or the collection of new facts, to beat an old theory.” (Blaug)

MMT claims to be a new theory that beats Orthodoxy. This is accurate with regard to the shift from microfoundations to macrofoundations. Microfounded approaches are dead already since Walras/Jevons/Menger. The problem is that economists, in their incurable scientific incompetence, messed up the indispensable Paradigm Shift from microfoundations to macrofoundations.

MMT is NO exception. And the proof is in the new MMT Textbook, more specifically in the premises of MMT. It holds what Keynes observed with regard to Orthodoxy: “For if orthodox economics is at fault, the error is to be found not in the superstructure, which has been erected with great care for logical consistency, but in a lack of clearness and of generality in the premises.”

The premises of MMT Macroeconomics are laid out on pp. 13-16 and pp. 83-86.

“By placing government, as the currency issuer, at the centre of the monetary system, the MMT approach immediately focuses on how a government spends, and how this spending influences … macroeconomic aggregates …” (p. 13)

This is methodologically false. Macroeconomics starts with what Keynes called the ‘monetary theory of production’. The most elementary economy consists of the household sector, the business sector, and the central bank. Government and foreign trade are included at a later stage. For the central bank holds that it “can never run out of its own currency.”

“One of the most basic propositions in macroeconomics that MMT emphasizes is the notion that at the aggregate level, total spending equals total income and total output.” (p. 14)

Unfortunately, the most basic proposition in macroeconomics is false since Keynes and MMTers have not realized it to this day.

Here is the short proof that economists in general and MMTers, in particular, get the elementary mathematics that underlies macroeconomics wrong.

(i) The elementary production-consumption economy is given by three macroeconomic axioms: (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.

(ii) The focus is here on the nominal/monetary balances. For the time being, real balances are excluded, i.e., X=O.

(iii) The monetary profit of the business sector is defined (in simplified notation) as Q≡C−Yw,

(iv) The monetary saving of the household sector is defined as S≡Yw−C.

(v) Ergo Q≡−S.

The balances add up to zero. The counterpart of the household sector's saving S is the business sector's loss −Q. The counterpart of household sector dissaving (-S) is business sector profit Q. Both Q and S are measurable with the precision of two decimal places.

For the elementary investment economy holds Q≡I−S.

For the elementary investment economy, the government holds Q≡(I−S)+(G−T). If I and S are taken out of the picture for a moment, one gets Public Deficit = Private Profit.

In sum: (1) profit is NOT income, i.e. a flow, but a balance, i.e. the difference of flows, (2) distributed profit Yd is income and adds up with wage income Yw to total income, (3) total income is NEVER equal to total spending, (4) in the most elementary case, the difference between total spending of the household sector C and total wage income Yw is saving/ dissaving, (5) profit/loss of the business sector is the mirror image of dissaving/saving of the household sector, i.e Q≡−S, (6) saving and investment are causally INDEPENDENT and NEVER equal, (7) all I=S/IS-LM models are false since Keynes/Hicks, (8) Keynesianism, Post-Keynesianism, New Keynesianism and all variants are scientifically worthless, (9) the foundational MMT sectoral balances equation (I−S)+(G−T)+(X−M)=0 is false because it lacks the balance of the business sector Q, (10) because profit is false, the whole of MMT is false, (11) because the theory is false, MMT policy guidance has no sound scientific foundations. #1

MMT theory is provably false. MMT policy serves the Oligarchy. Since Samuelson started the textbook industry in 1948, economists have produced NOT ONE textbook that satisfies scientific standards. #2 For generations, economics students swallow proto-scientific garbage without batting an eyelid. Not very smart, these folks. #3

Egmont Kakarot-Handtke


* Mitchell, Wray, Watts Macroeconomics
#1 For the full-spectrum refutation of MMT, see cross-references MMT
#2 The father of modern economics and his imbecile kids
#3 There is NO such thing as “smart, honest, honorable economists”

Related 'Macroeconomics: Drain the scientific swamp' and 'The miracle cure of economists’ micro-macro schizo' and 'Is Nick Rowe stupid or corrupt or both?' and 'Keynesians ― terminally stupid or worse?' and 'MMT = Modern Monetary Trash' and 'Both mainstream economics and MMT are axiomatically false' and 'DSGE and profit―forget it! MMT and profit―forget it!' and 'Fact of life: your econ prof is scientifically incompetent' and 'Dear idiots, time to get saving and investment straight (II)' and 'Both mainstream economics and MMT are axiomatically false' and 'The Levy/Kalecki Profit Equation is false' and 'Wikipedia and the promotion of economists’ idiotism (I)' and 'Wikipedia and the promotion of economists’ idiotism (II)' and 'Wikipedia, economics, scientific knowledge, or political agenda pushing?' and 'MMT and the magical profit disappearance'. For details of the big picture, see cross-references Econ 101/Old Curriculum/New Curriculum and cross-references Accounting.

***

REPLY to Brian Romanchuk on Mar 14

You ask: “Have you managed to convince anyone that your definition, oops, “axiom,” [sic.] of profits is correct?”

The ‘axiom of profits’ exists only in your confused mind.

The macroeconomic AXIOMS are enumerated above under (i). The profit DEFINITION is given under (iii). There is a difference between an axiom and a definition. #1

There is also a difference between ‘to refute’ and ‘to convince’. Bill Mitchell and you are REFUTED, and whether you are convinced of it is a matter of indifference. Nobody has any ambition to convince methodologically undereducated Flat-Earthers. #2 Refutation is sufficient.


#1 From false micro to true macro: the new economic paradigm
#2 Post Keynesianism, science, and universal idiocy

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REPLY to Brian Romanchuk on Mar 15

You ask: “So, you have no links to *anyone* who agrees with you? These paradigm shifts are pretty darn slow, eh?”

The point at issue is: “One of the most basic propositions in macroeconomics that MMT emphasizes is the notion that at the aggregate level, total spending equals total income and total output.” (Mitchell et al., p. 14)

This “most basic proposition” is provably false. #1 Because of this, the whole analytical superstructure is false. Because of this, MMT is proto-scientific garbage. Because of this, MMT policy has NO sound scientific foundations. Because of this, MMT is a political fraud.

The ‘most basic propositions’ are called axioms in methodology: “The attempt is made to collect all the assumptions, which are needed, but no more, to form the apex of the system. They are usually called the ‘axioms’ (or ‘postulates’, or ‘primitive propositions’; …). The axioms are chosen in such a way that all the other statements belonging to the theoretical system can be derived from the axioms by purely logical or mathematical transformations.” (Popper) #2

As Aristotle put it: “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.”

This was 2300+ years ago; however, economists in general and you, in particular, still don’t get it. Indeed, pretty darn slow, these economists.

The point at issue is that MMT is proto-scientific garbage and that MMTers are either stupid or corrupt or both. The new MMT Macroeconomics Textbook is the incontrovertible proof.

It holds as a general rule: The time it takes economists to realize that they are refuted on all counts is a simple metric of their scientific incompetence. #3

#1 Macroeconomics for retarded economists

#2 How to restart economics

#3 The clock runs down on economics

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REPLY to Brian Romanchuk on Mar 16

There is only one question to answer: Which sectoral balances equation is true/false?

(i) (I−S)+(G−T)+(X−M)=0

(ii) (I−S)+(G−T)+(X−M)−(Q−Yd)=0

If you cannot answer this question, you are unfit for economics/science. This, of course, also holds for the authors of the new MMT Macroeconomics Textbook.

There is no need for you to wreck your tiny brain with writing “a text that may be labelled a ‘review’”. Here is the final evaluation of William Mitchell, L. Randall Wray, and Martin Watts’s Macroeconomics: proto-scientific garbage.

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Graphic AXEC152

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Graphic AXEC128, AXEC129mch The Humpty Dumpty Fallacy

Understanding public deficits, money, and profit

Comment on Lars Syll on ‘Understanding government debts and deficits’

Blog-Reference and Blog-Reference

Lars Syll correctly observes: “The balanced budget paradox is probably one of the most devastating phenomena haunting our modern economies.”

He forgets to add, though, that this phenomenon ultimately derives from the stupidity/ corruption of economists, more specifically from the lack of the true Profit Theory. Because the Profit Theory is false, the whole analytical superstructure is false, including, of course, Money Theory, Distribution Theory, and Employment Theory. This prevented, to this day, the understanding of the effects of public deficit-spending/money-creation.

The process goes schematically as follows:#1, #2

(i) The initial economic configuration is the elementary production-consumption economy.#3 The initial state is characterized by budget-balancing of the household sector C=Yw and zero profit of the business sector Q≡C−Yw → 0. At this stage, money is a pure transaction medium, as shown in Graphic AXEC98

Money is created out of nothing. The stock of money is zero at the beginning and end of the period.

(ii) The government deficit spends. Deficit D is defined as public spending G minus taxes T, i.e., D≡G−T. T is set to 0. Deficit spending on current production causes a one-off price hike, and the business sector ends up with macroeconomic profit Q=G.

(iii) The business sector fully distributes profit. The distributed profit Yd goes to the Oligarchy and takes initially the form of deposits at the central bank. The CB’s balance sheet shows government overdrafts on the asset side and the Oligarchy’s deposits on the liability side. Both sides are equal to the penny. The CB's deposits are money. Money is the liability side of a special credit relationship.

(iv) The government consolidates overdrafts by selling interest-bearing bonds. The bonds are bought by the Oligarchy and paid for with deposits. The CB’s balance sheet shrinks again. The Oligarchy’s portfolio consists of bonds and money = deposits at the CB. The value of the portfolio is roughly equal to the public debt.

(v) The government taxes the household sector and transfers the tax in the form of interest payments to a subset of the household sector, i.e., to the Oligarchy.

(vi) This process is repeated for an indefinite time. Public debt grows and is continually rolled over. Interest payments grow faster or slower depending on whether the current interest rate is higher or lower.

(vii) How long this process can last is unknown. In some future period, though, the public debt is redeemed. The government taxes the household sector, total expenditures reduce to C−T, the market-clearing price falls, and the business sector makes a macroeconomic loss. Whether this leads to a breakdown of the economy is open to speculation.

Obviously, public deficit-spending/money-creation is the biggest redistributive action the world has ever seen.#4 As a rule of thumb, the financial wealth of the Oligarchy grows in lockstep with the public debt. In other words, the fabulous wealth in the U.S. is the mirror image of humongous public debt ($22 trillion and counting).

Egmont Kakarot-Handtke


#1 From MMT misunderstandings to the true Theory of Money
#2 Deficit-spending, public debt, and macroeconomic profit/loss
#3 The miracle cure of economists’ micro-macro schizo
#4 Keynes, Lerner, MMT, Trump and exploding profit

Related 'MMT: fundamentally false' and 'Money and time'.

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AXEC102

Opinion, conversation, interpretation, blather: the economist’s major immunizing stratagems

Comment on Inês Goncalves Raposo on ‘On Modern Monetary Theory’*

Blog-Reference and Blog-Reference

Contrary to their claim of doing science, economists have never been anything else than political agenda pushers. Because of this, the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel” is a fraud.#1

“There are always many different opinions and conventions concerning any one problem or subject-matter... This shows that they are not all true. For if they conflict, then at best only one of them can be true. Thus it appears that Parmenides ... was the first to distinguish clearly between truth or reality on the one hand, and convention or conventional opinion (hearsay, plausible myth) on the other ...” (Popper)

The ancient Greek’s distinction between episteme (= knowledge) and doxa (= opinion) corresponds to the distinction between science and non-science.

The scientist’s goal is to definitively settle a given question “That the settlement of opinion is the sole end of inquiry is a very important proposition.” (Peirce)

Scientific logic posits a binary division between opposites. Truth and falsehood are opposites: there is no half-truth or half-falsehood.#2 Science is predicated on the Principle of the Excluded Middle.

The Excluded Middle, the swamp between true/false where ‘nothing is clear and everything is possible’ (Keynes), is the habitat of non- and anti-scientists, believers, IQ test failures, schizophrenics, political agenda pushers, and fraudsters.

At present, economics is NOT a science but a heap of half-truths/half-falsehoods. The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got the foundational concept of the subject matter ― profit ― wrong.

Economists work hard to maintain the status quo of the pluralism of false theories. Their modus operandi is meta-communication, that is, economists mainly talk about what other economists have said or really meant or how they have been misinterpreted.

A recent example is MMT. Inês Goncalves Raposo exhausted herself with name-dropping and who said what without ever coming to a conclusion about what is true and what is false. Thus she follows the basic methodological rule of economics, i.e. never to reach a final true/false conclusion but to keep everything in the swamp of inconclusiveness and the logical nirvana of A and non-A and to advertise  pluralistic schizo as an epistemological ideal.#3

The fact of the matter is that MMT is refuted on all counts.#4 Scientifically, MMT is dead and buried. And exactly at this point, the habitual fraud kicks in: “In economics we should strive to proceed, wherever we can, exactly according to the standards of the other, more advanced, sciences, where it is not possible, once an issue has been decided, to continue to write about it as if nothing had happened.” (Morgenstern, 1941)

Inês Goncalves Raposo’s blog post is a clear attempt to keep economics in the proto-scientific swamp of the pluralism of provably false theories.#5

Egmont Kakarot-Handtke


* Bruegel, blog post Feb 11
#1 The real problem with the economics Nobel
#2 Keynesians never got this vital point: “For Keynes, as for Post Keynesians the guiding motto is ‘it is better to be roughly right than precisely wrong!’” (Davidson). See here.
#3 MMT: How to get out of the infinite meta-communication loop
#4 For the full-spectrum refutation of MMT see cross-references MMT
#5 There is NO such thing as “smart, honest, honorable economists”

Related 'Links on capital-T Truth, stupidity, corruption' and 'A new curriculum for swampies?' and 'Refuting MMT’s Macroeconomics Textbook' and 'Opinion vs. Knowledge' and 'From opinion recycling to real scientific progress' and 'Knowledge only — no opinion'.

For more about immunizing stratagem see AXECquery.

MMT and Marxism ― blather as immunizing stratagem

Comment on Tom Hickey on ‘Michael Roberts Blog MMT 2 ― the tricks of circulation’

Blog-Reference and Blog-Reference

Tom Hickey cites Aquinas, paraphrasing Aristotle: “‘A small mistake in the beginning is a big one in the end.’ Most economic theory stumbles out of the gate by getting this wrong.”

Or as Marx put it: “Beginnings are always difficult in all sciences.” or as Schumpeter said: “There is no more fertile source of error than apparently trivial premises.” or as Georgescu-Roegen put it: “In fact, the history of every science, including that of economics, teaches us that the elementary is the hotbed of the errors that count most.” or as Aristotle knew already: “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.”

Scientific knowledge is missing in economics. This is the actual state: The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, MMT ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got the pivotal concept of the subject matter ― profit ― wrong.

Because the premises are false, economics is, after 200+ years, still not more than confused proto-scientific blather. #1

As Tom Hickey correctly observes: “There are many interpretations favorable to Marx among Marxist and Marxian economists. There is no agreed-upon ‘standard’ interpretation of Marx that all Marxists and Marxians accept. Roberts’s view is one among many. In addition, Marx has been criticized widely by just about every other school of economics, and members of a school sometimes disagree over how Marx should be criticized. Pinning Marx down to a particular interpretation has proved impossible.” and “The same might be said of Keynes, as any other thinker, theory or school.” #2

In other words, economists sit over both ears in an intellectual swamp where “nothing is clear and everything is possible”. (Keynes) Whether this is by innate stupidity or educational design is an open question. Swampiness, wish-wash, and inconclusiveness are what Popper called instances of an immunizing stratagem because: “Another thing I must point out is that you cannot prove a vague theory wrong.” (Feynman) This benefit was not lost on fake scientists. #3

Now, the fact of the matter is that economists have occasionally spelled out their premises clearly and in these cases, they have promptly been proven wrong. In these cases, though, economists simply trample over scientific standards: “In economics we should strive to proceed, wherever we can, exactly according to the standards of the other, more advanced, sciences, where it is not possible, once an issue has been decided, to continue to write about it as if nothing had happened.” (Morgenstern)

As a result, economists discuss the various approaches until they are blue in the face without ever taking notice that their stuff lacks sound scientific foundations. This is the case for Walrasianism, Keynesianism, Marxianism, Austrianism, and MMT, which are all axiomatically false, i.e., based on provably false premises.

MMT, for example, is based on this false sectoral balances equation (I−S)+(G−T)+(X−M)=0. And here the methodological curse kicks in: “A small mistake in the beginning is a big one in the end.”

There is no need to study MMT in greater detail and to bother oneself with different interpretations. It is absolutely sufficient to prove that one premise/axiom is false. #4, #5 This collapses the whole verbal superstructure of interpretations and confused blather.

There is no use in waffling inconclusively about the 1001st interpretations of Marx or Keynes. The multiplicity of interpretations is proof enough that one is NOT dealing with a valid scientific theory but with political BS. #6

Marx and Keynes are refuted, and Tom Hickey’s clarification of the relationship between the two is an exercise in futility. The right thing to do is to bury this proto-scientific garbage at the Flat-Earth-Cemetery and to move on. #7

Egmont Kakarot-Handtke


#1 Confused Confusers: How to Stop Thinking Like an Economist and Start Thinking Like a Scientist
#2 John Hicks, fake scientist
#3 And the answer is NCND ― economics after 200+ years of Glomarization
#4 Where economics went wrong (II)
#5 The miracle cure of economists’ micro-macro schizo
#6 Why is economics a total scientific failure?
#7 From false micro to true macro: the new economic paradigm

Related 'Here is the long overdue scientific death certificate for Marx and Marxists' and 'There is NO such thing as “smart, honest, honorable economists”' and 'If religion is opium of the people, economics is crack of the people' and '“But economics is not pure mathematics or logic” No, it is pure blather' and 'Marshall and the Cambridge School of plain economic gibberish' and 'Profit for Marxists' and 'The Profit Theory is False Since Adam Smith'.

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REPLY to michael roberts on Feb 5

You summarize: “You tell us we are wasting our time because economics is not scientific and rigorous.” and counter: “… it seems you also are just ‘one among many’”.

Take notice that there are some differences between blathering and scientific proof:

• Marx’s profit theory is provably false. #1
• Because the foundational concept of profit is false, Marx’s whole analytical superstructure is false. #2
• Because the theory is defective, Marx’s policy guidance NEVER had sound scientific foundations.
• After-Marxians have not spotted Marx’s foundational blunder to this day.
• After-Marxians are scientifically incompetent. You, for example, do not realize that public deficit D is defined as public spending G minus taxes T, i.e., D=G−T. Now, it is the deficit D that reduces unemployment and NOT G. If G=T, there is NO effect on employment, no matter how big G is. This is why you cannot find any correlation. #3
• MMT, too, gets macroeconomic profit wrong. The MMT sectoral balances equation (I−S)+(G−T)+(X−M)=0 applies to a zero-profit economy. MMTers are simply too stupid for the elementary algebra that underlies macroeconomics. #4

Because both Marxianism and MMT are false, any discussion about and between these two goofy approaches is no more than a sitcom.


#1 Profit for Marxists
#2 Ricardo and the invention of class war
#3 Essentials of Constructive Heterodoxy: Employment
#4 Wikipedia and the promotion of economists’ idiotism (II)

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REPLY to jlowrie on Feb 5

For the founding fathers, Political Economy was what is today called sociology. Economics started as a hodgepodge of sociology, history, folk psychology, and folk philosophy (a mixture of utilitarianism, Hegelianism, Malthusianism/Darwinism, Individualism/ Protestantism). The two issues, ‘how society works’ and ‘how the economy works’, were not properly kept apart.

J. S. Mill defined Political Economy as a social science: “The fundamental problem, therefore, of the social science, is to find the laws according to which any state of society produces the state which succeeds it and takes its place.”

With regard to the subject matter, there is no difference between Mill and Marx: “My standpoint, from which the evolution of the economic formation of society is viewed as a process of natural history, …” (Marx) #1

Clearly, the blunder lies in the definition of economics as a social science.#2 Fact is that economics is a systems science that deals with how the monetary economy works. Sociology, on the other hand, is a so-called social science or a cargo cult science, as Feynman so aptly characterized it.

The characteristic of the so-called social sciences is endless blather and interpretation and meta-communication, and political agenda pushing. Economics, as a systems science, figures out what the systemic laws are. For example, the macroeconomic Profit Law is given by Q≡Yd+(I−S)+(G−T)+(X−M), and it consists of variables that are measurable with the precision of two decimal places. NO interpretation here!

From this equation follows, inter alia, that Keynes’ I=S is false, which, in turn, means that all IS-LM models from Hicks to Krugman are false. NO interpretation here!

As far as economics deals with psychology/sociology, it is fake science just like the so-called social sciences as a whole.

The ‘multiplicity of interpretations’ is the very characteristic of proto-, non-, anti-science and of post-modern anything-goes. #3

The true theory is well-defined by material and formal consistency. The ‘multiplicity of interpretations’ is the mark of idiocy. #4, #5


#1 Karl Marx, fake scientist
#2 For details of the big picture, see cross-references Not a Science of Behavior
#3 If religion is opium of the people, economics is crack of the people
#4 Marshall and the Cambridge School of plain economic gibberish
#5 A brief history of soapbox economics

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REPLY to jlowrie on Feb 5

As I said, the ‘multiplicity of interpretations’ is the mark of idiocy. You confirm this conclusion with your incompetent comments. Marx got profit, exploitation, and class wrong 200 years ago, and after-Marxians are still behind the curve. For details see

► Capitalism, poverty, exploitation, and cross-over exploitation
► No exploitation, no classes
► If we only had classes
► Here is the long overdue scientific death certificate for Marx and Marxists

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REPLY to brunobertezautresmondes on Feb 5

You say: “If you’ve read my own stuff for any length of time, you’re familiar with ideas like the savings-investment identity, and it’s no revelation that government deficits have to be financed either by debt creation or money creation, … But phrased in particular, and slightly misleading ways (like “The only way for the private sector to accumulate a surplus is for the government to run a deficit”), these rather boring accounting identities are used by MMT as tools that promise only benefits from currency-financed deficit spending.”

Then you go on: “The one-minute exposition begins with the basic accounting equation for national income and output:

GDP = Consumption + Investment + Government Spending + Exports – Imports
which is typically written as:
Y=C+I+G+X−M
Adding and subtracting taxes T and rearranging gives:
(Y−T−C)+(M−X)+(T−G)=I
This is the savings-investment identity, and is always true by definition.”

Take notice that there is NO such thing as a savings-investment identity and that the “rather boring accounting identities” are false because MMTers and the rest of economists, including you, are too stupid for the elementary algebra that underlies macroeconomics. #1, #2, #3

The correct macroeconomic relations are given by Q≡−S for the elementary production-consumption economy and Q≡I−S for the elementary investment economy, with Q the business sector’s monetary profit, S the household sector’s monetary saving, business sector’s I investment expenditures. Saving is NEVER equal to investment.

MMTers, Marxians, and you simply get macroeconomic profit wrong. Economists are incompetent scientists, and this is “always true by definition”.


#1 Wikipedia and the promotion of economists’ idiotism (II)
#2 For details, see cross-references Refutation of I=S
#3 For the full-spectrum refutation of MMT, see cross-references MMT