Links on MMT is politically open and applicable to both Capitalism and Socialism

Comment on Peter Cooper on  ‘MMT is Politically Open and Applicable to Both Capitalism and Socialism’

Blog-Reference and Blog-Reference on Feb 10

Peter Cooper asserts: “Modern Monetary Theory (MMT) offers an understanding of sovereign (and non-sovereign) currencies that is applicable to a wide range of economic systems, including capitalist and socialist ones. Irrespective of the personal political preferences of its proponents, the theoretical framework in itself is neutral on the appropriate balance between public sector and private sector activity, or the relative merits of capitalism and socialism.”

This is not the case.

In the course of an enumeration of MMT’s essential features, Peter Cooper mentions “Government deficit equals non-government surplus.” and explains “Basic accounting relationships apply irrespective of a society’s politics. Funds created through government spending that have not been taxed back are held as financial assets by non-government.”

It is methodologically true, of course, that “Basic accounting relationships apply irrespective of a society’s politics”, however, MMT’s fundamental accounting relationship, i.e. the sectoral balances equation, is logically/mathematically false. Because of this fundamental blunder, the rest of MMT is scientifically worthless and neither applicable to capitalism or socialism.

The correct accounting relationship states Public Deficit = Private Profit.

For the proof see
► Rectification of MMT macro accounting
► What and where is profit?
► “But economics is not pure mathematics or logic” No, it is pure blather
► Stephanie Kelton’s legendary Plain-Sight-Ink-Trick

Egmont Kakarot-Handtke

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Links on Michael Roberts’ ‘The Green New Deal and changing America’

Blog-Reference on Feb 10

Calgacus cites: “Many of the MMT school don’t appear to understand (or at least don’t admit) that the very existence of MMT as a body of knowledge directly opposes ruling capitalist class interests.” and comments “Ohh, they almost all understand and admit it. They’re just quiet about it.”

To speak of MMT as a “body of knowledge” is a silly joke. MMTers have not even understood that their foundational sectoral balances equation is false. Descriptions of the operational details of Treasury/FED interactions are useful information but NOT scientific knowledge.

To maintain that “MMT directly opposes ruling capitalist class interests” is either self-delusion or fraud. Because of the macroeconomic Profit Law, i.e. Public Deficit = Private Profit, the MMT policy of deficit-spending/money-creation guarantees a permanent free lunch for the Oligarchy. For details see
► Keynes, Lerner, MMT, Trump and exploding profit
► Fraud comes always in the cloak of philanthropy, salvation, or threat of doom
► Socialism and scientific incompetence
► MMT and Marxism ― blather as immunizing stratagem

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Links on Lars Syll’s ‘Paul Samuelson–an economist in “the business of dishonesty”’

Blog-Reference on Feb 8

The problem with Samuelson is NOT silly policy advice but scientific incompetence. See
► The father of modern economics and his imbecile kids
► There is NO such thing as “smart, honest, honorable economists”

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Link on Bruce Wilds' ‘Deficit Spending Main Driver Of American Economy!’

Blog-Reference on Feb 5

Tom Hickey replies: “And Accounting 101 shows why this is wrong. Basic accounting shows that public debt increases private saving. The funding sources is currency issuance. The funds government net spends in aggregate are exactly equal to the funds that the private sector net saves in aggregate.”

Take notice that the assertion “public debt increases private saving” is provably false. Economists are too stupid for macroeconomic accounting. Because of the macroeconomic Profit Law, it holds Public Deficit = Private Profit.#1


#1 Stephanie Kelton’s legendary Plain-Sight-Ink-Trick

Fraud comes always in the cloak of charity, salvation, or the threat of doom

Comment on Jacob Weindling on ‘What Is Modern Monetary Theory and Why Is It So Important to the Green New Deal?’*

Blog-Reference

Jacob Weindling asserts: “… the question of … how do you pay for the Green New Deal?’ has already been answered. The HuffPo piece was written by Professor of Economics and Public Policy at Stony Brook University, Stephanie Kelton, who was also the Chief Economist for the Democrats on the U.S. Senate Budget Committee. Yesterday, she posted a thread outlining some legitimate economic questions that MMT claims to answer.” and “The question of how to pay for the Green New Deal is pretty silly when you take a step back and look at the larger issue at hand. Scientists are nearly in unanimous agreement that unless we do something unprecedented in the next twelve years, the Earth will become irreversibly hostile to human life in twenty years, with an estimated cost of $69 trillion to deal with this apocalyptic future.”

Jacob Weindling is either a confused blatherer or a fake Progressive agenda pusher. #1

The answer to the question “How are you going to pay for it” has two progressive answers: the genuine and the fake. The genuine Progressive answers: simple, by cutting military spending. #2 The fake Progressive answers: simple, by deficit-spending/money-creation.

MMTers are fake Progressives. In fact, MMTers are agenda pushers for the Oligarchy. How can one be sure of it?

Economically, there are two questions for government spending (i) on what is the money spent (e.g., (ia) administrative-, (ib) military-, (ic) social budget, etcetera), and (ii) is government spending G less, equal, or greater than taxation T, i.e., (iia) G<T, (iib) G=T, (iic) G>T? Needless to emphasize that these questions are constantly confused, whether intentionally or unintentionally, does not matter. The question is further confused by lumping it together with the full employment policy.

MMTers claim that the answer to almost all economic/social problems is permanent deficit-spending/money-creation, with some caveats with regard to inflation.

Now, MMT policy has one property that makes it disadvantageous for WeThePeople and advantageous for the Oligarchy, #3, #4, #5, i.e., because of the macroeconomic Profit Law, it holds Public Deficit = Private Profit. So, no matter how the money is allocated between administrative, military, social, and environmental spending, as long as there is deficit-spending/money-creation, the Oligarchy makes a profit equal to the deficit. #6

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 fabulous public debt ($21.5 trillion).

No matter what MMTers claim that permanent public deficit spending is good for, #6 it is ultimately good for the permanent self-alimentation of the Oligarchy.

While MMTers have hitherto posed as friendly helpers for the unemployed and socially disadvantaged, they now sell deficit spending as the last hope for saving humanity and the planet.

MMT is proto-scientific garbage and social fraud. This is what economics has been since Adam Smith/Karl Marx. Economics is failed/fake science. The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, MMT ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got the foundational concept of the subject matter ― profit ― wrong.

Egmont Kakarot-Handtke


* Paste
#1 MMT Progressives: stupid or corrupt or both?
#2 What the world wants and how to pay for it using military expenditures
#3 How MMT makes everybody happy
#4 MMT, money creation, stealth taxation, and redistribution
#5 Deficit-spending/money-creation is ALWAYS a bad deal for WeThePeople
#6 MMT: If you’ve got a problem, I don’t care what it is, let me help

Related 'The Kelton-Fraud' and 'Down with idiocy!' and 'Stephanie Kelton on how to become fabulously wealthy' and 'MMT sucks' and 'MMTers are NOT Friends-of-the-People'.

Socialism and scientific incompetence

Comment on David Ruccio on ‘Socialism and exploitation’

Blog-Reference and Blog-Reference on Feb 14

There is no such thing as economics. There are TWO fundamentally different types of economics: political economics and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda; 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.

For non-economists, the most important thing to realize is that theoretical economics (= science) has 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 a failed science. The four main 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.

As a result, since Adam Smith/Karl Marx economic policy guidance NEVER had sound scientific foundations. Economists of all colors sell proto-scientific garbage in the bluff package of science.

This, of course, also holds for Marxianism:

• Marx’s profit theory is provably false. #1
• As a consequence, the concepts of exploitation and class are false. Marx lacks the concept of cross-over exploitation. #2, #3
• Because the foundational concepts are false, Marx’s whole analytical superstructure is false.
• Because the theory is defective, Marxian economic policy guidance was bound to fail from the very beginning. #4, #5
• After-Marxians have not spotted Marx’s foundational blunder to this day. #6, #7
• Marxians are scientifically incompetent just like non-Marxians and altogether are only employable as useful political idiots.

Because both Capitalism and Socialism have no sound scientific foundations, their respective economic policies are not much more than blind political agenda pushing. Never forget that both left-wing and right-wing economists do NOT know what profit is and how the actual monetary economy works.

David Ruccio concludes: “Workers, especially young workers, are suffering the consequences of increased exploitation and beginning to look beyond capitalism, to different ways of organizing the U.S. economy and society.” If so, what is their winning formula? Go for it but do NOT think that economists have any solutions for you or that they are of any help. Forget this Capitalism/Socialism thing. For 200+ years, economists have been incompetent blatherers who are too stupid for the elementary mathematics that underlies macroeconomics. Independent of their political color, economists have always been a real hazard to their fellow citizens. #8

Egmont Kakarot-Handtke


#1 Profit for Marxists
#2 Capitalism, poverty, exploitation, and cross-over exploitation
#3 If we only had classes
#4 Ricardo, too, got profit theory wrong
#5 Ricardo and the invention of class war
#6 MMT and Marxism ― blather as immunizing stratagem
#7 MMT ― backstop or advanced life support for the Oligarchy?
#8 Econogenics in action

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REPLY to Tom Hickey, Clint Ballinger on Feb 16

Profit and rent are, in the final analysis, the same thing. Ricardo messed things up, and in 200+ years, economists still have not realized it. #1, #2, #3


#1 When Ricardo Saw Profit, He Called It Rent: On the Vice of Parochial Realism
#2 Ricardo, too, got profit theory wrong
#3 Ricardo and the invention of class war

The day when WeThePeople sends debt-deranged economists to hell

Comment on Bradford DeLong on ‘Debt Derangement Syndrome’

Blog-Reference and Blog-Reference

After some name-dropping (Rogoff, Blanchard) and False-Hero-Worshipping (eminent, highly knowledgeable) the applause-troll Bradford DeLong offers a piece of economic wisdom: “Whenever the private sector stops spending enough to keep unemployment low and jobs easy to find, the public sector needs to fill the gap in aggregate demand.”

Now, good old Keynesianism stood under the premise of temporary deficit spending with budget-balancing over the business cycle. Somehow this did not happen and government debt rose worldwide faster than GDP. A permanently growing public debt means that a market economy is on the permanent life-support of the State. Some people got the uneasy feeling that permanent debt growth is unhealthy and cannot go on forever. They blew the panic whistle several times in the past decade but were always proven wrong.

At present, the loudspeakers of the profession are deeply relaxed and Bradford DeLong scolds the scaremongers: ”I now have hope that future economists will remember the sorry history of this past decade and prevent it from being repeated.”

In his utter scientific incompetence, Bradford DeLong completely ignores the massive immediate and delayed distributional effects of growing public debt.

To make the argument short, the macroeconomic Profit Law is given as Q≡Yd+(I−S)+(G−T)+(X−M) which reduces to Q=(G−T) with Yd, I, S, X, M blanked out for a moment. The reduced Profit Law says that the profit of the business sector as a whole Q is equal to the deficit (G−T) of the public sector. In a nutshell: Public Deficit = Private Profit. In other words, permanent public deficit-spending is a permanent free lunch for the Oligarchy.

As a rule of thumb, the financial wealth of the Oligarchy grows in lockstep with the public debt. In other words, fabulous wealth is the mirror image of fabulous public debt ($21.5 trillion).

The deficit spending on social measures does NOT benefit WeThePeople as a whole because the benefits of one group are paid for in real terms through unnoticeable stealth taxation via the price mechanism by the complementary group.

The permanent free lunch for the Oligarchy is beefed up with interest on a permanently rolled-over growing public debt. This amounts to reversed progressive taxation of WeThePeople by the IRS on behalf of the Oligarchy.

Finally, the national debt is NOT savings of WeThePeople but deferred taxes. In order to eventually redeem the national debt, the government has to eventually tax WeThePeople. This will be the day when WeThePeople sends debt-deranged economists to hell.

Egmont Kakarot-Handtke

Thinking about economic policy for future PM Corbyn

Comment on Richard Murphy on ‘The political economy of Labour’s fiscal rule’

Blog-Reference

What is the unique selling proposition of MMT vis-a-vis good old Keynesianism? Keynesianism stands for temporary deficit spending with budget-balancing over the business cycle, MMT stands for permanent deficit-spending/money-creation.

However, with regard to the current situation in the UK with the interest rate close to the ZLB, this amounts to the same anti-Austerity policy. In practical policy terms, the fuss between Simon Wren-Lewis/Jonathan Portes and Richard Murphy over the relative merits of monetary and fiscal policy seems a bit overblown.

So let us look at politics. For political planers, the main issue is to make provisions for their worst-case scenario that Jeremy Corbyn becomes the next PM. There are two groups who compete for the role of Mr. Corbyn’s economic policy adviser. The Wren-Lewis/Portes group attempts to keep Mr. Corbyn on the old path of monetary/fiscal policy albeit with more active employment and social policy, the Murphy group tries to get a handle on the Treasury/Central Bank for a permanent MMT deficit policy that spends on everything from employment to the NHS to a Green New Deal. The common denominator, though, is to prevent a potential PM Corbyn from pursuing a genuine socialist policy.

Because of Public Deficit = Private Profit, there is some perverse humor in the idea that Mr. Corbyn either adopts a temporary or a permanent free-lunch program for the Oligarchy.#1

Egmont Kakarot-Handtke


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

Related 'MMT Progressives: The knife in the back of WeThePeople' and 'How Bill Mitchell stalks Jeremy Corbyn' and 'Richard Murphy: the MMT fraudster dressed up as realist' and 'Economics has arrived at the bottom of the proto-scientific shithole' and 'Mr. Corbyn and the perils of political economics' and 'Endtime for soapbox economists' and 'MMT and grassroots movements' and 'MMTers are NOT Friends-of-the-People' and 'Why the British Labour Party should NOT adopt MMT' and 'Economics as a cover for agenda pushing' and 'MMT: A Trojan Horse for Labour courtesy of the Oligarchy' and 'MMTers are false Progressives and false Friends-of-the-People' and 'MMT and the promotion of Wall Street's idea of social policy' and 'How to spot economics trolls' and 'Prophet Stephanie divines the seizure of the means of production of currency' and 'How Bill Mitchell stalks Jeremy Corbyn' and 'Economic backstabbing: Bill Mitchell hits again' and 'Bill Mitchell’s pure MMT teachings for British Labour' and 'The economist as useful political idiot' and 'Links on MMTers push Wall Street’s agenda' and 'Links on Austerity' and 'Political economics and intellectual corruption' and 'The retirement of a fake scientist and real agenda pusher' and 'Mission accomplished: Economists as useful idiots of the Oligarchy'.

For details of the big picture see cross-references Political Economics/Stupidity/Corruption.

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mainly macro Feb 5

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Twitter Feb 18, The splitting comes faster than signaled

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Twitter Feb 23, According to the Financial Times, Britain needs no "Corbynism"

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What and where is profit?

Comment on Clint Ballinger’s ‘1000 CASTAWAYS: Fundamentals of Economics’

Blog-Reference

Since Adam Smith/Karl Marx, economists get profit wrong: “A satisfactory theory of profits is still elusive.” (Desai, Palgrave Online Dictionary, 2008)

Economics without a proper understanding of the concept of profit is like physics without a proper understanding of the concept of energy. This tells one that economics is to this day roughly at the level of Neanderthal science.#1, #2, #3

This is the actual state: 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.

Clint Ballinger is well aware of the dismal state of the dismal science and takes the gloves off with his new book: “Warren Mosler once said … the following: "Therefore, the key to understanding Modern Monetary Theory is this vertical-horizontal relationship. When one understands this, then Abba Lerner’s principles of functional finance become obvious." In some ways, 1000 CASTAWAYS is an attempt to express MMT to undergraduates/laypeople through this lens, Mosler’s statement, even making a book-length treatment of it. Also, I plan to purposefully pitch it to undergraduate Econ101 students reading Mankiw and similar BS textbooks, telling them it is literally a corrective to what they are being brainwashed in.”

So, let us make the instant acid test and search the whole text for the word profit. Is profit anywhere properly defined?#4 Nil return. Another economic model without profit. MMTers, too, mess macroeconomics up.#5, #6

Without further ado: cast away the 1000 CASTAWAYS because Clint Ballinger, like the rest of his retarded colleagues, gets the “Fundamentals of Economics” wrong.

Egmont Kakarot-Handtke


#1 The Profit Theory is False Since Adam Smith
#2 Profit for Marxists
#3 For details of the big picture, see cross-references Profit
#4 How the Intelligent Non-Economist Can Refute Every Economist Hands Down
#5 Why the MMT benefactors of humanity never talk about profit
#6 For the full-spectrum refutation of MMT, see cross-references MMT

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Graphic AXEC109i

From MMT misunderstandings to the true Theory of Money

Comment on Jo Michell on ‘Misunderstanding MMT’ #1, #2

Blog-Reference and Blog-Reference

Jo Michell summarizes what Robert Murphy says are his core points of MMT:
1. All money is created by the state or other banks acting under state license
2. Money only has value because the government promises to back it …
3. … because taxes must be paid in government-issued money
4. Therefore, government spending comes before taxation
5. Government deficits are necessary and good because, without them, the means to make settlements would not exist in our economy
6. This liberates us to think entirely afresh about fiscal policy.

Jo Michell focuses his critique on point 5, and concludes: “The macroeconomic reason for running a deficit is straightforward and has nothing to do with money. The government should run a deficit when the desired saving of the private sector exceeds the sum of private investment expenditure and the surplus with the rest of the world. This is not an insight of MMT: it was stated by Kalecki and Keynes in the 1930s.”

Because point 2 of Robert Murphy’s list can be shown to be false, there is no need to say anything about Jo Michell’s argument.

In order to see where MMT fails, one has to start with the most elementary version of what Keynes called the “monetary theory of production”.

As the 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) 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). The price P is determined by the wage rate W, which takes the role of the nominal numéraire, and the productivity R. This translates into W/P=R (2), i.e., the real wage is equal to the productivity.

Monetary profit/loss of the business sector is defined as Qm≡C−Yw, and monetary saving/dissaving of the household sector is defined as Sm≡Yw−C. It always holds Qm+Sm=0, or Qm≡−Sm, in other words, the business sector’s nominal surplus = profit equals the household sector’s nominal deficit = dissaving. Vice versa, the business sector’s deficit = loss equals the household sector’s surplus = saving. Under the initial condition of budget-balancing C=Yw, total monetary profit is zero.

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.

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.

For the case of a balanced budget C=Yw, the idealized transaction pattern of deposits/overdrafts of the household sector at the central bank over the course of one period is shown in 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 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 kκ 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 transaction equation reads M=κWL in the case of budget balancing and market clearing. 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.

So, the crucial point is to make sure that the business sector gets transaction money from the central bank if it plans to increase employment. In the old days, firms issued bills of exchange, which were discounted by the banking system and redeemed within a short time span. Something a bit more sophisticated is required to ensure that the business sector is in no way hampered by a lack of transaction money. That is a question of the institutional design of the central bank.

In sum, (i) money is a generalized IOU (ii) no taxes are needed to get the monetary economy going and growing, (iii) there is NO fixed quantity of money, (iv) money is created and destroyed by the transactions between the household and the business sector, (v) money is endogenous, (vi) the value of money is given by W/P=R, i.e. is equal to the productivity, (vii) if the rate of change of the wage rate W is equal to the rate of change of productivity R there is neither inflation nor deflation.

The unhindered creation of fiat money for the payment of the wage bill is the correct way of bringing money into the economy. MMT’s deficit spending is the incorrect way. Why? Because of the macroeconomic Profit Law, it holds Public Deficit = Private Profit, in other words, bringing money at the demand side into the economy creates a free lunch for the Oligarchy.#4

When all misunderstandings are clarified, this is the ultimate reason why self-styled Progressives like Richard Murphy want Labour so badly to adopt MMT’s policy of deficit-spending/money-creation.#5, #6

Egmont Kakarot-Handtke


#1 Jo Michell Misunderstanding MMT
#2 Richard Murphy Why the left and Labour really do need to adopt the core ideas of modern monetary theory
#3 Graphic AXEC98 Idealized transaction pattern
#4 Keynes, Lerner, MMT, Trump and exploding profit
#5 Very busy these days: Wall Street’s agents
#6 Why the British Labour Party should NOT adopt MMT

Related 'MMTers are NOT Friends-of-the-People' and 'How Bill Mitchell stalks Jeremy Corbyn' and 'The economist as useful political idiot' and 'Mr. Corbyn and the perils of political economics' and 'Political economics: Who hijacks British Labour?' and 'MMT and the overall political corruption of economics' and 'Richard Murphy: the MMT fraudster dressed up as realist'.

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REPLY to Kaivey on Feb 7

Richard Murphy, as a hardcore MMT foot soldier of the Oligarchy, is not at all enthusiastic about taxing the rich: “The time for pussy-footing with new taxes to extract a little more from the rich is yesterday’s news. There is no time for that. This is the time to create money for change.”#1


#1 MMT: Distribution is the drawback NOT Inflation

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#PointOfProof

Feb 8

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