MMT = Trumponomics

Comment on Bill Mitchell on ‘Japan still to slip in the sea under its central bank debt burden’

Blog-Reference

Bill Mitchell reports: “I took the UK Guardian’s ― How populist are you? ― quiz yesterday. I thought the quiz was an odd cultural artifact. The Tweet by Ronan Burtenshaw … summarised how these sorts of quizzes reflect underlying biases.

Anyway, I did the quiz and I won’t say who I was most alike because I am actually very much unalike the person (which just shows the categorisation errors in the exercise) but I felt relieved that I did score this outcome: You are least similar to Donald Trump.”

Now, this is curious at least with regard to economics because if one takes away the social populism, then MMT is economically identical to Trumponomics, that is to say, it produces exactly the same amount of macroeconomic profit for the Oligarchy. #1

In Bill Mitchell’s words, this “shows the categorisation errors in the exercise.” No, this shows how MMT’s social brainwashing works.

Egmont Kakarot-Handtke


#1 Keynes, Lerner, MMT, Trump, Biden, and exploding profit

Related 'MMT: A free lunch for the Oligarchy' and 'Stephanie and Noah ― economics at the intellectual zero lower bound' and 'MMTers are NOT Friends-of-the-People'.

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REPLY to Calgacus, Matt Franko, André, Noah Way on Nov 24

Compared to microfounded mainstream economics, macrofounded MMT is a real improvement. While mainstream economics is absolutely false, MMT is half-true. So, Bill Mitchell correctly summarizes “that the Bank of Japan continues to demonstrate the categorical failure of mainstream macroeconomics …”

MMT is correct on these points:
• A growing public debt does NOT cause inflation.
• The limit of growth of public debt is further out than doom-merchants always claimed.
• Fiscal policy is the main game.
• The government has all the firepower it ever needs.
• The Central Bank (CB) can buy any amount of gov bonds without increasing the inflation rate.
• The CB can maintain yields on gov bonds “at whatever level it chooses, at whatever maturity range it targets, and for as long as it likes.”

But then comes the fraudulent MMT sales slogan: “… normally for most countries it will require continuous fiscal deficits of varying proportions of GDP as the overall saving desires of the private domestic sector vary over time.”

What MMTers never talk about are the distributional effects of a permanently growing public debt.

What exactly happens if the government runs a deficit in an elementary production-consumption economy?#1 From the general macroeconomic Profit Law Qm≡Yd+(I−S)+(G−T)+(X−M) follows that Public Deficit = Private Profit if all other variables are taken out of the picture.

So, at the end of the first period, the business sector’s deposits at the CB (= money) are exactly equal to the government’s overdrafts. If deficit spending is repeated period after period, then the government’s debt in the form of overdrafts grows permanently, and the same holds for the business sector’s deposits. Under the assumption that the interest rate is zero for overdrafts and deposits at the CB, there is NO interest effect and no interest burden on public debt. The stock of money increases, but there is no inflation.

However, things do not stop there. Basically, two liming cases are possible. The government issues bonds, and the business sector buys them. Then, gov overdrafts at the CB go to zero, and the business sector’s deposits go to zero and are replaced by the interest-bearing gov bonds. Both sides of the CB’s balance sheet return to zero. The additional money from deficit spending vanishes. The business sector now earns interest, which is taxed from the household sector. This is what Bill Mitchell calls corporate welfare.

The other limiting case is that the CB buys the gov bonds. Then, gov overdrafts at the CB go to zero, but the business sector’s deposits (= money) remain unchanged. The CB switches on the asset side from overdrafts to long-term interest-bearing bonds. This interest increases the profit of the CB and is later on recycled to the government. So, this variant is distributionally neutral with regard to interest.

Reality is between the limiting cases.

So, while MMT is descriptively correct with regard to many monetary phenomena, it lacks sound scientific foundations because it is based on a mathematically false sectoral balances equation. Both MMTers and mainstreamers get macroeconomic profit wrong. This is disqualifying for an economist.


#1 The elementary production-consumption economy is, for a start, defined by three macroeconomic axioms (Yw=WL, O=RL, C=PX), two conditions (X=O, C=Yw), and two definitions (profit/loss Q≡C−Yw, saving/dissaving S≡Yw−C). Legend: Yw wage income, W wage rate, L employment, O output, R productivity, C consumption expenditures, P price, X quantity bought/sold. It always holds Q≡−S. This is the most elementary form of the macroeconomic Profit Law. The market-clearing price is derived as P=W/R. This is the macroeconomic Law of Supply and Demand.

Related 'MMT and the inflation-red-herring' and 'MMT: agenda-pushing and money-making for the Oligarchy' and 'Why the MMT benefactors of humanity never talk about profit'.

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REPLY to Calgacus on Nov 25

I said: ‘But then comes the fraudulent MMT sales slogan: “… normally for most countries it will require continuous fiscal deficits of varying proportions of GDP as the overall saving desires of the private domestic sector vary over time.” What MMTers never talk about are the distributional effects of a permanently growing public debt.’

You disagree: “This is just not true. They do talk about that, I believe I have given you at least one reference. They just don’t wildly exaggerate them and remove them from context.”

When I talk about distributional effects, I refer to the core of distribution theory, that is, the relation of wages to profits or what is called the wage share/profit share. #1

The fact of the matter is that Bill Mitchell talks about the “overall saving desires of the private domestic sector” and by this, he makes the profit effect of deficit-spending/money-creation disappear. #2

There is NO such thing as the “private domestic sector”; there is the business sector and the household sector, and the balance of the household sector is saving/dissaving, and the balance of the business sector is profit/loss. And both cannot be lumped together to overall saving. Methodologically, this is called the Humpty Dumpty Fallacy; politically, this is plain fraud. #3

In the MMT balances equation (G−T)+(I−S)=0 for the closed economy, profit does not appear at all. So, MMT’s distribution theory is a priori false.

The axiomatically correct balances equation reads (G−T)+(I−S)−(Q−Yd)=0. It follows that Public Deficit = Private Profit. And this tells one that the relation between overall profits and wages, which is generally considered a distributional scandal, is produced by ― guess who? ― yes, by MMTers’ deficit-spending/money-creation.

MMTers NEVER speak about this pivotal distributional effect of their policy because underneath their butoxed social populism, they are agenda pushers for the Oligarchy.#4


#1 There is NO such thing as a “labor share of income”
#2 Rectification of MMT macro accounting
#3 Down with idiocy!
#4 Keynes, Lerner, MMT, Trump and exploding profit

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AXEC128b The Humpty Dumpty Fallacy (V1)

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REPLY Calgacus on Nov 25

You say: “I have to say, I think this is the weirdest, most illogical, most anti-scientific thing ever said here. It is unimaginably, strangely, uniquely wrong.”

I have news for you. You cannot think, that’s merely self-delusion. To blather and to think are quite different things.

You maintain: “You’re saying that some particular way that some people decided to describe and divide up economic activity was engraved in stone AND even more incredibly, that there is some mystical problem with putting together what they happened to separate.”

No, I have proved that MMTers are too stupid for the elementary mathematics that underlies macroeconomics and that they got the foundational concepts of profit and income wrong. #1 In this, they follow in the footsteps of Keynes and the Post-Keynesians. #2, #3, #4

It is pretty obvious that if the concepts of macroeconomic profit and income are ill-defined, distribution theory runs straight into a dead end. This also happened to MMT.

Economists, including MMTers, are scientifically incompetent. Their foundational concepts lack consistency, and this is why this sorry bunch of blathering Humpty Dumpties was unable in the past 200+ years to rise above the proto-scientific level. #6, #7

Get out of wish-wash and answer the question of which of the two sectoral balances equations is true/false

(i) (I−S)+(G−T)+(X−M)=0

(ii) (I−S)+(G−T)+(X−M)−(Qm−Yd)=0

#1 Wikipedia and the promotion of economists’ idiotism (II)

#2 Macroeconomics ― dead since Keynes

#3 Post Keynesianism, too, is indefensible

#4 Why Post Keynesianism Is Not Yet a Science

#6 Profit, income, and the Humpty Dumpty Fallacy

#7 Humpty Dumpty is back again

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REPLY to Calgacus, Matt Franko on Nov 26

MMTers call themselves Progressives and are the first and loudest to condemn the distribution of income/financial wealth between the one-percenters and the ninety-nine-percenters as unjust, absurd, socially destructive, etcetera.

The MMT policy of government deficit-spending/money-creation is the very cause of this distributive outcome. Because in a three-sector economy, with the household sector’s budget balanced, the deficit of the government sector is exactly equal to the surplus of the business sector.

So, there is a logical contradiction in the position of MMTers.

This contradiction is papered over with a semantic shell game, that is, by calling the surplus of the business sector (= macroeconomic profit) surplus of the private sector. The term private sector falsely suggests that WeThePeople is part of it.#1

This semantic shell game is a political fraud to obscure the fact that Progressives are agenda pushers for the Oligarchy.

Academic MMTers are either stupid or corrupt or both. They have to be expelled from academia. This applies first of all to Bill Mitchell.

#1 For the general case, the axiomatically correct sectoral balances equation is given by (I−S)+(G−T)+(X−M)−(Qm−Yd)=0.

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AXEC143d Macroeconomic Profit Law (with increasing complexity) and Balances Equation

Fake religion, fake science, fake news, and false complaints

Comment on Peter Dorman on ‘The Death of Shame’

Blog-Reference

Peter Dorman concludes: “I would like our culture analysts, who are so adept at discerning subtle shades of colonialism in language and art, to take up the study of shame and its progressive disappearance from public life. In the meantime, those of us who are disgusted by the shameless behavior of those in power should have no illusions. We won’t get them to back down by uncovering further evidence of their misdeeds, although evidence remains the basis for rational judgment and should always be sought.”

The authors of so-called Holy Books produced literary fiction by mixing NONENTITIES and NONEVENTS and unverifiable PROPHESIES with banal elements of reality in order to get their message across. So, it has been a fact for at least 3000 years that one can tell people any garbage/lie without fear of any unpleasant physical, societal, or psychological consequences.

It is hard to tell what is more astounding, the lack of any good sense on the side of the storytellers or on the side of the recipients. The fact is that the complementary stupidity/ corruption of the participants of public communication worked fine throughout the ages and still works for ninety-nine percent of any population.

The success of priesthoods and their narratives did not get lost on philosophers, princes/ politicians, historians, journalists, sociopaths, criminals, secret societies/agencies, marketers, psychologists, propagandists, and the entertainment industry. The control of the narrative is the precondition of the control of society.

History as a reliable account of actual events got effectively lost with the invention of mass media and war propaganda at the beginning of the 20th century. Today, the average citizen cannot tell whether the photo he sees is authentic, whether the news he watches is staged, whether the report he reads is made up, or whether the authority he trusts is corrupt. Worse, he cannot know which information has been temporarily or forever put beyond his reach.

Since Adam Smith/Karl Marx, economics claims to be a science. However, there are two economixes: political and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda, and the goal of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics anything goes; in theoretical economics, the scientific standards of material and formal consistency are observed.

Theoretical economics (= science) had been hijacked from the very beginning by political economists (= agenda pushers). Political economics has produced NOTHING of scientific value in the last 200+ years. Economics is what Feynman called a cargo cult science.

Political economics is an institutionally closed selection system that begins with the peer-review of the journals, proceeds with funding, and ends with the fake Nobel Prize. The visible outcome is the peaceful coexistence of four approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― that are mutually contradictory, axiomatically false, materially/formally inconsistent and that got the pivotal concept of the subject matter ― profit ― wrong.

Agenda-pushing extends to the econblogosphere and takes all forms between outright lying, false applause, and real suppression. EconoSpeak is no exception.

So, Peter Dorman’s complaint about the Death of Shame is rhetorical. On EconoSpeak he is in one boat with two notorious fake scientists/agenda pushers, Barkley Rosser and Sandwichman, who shamelessly blather, disinform, misinform, distract, applaud one another, and suppress posts they do not like.

The ultimate stage of economists’ shamelessness is reached when the shameless whine about the Death of Shame.

Egmont Kakarot-Handtke

MMT and Marxism: A debate between proto-scientific zombies

Comment on Jehu on ‘MMT is right … which (paradoxically) is why it is wrong’

Blog-Reference

Jehu argues: “I approach the core assumptions of MMT from the perspective of Marx’s labor theory of value not from the perspective of bourgeois neoclassical theory.”

Unfortunately, the core assumptions of Marx are also false. Fact is that Marx never understood what profit is. #1 This is what Marxianism, Walrasianism, Keynesianism, Austrianism, and MMT have all in common. #2

From this follows that economics is a failed/fake science and economic debate between the different schools has never been more than brain-dead political blather.

Not only is Marxian profit theory provably false, but also the theory of money: “It is not simply that the fiat no longer expresses the value of commodity, inconvertible fiat expresses the values of all commodities as zero. Since a unit of fiat contains no value, in an exchange it expresses the value of the commodity for which it is exchanged as zero.”

This is plain BS. The value of fiat money is given in the elementary case of the production-consumption economy as P=W/R or W/P=R, i.e, the real wage is equal to the productivity. #3

Jehu, though, comes close to the secret charm of MMT, which boils down to the formula Public Deficit = Private Profit: “Here is the thing: MMT can show how it is possible for the state to use MMT to prop up profits; instead, they choose to lobby support for more abuses by the state. They begin with the argument that if the ‘private sector’ (i.e., the capitalists) choose to save more than they can invest productively, the state is obligated to make this excessive accumulation possible by running deficits and borrowing the excess savings (capital) that can’t be invested profitably. In the long run, private firms could not accumulate more profits than they can invest profitably if the state did not run the deficits (and thus issue interest paying treasury bonds) that make this possible.” And “Not surprisingly, Kelton is now Chief Economist, U.S. Senate Budget Committee, where she is educating dumb congresspersons on the basic facts of modern money theory.” #4

MMT’s policy guidance does NOT promote the cause of WeThePeople but of the Oligarchy.#5 It does NOT matter at all whether deficit-spending/money-creation is caused by military or social spending, the axiomatically correct Profit Law says Public Deficit = Private Profit. It is deficit-spending per se that feeds the Oligarchy.#6 The MMTers' demonstrative care for the unemployed, the environment, the elderly, the sick, and the poor is a fig leaf for pushing Wall Street’s agenda.

Jehu, the retarded Marxist, beats MMT for the wrong reasons, but the beating is justified because MMT is full-blown proto-scientific garbage ― paradoxically ― just like Marxianism.

Egmont Kakarot-Handtke


#1 Profit for Marxists
#2 See cross-references Profit
#3 The creation and value of money and near-monies
#4 The Kelton-Fraud
#5 MMT: Money-making for the one-percenters
#6 How MMT makes everybody happy

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REPLY to Jehu on Nov 21

200+ years after Smith/Marx, you still do not understand that economics from Smith/Marx up to MMT is proto-scientific garbage, so that’s something.#1


#1 Marx’s bicentennial ― nothing to discuss, nothing to celebrate

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REPLY to Jehu on Nov 22

You have studied economics and do not know what profit is? You are beyond help. Neither goodness nor I nor anybody else will school you or relieve you of your ignorance.

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REPLY to Jehu on Nov 25

You ask: “Wait, wha… I thought money was debt! Is everything debt now?”

The general macroeconomic Profit Law Qm≡Yd+(I−S)+(G−T)+(X−M) boils down to Public Deficit = Private Profit. Loosely speaking, profit is the mirror image of a growing public debt. Politically speaking, MMT’s deficit-spending/money-creation is a program for the permanent self-alimentation of the Oligarchy. #1, #2

Marxists, in their utter stupidit,y have not figured this out in the past 200 years. #3 Ultimately, profit does NOT originate from exploitation but from growing public/private debt. #4, #5

There is no need for “Looking forward to the book PROFIT: The first 5000 Years.” For details of the big picture, see cross-references Profit. #6

Of course, there is a relationship between deficit-spending/money-creation, debt, and money. #7

The first thing Marxists have to realize is that the pivotal concept of exploitation has to be replaced by cross-over exploitation. This, of course, is too much for their two brain cells.


#1 MMT: A free lunch for the Oligarchy
#2 Keynes, Lerner, MMT, Trump. Biden, and exploding profit
#3 Profit for Marxists
#4 Capitalism, poverty, exploitation, and cross-over exploitation
#5 Ricardo and the invention of class war
#6 Cross-references Profit
#7 The creation and value of money and near-monies

Macroeconomics: Drain the scientific swamp

Comment on Matt Franko/Nick Rowe on 'Why is macroeconomics so hard to teach?'

Blog-Reference

Macro is hard to teach because it is failed/fake science. Nick Rowe, according to The Economist, “a master of the craft”, realized nothing during his whole career. Too bad for his poor students. For details, see:

• The miracle cure of economists’ micro-macro schizo
• Fact of life: your econ prof is scientifically incompetent
• From false microfoundations to true macrofoundations
• The new macroeconomic Paradigm
• Is Nick Rowe stupid or corrupt or both?
• Cryptoeconomics ― the best of Nick Rowe’s spam folder
• “I never learned maths, so I had to think” ― another False-Hero-Memorial

Egmont Kakarot-Handtke


Related 'Economics: No method to the madness' and 'Macroeconomics: Economists are too stupid for science' and 'The canonical macroeconomic model'.

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AXEC136

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#DrainTheScientificSwamp on Nov 20

Both Walrasian microfoundations and Keynesian macrofoundations are materially and formally inconsistent, that is, scientifically worthless. In order to advance from brain-dead storytelling to science, economics needs a Paradigm Shift from provably false Walrasianism, Keynesianism, Marxianism, Austrianism, and MMT to true macrofoundations.#1, #2

Economics is a failed/fake science, and MMTers are part of it.


#1 New Economic Thinking: The 10 crucial points
#2 If it isn’t macro-axiomatized, it isn’t economics

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REPLY to Matt Franko on Nov 20

Science is well-defined: “Research is, in fact, a continuous discussion of the consistency of theories: formal consistency insofar as the discussion relates to the logical cohesion of what is asserted in joint theories; material consistency insofar as the agreement of observations with theories is concerned.” (Klant)

Often, research comes to the conclusion that a theory is materially/formally inconsistent. In this case, one has a failed theory. The Flat Earth Theory is a case in point. This theory is NO longer part of the scientific process.

In economics, things are special insofar as the four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― and all variants thereof are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got profit ― the pivotal concept of the subject matter ― wrong.

Thus, economics is a failed/fake science or what Feynman called a cargo cult science. #1

Your assertion: “There is no such thing as a ‘failed science’... science is a process...” proves that you are so far behind the curve that it is worse than comical. #2

The point is that economists in their utter scientific corruption simply sweep clear-cut refutation under the carpet: “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)

Take notice that MMT has been refuted. To “continue to write about it as if nothing had happened” is an act of plain scientific corruption.


#1 What is so great about cargo cult science? or, How economists learned to stop worrying about failure
#2 Economists cannot do the simple math of profit — better keep them out of politics

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REPLY to S400 on Nov 20

The Economist summarizes: “Macroeconomic theorists disagree on almost everything. That is one of the reasons it is such a hard subject to teach.”

In other words, after 200+ years, there is still no such thing as macroeconomics. And microeconomics is known to be a bad joke. So, there is NO economics.

Peirce said: “That the settlement of opinion is the sole end of inquiry is a very important proposition.”

Economists never got out of the swamp of worthless opinions and never reached the firm ground of scientific knowledge.

The intelligent layman can refute every supply-demand-equilibrium teacher. #1 Economics students, though, swallow this proto-scientific garbage hook, line, and sinker for generations.

MMT, too, is provably false. You neither understand the proof nor its far-reaching implications.


#1 How the intelligent non-economist can refute every economist hands down

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REPLY to S400 on Nov 21

Science is about true/false and nothing else. So, tell the blog audience which of the two macroeconomic relations a.k.a. sectoral balances equations, is true/false

(i) (I−S)+(G−T)+(X−M)=0 

(ii) (I−S)+(G−T)+(X−M)−(Qm−Yd)=0

Nick Rowe, who is regarded among his silly academic peers as “a master of the craft”, could not do it.#1, #2

“That the settlement of opinion is the sole end of inquiry is a very important proposition.” (Peirce)

So, this is the big chance of your sorry troll existence: settle the pivotal question of macroeconomics.

Perhaps one of the MMT geniuses, Mitchell, Mosler, Kelton, Tcherneva, Wray, Fullwiler, Forstater, Kaboub, Pettifor, Keen, Tymoigne, Willingham, Grumbine, Murphy, etc., can help you.

#1 It has been said before but economists still don’t get it

#2 Wikipedia and the promotion of economists’ idiotism (II)

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REPLY to Matt Franko, S400, Andrew Anderson, Konrad, Noah Way on Nov 22

The question of this thread is: “Why is macroeconomics so hard to teach?”

The answer is: “Because there is NO valid macroeconomics.

Why?

Because economists in general, and MMTers in particular, cannot answer the simple question of which of the two macroeconomic relations is true/false:
(i) (I−S)+(G−T)+(X−M)=0
(ii) (I−S)+(G−T)+(X−M)−(Qm−Yd)=0. #1

After having flunked the intelligence test at the entry level, the MMT promotion team should focus on what they are really good at. As Matt Franko said: “You are authorized to return to your finger painting...”


#1 MMT is idiocy and fraud

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AXEC121i

The Longbon fake news

Comment on Alan Longbon on ‘Good News: The U.S. Government Runs A $100B Deficit In October 2018, The Private Sector Runs A $100B Surplus’

Blog-Reference

Alan Longbon jubilates: “The US budget deficit is $100 billion in October 2018; this is a net expansion of income and savings in the private sector and explains the rebound in markets. The good news is that dollars are being added to the economy by the Federal government, allowing the private sector to post a $100 billion surplus. Private credit growth has rebounded this month and made a $17B contribution to aggregate demand and fiscal flows.”

There is the household-, business-, government- and foreign trade-sector. The “private sector” is an MMT swindle.#1, #2, #3, #4

The general macroeconomic Profit Law reads Qm≡Yd+(I−S)+(G−T)+(X−M). Let’s simplify it to Qm≡−S+(G−T). Then Alan Longbon’s message reads correctly: The US budget deficit, i.e. G−T, is $100 billion in October 2018. Private credit growth has rebounded this month and made a $17B, i.e. dissaving −S=$17B.#5

Ergo, monetary profit Qm increased to 117B. Much to celebrate for the Oligarchy. Special thanks to Mr. Trump for the exploding budget deficit.#6

Good news for the oligarchy is terrible news for the WeThePeople.

Egmont Kakarot-Handtke


#1 MMT: Money-making for the one-percenters
#2 Down with idiocy!
#3 The Kelton-Fraud
#4 How MMT makes everybody happy
#5 Secret Champagne for the MMT gods
#6 Keynes, Lerner, MMT, Trump and exploding profit

How MMT makes everybody happy

Comment on Clint Ballinger on ‘MMT & the Fourth Spark Plug: Descriptive vs. Prescriptive revisited’

Blog-Reference and Blog-Reference

Clint Ballinger explains how MMT works: “Just as with the mechanic, there is no way to look at an otherwise well-running four cylinder car that is running needlessly on 3 cylinders and not mention “Errr,,,you know…it would run amazing if you simply connect that cable back, which I can do for free in 10 seconds.” … Another way to say this: In this case there is in effect a “free lunch”. There is almost no effort involved in plugging the fourth cylinder in, but a massive gain that is currently being foregone for no reason.”

The keywords are “almost for free”. People like to get things “almost for free”. Fraudsters know this, and since the ancient gold makers, they promise ‘something for nothing.’ MMTers are no exception.

Let’s see how it works.

The elementary production-consumption economy is, for a star,t defined by three macroeconomic axioms (Y_w=WL, O=RL, C=PX), two conditions (X=O, C=Y_w), and two definitions (profit/loss Q≡C−Y_w, saving/dissaving S≡Y_w−C). Legend: Y_w wage income, W wage rate, L employment, O output, R productivity, C consumption expenditures, P price, X quantity bought/sold.

It always holds Q+S=0 or Q=−S, in other words, the business sector’s surplus = profit equals the household sector’s deficit = dissaving, and vice versa, the business sector’s deficit = loss equals the household sector’s surplus = saving. This is the most elementary form of the macroeconomic Profit Law.

Given the two conditions, the market-clearing price is derived for a start as P=W/R. So, the price P is determined by the wage rate W, which has to be fixed as a numéraire, and the productivity R. This is the macroeconomic Law of Supply and Demand.

Unfortunately, the elementary production-consumption economy is in a state of unemployment, and nobody has any idea of how to fix the problem.

Now, the smart MMTer Clint Ballinger talks to the unemployed: “My park has been devastated, I offer each of you the current wage W if you clean up the mess. Your work is appreciated as a valuable contribution to environmental protection.”

The hitherto unemployed happily agree and start to work while Clint Ballinger vanishes in the basement of his house and prints the extra wage sum Y_wu. The money is indistinguishable from central bank money.

The income of the household sector increases to Y_w+Y_wu. If the households fully spend their income, consumption expenditures increase and the price goes up a little (NO inflation). The household sector as a whole gets the SAME total real output O under the conditions of market clearing. The hitherto unemployed now get a share of the output of the business sector. Correspondingly, the hitherto employed get less in real terms. Their real wage falls unnoticeably.

The profit of the business sector increases because Q₁=C₁−Y_w is greater than Q=C−Y_w=0 because C₁ is greater than C. The situation of the business sector improves. It holds: the business sector’s profit is equal to Clint Ballinger’s counterfeit money creation Y_wu.

That’s a real win-win solution, isn’t it? Clint Ballinger gets his park tidied up for free, the unemployed are productively employed, and the business sector’s profit increases.#1, #2 The question is: Who holds the bag? Could it be WeThePeople?

Egmont Kakarot-Handtke


#1 MMT: Money-making for the one-percenters
#2 MMT, money creation, stealth taxation, and redistribution

Related 'MMT: A free lunch for the Oligarchy'. For the full-spectrum refutation of MMT, see cross-references MMT.

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AXEC142

MMT: A free lunch for the Oligarchy

Comment on Clint Ballinger on ‘MMT & the Fourth Spark Plug: Descriptive vs. Prescriptive revisited’

Blog-Reference and Blog-Reference

Like every good snake oil seller, Clint Ballinger first takes people away in a dream world: “Imagine you are an experienced mechanic. One day your neighbour comes home with a newly purchased used car. It is running terribly – sputtering and running slowly with little power. You look under the hood. It is a four cylinder car in good condition, and you notice that one of the spark plug cables is simply unconnected. The only thing that needs to be done to make the car run smoothly and with 100% power is to connect that spark plug so that all four cylinders fire. This is the case with economics and the economy. There are a minority of economists, MMT and Post Keynesian economists especially, who actually observe the real properties and understand the fundamentals of how the economy functions …”

The fact of the matter is, though, that neither MMTers nor Post-Keynesians understand how the economy works. Neither approach satisfies the scientific criteria of material and formal consistency. In other words, MMT is provably false. MMTers are NOT like the experienced mechanic; they are simply too stupid for the elementary mathematics that underlies macroeconomics. #1

As a result, the MMT policy of deficit-spending/money-creation has NO sound scientific foundations. MMTers are quite ordinary snake oil sellers. #2

Technically speaking, MMT is based on this sectoral balances equation (X−M)+(G−T)+(I−S)=0 and this equation is mathematically false. The correct balances equation reads (I−S)+(G−T)+(X−M)−(Q−Yd)=0, and this implies Public Deficit = Private Profit. In other words, the MMT policy of deficit-spending/money-creation boils down to money-making for the Oligarchy. The free lunch Clint Ballinger promises is indeed a free lunch, but NOT for WeThePeople but for the Oligarchy.#3
 
For WeThePeople, the essential points to know about MMT are
• MMT has NO sound scientific foundations,
• MMT’s foundational sectoral balances equation is mathematically false,
• MMTers do NOT know how the monetary economy works,
• MMT is a political agenda pushing in a scientific bluff package,
• MMT policy is NOT for the benefit of WeThePeople, #4
• MMT is just another political fraud,
• the storyteller Clint Ballinger is a pushy member of the MMT snake oil sales team. #5, #6, #7, #8

Egmont Kakarot-Handtke


#1 For the full-spectrum refutation of MMT, see cross-references MMT *
#2 MMT, Warren Mosler, and the little helpers from Wall Street and Academia
#3 Why the MMT benefactors of humanity never talk about profit
#4 Deficit-spending/money-creation is ALWAYS a bad deal for WeThePeople
#5 The Kelton-Fraud
#6 MMT: The one deadly error/fraud of Warren Mosler
#7 Richard Murphy: the MMT fraudster dressed up as realist
#8 MMT: Academic snake oil for the people

Related 'Keynes, Lerner, MMT, Trump, Biden, and exploding profit' and 'Keynesianism as ultimate profit machine' and 'MMT sucks' and 'MMT: The fusion of Wall Street and Academia' and 'Economics, MMT, and the capture of science by the political mob' and 'Economics, MMT, and the corruption of science'.

*  The formal proof is to be found here: Wikipedia, economics, scientific knowledge, or political agenda pushing? Because the foundational sectoral balances equation is false, the whole MMT approach is false, see Refuting MMT’s Macroeconomics Textbook.

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