Free academia from economics

Comment on David Ruccio on ‘Academic unfreedom in economics’

Blog-Reference

You say, “Most departments of economics [in North America] offer — in the classroom and in terms of research and policy advice — only mainstream economics. By that, I mean they hire economists who only teach, conduct research, and offer policy advice defined by one or another version of mainstream (neoclassical and Keynesian) economics. Other approaches to economics — generally, these days, referred to as heterodox economics — simply aren’t recognized by or represented within those departments.” (See intro)

There is a big problem here. Imagine the followers of geocentrism complain that academia is dominated by the followers of heliocentrism. Or that the Astrologers and Alchemists complain that there is no place for them in academia. Would anyone seriously conclude from these facts that there is unfreedom in physics, astronomy, or chemistry?

The real problem is this. Academia is, loosely speaking, committed to science — this is the original idea. And science is well-defined by material and formal consistency (Klant, 1994, p. 31). To recall, when Plato founded the first academy, he explicitly excluded what he considered nonscientists: "Let None But Geometers Enter Here." (See Wikipedia)

The practical problem is that it is not always easy to establish material and formal consistency, and this is what the demarcation problem has always been about: how to draw a clear line between science and non-science. “The problem of finding a criterion which would enable us to distinguish between the empirical sciences on the one hand, and mathematics and logic as well as ‘metaphysical’ systems on the other, I call the problem of demarcation. This problem was known to Hume who attempted to solve it. With Kant, it became the central problem in the theory of knowledge.” (Popper, 1980, p. 34)

As a good sophist, McCloskey has given the whole topic a social spin, insinuating that demarcation is the same as discrimination: “In practice methodology serves chiefly to demarcate Us from Them, demarcating science from nonscience. Once the modernists have found a Bantustan for nonscience, such as astrology, psychoanalysis, acupuncture, nutritional medicine, Marxist economics, spoonbending, or anything else they do not wish to discuss, they can get on with the business at hand with a clear head. Methodology and its corollary, the Demarcation Problem (What is Science? How is It to be distinguished from nonscience?), are ways at stopping conversation by limiting conversation to people on our side of the demarcation line.” (1998, p. 161)

Contrary to this subtle redefinition, it has to be affirmed that demarcation is not only legitimate but necessary in order to protect the integrity of science, which consists in upholding the distinction between true and false regardless of any other criteria.

It is pretty clear who should be in and who should be out: “A genuine inquirer aims to find out the truth of some question, whatever the color of that truth. ... A pseudo-inquirer seeks to make a case for the truth of some proposition(s) determined in advance. There are two kinds of pseudo-inquirer, the sham and the fake. A sham reasoner is concerned, not to find out how things really are, but to make a case for some immovably-held preconceived conviction. A fake reasoner is concerned, not to find out how things really are, but to advance himself by making a case for some proposition to the truth-value of which he is indifferent. (Haack, 1997, p. 1)

Therefore, it is of the utmost importance to distinguish between political and theoretical economics. The main differences are:
(i) The goal of political economics is to push an agenda; the goal of theoretical economics is to explain how the actual economy works.
(ii) In political economics, anything goes; in theoretical economics, scientific standards are observed.

Theoretical economics has to be judged according to the criteria true/false and nothing else. The history of political economics, on the other hand, can be summarized as the perpetual violation of well-defined scientific standards.

The fact of the matter is that theoretical economics has, from the very beginning, been dominated by the agenda pushers of political economics. Smith and Mill fought against the precapitalistic order; Marx and Keynes were agenda pushers, so were Hayek and Friedman, and so are Krugman and Varoufakis.

Political economics is scientifically worthless. Economics is a failed science. Orthodox economics does not satisfy scientific criteria, and neither does Heterodoxy (see, for example, 2011).

Theoretical economics has been hijacked by politics and instrumentalized. Political economics, in turn, has occupied academia. Academic freedom means not only getting rid of Neoclassical economics but of all of economics as far as it is political economics. There can be no freedom and pluralism of false theories. Academic freedom does not include the freedom to push a political agenda, nor to talk plain proto-scientific garbage. Both current Orthodoxy and Heterodoxy have to go the way of astrology.

Egmont Kakarot-Handtke


References
Haack, S. (1997). Science, Scientism, and Anti-Science in the Age of Preposterism. Skeptical Inquirer, 21(6): 1–7. URL
Kakarot-Handtke, E. (2011). Why Post Keynesianism is Not Yet a Science. SSRN Working Paper Series, 1966438: 1–20. URL
Klant, J. J. (1994). The Nature of Economic Thought. Aldershot, Brookfield: Edward Elgar.
McCloskey, D. N. (1998). The Rhetoric of Economics. Madison, London: University of Wisconsin, 2nd edition.
Popper, K. R. (1980). The Logic of Scientific Discovery. London, Melbourne, Sydney: Hutchison, 10th edition.

Related ‘The case for pure economics’ and ‘Time to get rid of political economics’ and ‘Heterodoxy: promising or hopeless?’ and 'How to be a good scientist' and 'A rough business plan for science'

Dear idiots, MMTers are Wall Street’s agenda pushers

Links on Patricia Cohen’s ‘Modern Monetary Theory Finds an Embrace in an Unexpected Place: Wall Street’*

Blog-Reference

MMTers have always pushed the agenda of Wall Street/WeTheOligarchy and NOT of WeThePeople. Wall Street’s open embrace only confirms the obvious. After all, the macroeconomic Profit Law boils down to Public Deficit = Private Profit and thus the Oligarchy’s financial wealth and public debt (currently $22 trillion) grow in lockstep. The so-called free-market economy ― and Wall Street with it ― is on the full life support of the state. MMT is NOT a scientifically valid theory but political agenda pushing for the Oligarchy in a scientific/social bluff package.

► Very busy these days: Wall Street’s agents
► MMT and the promotion of Wall Street's idea of social policy
► MMT = proto-scientific garbage + deception of the 99-percenters
► How MMT enlightens Washington
► MMT, Warren Mosler, and the little helpers from Wall Street and Academia
► MMT: The fusion of Wall Street and Academia
► Secret Champagne for the MMT gods
► Keynes, Lerner, MMT, Trump, Biden, and exploding profit
► MMT Progressives: stupid or corrupt or both?
► MMT: A free lunch for the Oligarchy
► MMT: Academic snake oil for the people
► Deficit-spending/money-creation is ALWAYS a bad deal for WeThePeople
► MMTers are NOT Friends-of-the-People
► The Kelton-Fraud
► Warren Mosler: scientific dilettante and political fraudster
► MMT is an economic policy fraud
► MMTers make Capitalism work

► MMT Progressives: The knife in the back of WeThePeople

► MMT: The fusion of Wall Street and Academia

► MMT and the overall political corruption of economics

Egmont Kakarot-Handtke


* New York Times

Related 'MMT and the canonical macroeconomic model' and 'MMT and grassroots movements'. For the full-spectrum refutation of MMT, see cross-references MMT.

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AXEC143d Macroeconomic profit ― the AXEC Profit Law ©®

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Twitter Apr 7 An indirectly related lockstep

Source: Holger Zschaepitz

Felix Salmon The upside of printing money Axios Apr 8,

Message: "For the time being, the government should keep on spending, even if it doesn't raise taxes. The economy — and the market — will only benefit as a result."

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#PointOfProof

Apr 7

before

after

Tribalism is NOT the problem of economics

Comment on Blair Fix on ‘Tribalism in Science (and Economics)’

Blog-Reference

Blair Fix summarizes: “If you ask the average person what ‘science’ is, they’ll probably answer something like ‘it’s what we know about the world’. To the lay person, ‘science’ is a body of facts. To the trained scientist, however, ‘science’ means something different. It’s not a body of knowledge. It’s a method for determining what’s true and what’s not. To determine the way the world works, science appeals to evidence. The ideal of science is beautifully summarized by the motto of the Royal Society: nullius in verba. It means ‘take nobody’s word for it’. In science, there is no authority. There are no gods, no kings, and no masters. Only evidence.”

In more technical terms: “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)

Economics claims to be science#1 but is merely what Feynman called a cargo cult science. As always and everywhere, there is the genuine thing and the look-alike: “They’re doing everything right. The form is perfect. ... But it doesn’t work. ... So I call these things cargo cult science because they follow all the apparent precepts and forms of scientific investigation, but they’re missing something essential.”

The general public cannot spontaneously tell the difference between the genuine thing and the look-alike and this provides a comfortable ecological niche for the look-alikes in all walks of life from the ordinary impostor to the fake scientist.#2

Strictly speaking, there is no such thing as economics. There are TWO economixes: 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.

Political economics has produced NOTHING of scientific value in the last 200+ years. The major approaches — Walrasianism, Keynesianism, Marxianism, Austrianism, MMT — are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational economic concept profit wrong.

Theoretical economics has to be judged according to the criteria true/false and NOTHING else. Theoretical economics, though, had been hijacked from the very beginning by the agenda pushers of political economics.

Blair Fix thinks this is due to our evolutionary heritage: “When we do science, we have to fight against this tribal instinct. Not surprisingly, we often fail. Rational skepticism gets overpowered by the instinct to trust members of our group. If the group happens to be powerful — say it dominates academia in a particular discipline — then false ideas get entrenched as ‘facts’. This is a problem in all areas of science. But it’s a rampant problem in economics. The teaching of economics is dominated by the neoclassical sect, which has managed to entrench itself in academia. Among this sect, I believe, tribal instincts trump the rational appeal to evidence.”

This evolutionary explanation is a bit silly. Economics is not science but the propaganda arm of the Oligarchy. The heap of inconsistent economic approaches has no truth-value, however, this does not matter much in the political realm where all that counts is propagandistic use-value. More has not been expected by the founders and funders of economics departments, chairs, and institutions. And this has always been delivered. Rockefeller called the university ‘the best investment’ he ever made.

This ― and NOT biologically entrenched tribalism ― is the built-in bias of economics. Economics is controlled with the usual incentives of prestige and money and publicity. Economists are  the useful idiots of the Oligarchy which selects their agenda pushers systematically and rewards them handsomely.#3 Arrow, Debreu and other members of the Cowles “tribe” were awarded the “Nobel” for the “proof” of the superiority of the market economy, i.e. for a political PR stunt and not for a genuine scientific achievement.#4

Tribalism is NOT the problem of economics, scientific incompetence is.

Egmont Kakarot-Handtke


#1 About the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel” see here.
#2 The economist as storyteller
#3 How to spot economics trolls
#4 Economics, math, pluralism, and corruption

Related 'Circus Maximus: Economics as entertainment, personality gossip, virtue signaling, and lifestyle promotion' and 'Economics ― not science, not ideology, just useful idiocy' and 'Economics, too, is pre-truth' and 'There is NO such thing as “smart, honest, honorable economists”' and 'Economists’ silly kindergarten games' and 'Links on capital-T Truth, stupidity, corruption' and 'Links on the Economics Nobel'.

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REPLY to Yoshinori Shiozawa on Oct 11

You say: “What do you propose as theoretical economics that challenges to explain how the actual economy works? This is the most important point. Criticizing neoclassical economics alone does not bring a new economics i.e. theoretical economics that explains how the actual economy works.”

True indeed and basic methodological stuff: “The moral of the story is simply this: 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)

So, a Paradigm Shift is indispensable. Economics has to move from false Walrasian microfoundations and false Keynesian macrofoundations and false heterodox Pluralism to true macrofoundations.

For details of the big picture see cross-references Paradigm Shift.

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REPLY to Ken Zimmerman on Oct 13

The major approaches — Walrasianism, Keynesianism, Marxianism, Austrianism, MMT — are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational economic concept profit wrong. Economics is a failed science.

The axiomatically correct macroeconomic Profit Law is given by Q=Yd+(I−S)+(G−T)+(X−M) and boils down to Public Deficit (G−T>0) = Private Profit Q which means that the Oligarchy’s financial wealth and public debt grow in lockstep. It is the very characteristic of the free-market economy that it is already for a long time on the life support of the State. Profit is produced mainly by the government through deficit-spending/money-creation.#1 The Oligarchy, in turn, uses the opulent free lunches to corrupt what remains of the State’s legislative, executive, judiciary institutions, including academia.#2

All this happens openly before the authors and commentators of the RWER blog. These folks, though, in their bottomless stupidity realize NOTHING but instead blather about biology/evolution, god/religion, astronomy, and the invention of human sociality about 20,000-30,000 years ago.

This senseless blather, of course, distracts from the biggest deficit-coup of all times that the Oligarchy is currently pulling off with the help of a bunch of MMT academics.#3

Economics has NEVER been a science but a smokescreen for political agenda pushing. BOTH orthodox and heterodox economists are stupid or corrupt or both. And the whole pile of scientific and human crap is tomorrow crowned for the 50th time with the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”.


#1 Keynes, Lerner, MMT, Trump, etc. and exploding profit
#2 For a meeting-photo of billionaire Jeffrey Epstein and economist Larry Summers see Twitter and New York Times

Source: Twitter

#3 Dear idiots, MMTers are Wall Street’s agenda pushers

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#PointOfProof

Oct 15

before

after

A rough business plan for science

Comment on Bob on ‘Steve Keen — Teaching Economics the Pluralist Way’

Blog-Reference

The problem of economics is that political economics (= agenda-pushing) has hijacked and dominated theoretical economics (= science) since the founding fathers. To get out of the current pluralism of provably false theories (Walrasianism, Keynesianism, Marxianism, Austrianism, and their derivatives) requires that theoretical economics emancipate itself from political economics. Or, more generally, that science emancipates itself from politics or any other conceivable other-directedness. Other-directedness — this is rather trivial — takes mostly the form of money. As Bob reminds everybody in his post above: “If that were to be done [ejection of political economists from the scientific community], funding for the remaining sciences might dry up.”

The proper separation of politics/business on the one hand and science on the other presupposes the solution to the funding problem. Obviously, there can be no full scientific independence without full financial independence.

The curious thing is that what we call material wealth/innovative products/civilization/ culture/ knowledge has, for the most part, been created by science, but scientists have to go begging for funds and are de facto continuously threatened with the withdrawal of funds. As a result, science is leveraged where government, the military, corporations, Wall Street, and wealthy individuals pour money in, and it is de-leveraged elsewhere.

How the relationship between science and politics/business gradually developed over time can be gleaned from the following episodes.

“At one point in that 100 years, Lord Ernest Rutherford was visited by a minister of the Queen. He proudly and busily demonstrated what he had learned about radio. The minister said, that’s all very good, but what is it good for. Lord Rutherford replied that he did not know, but he guaranteed that at some point the government would tax it.” #1

“The investors showed little interest in Tesla’s ideas for new types of motors and electrical transmission equipment. They were more interested in developing an electrical utility than inventing new systems. They eventually forced Tesla out, leaving him penniless. He even lost control of the patents he had generated, since he had assigned them to the company in lieu of stock. He had to work at various electrical repair jobs and as a ditch digger for $2 per day.” #2

“In the mid-1890s the conglomerate General Electric, backed by financier J. P. Morgan, was involved in takeover attempts and patent battles with Westinghouse Electric. A patent-sharing agreement was signed between the two companies in 1896, but Westinghouse was still cash-strapped from the financial warfare. To secure further loans, Westinghouse was forced to revisit Tesla’s AC patent, which bankers considered a financial strain on the company. ... In 1897, Westinghouse explained his financial difficulties to Tesla in stark terms, saying that, if things continued the way they were, he would no longer be in control of Westinghouse Electric and Tesla would have to ‘deal with the bankers’ to try to collect future royalties. Westinghouse convinced Tesla to release his company from the licensing agreement over Tesla’s AC patents, in exchange for Westinghouse Electric purchasing the patents for a lump sum payment of $216,000. This provided Westinghouse a break from what had turned out to be an overly generous $2.50 per AC horsepower royalty, due to alternating current’s rapid gain in popularity.” #2

“Starting in 1934, the Westinghouse Electric & Manufacturing Company began paying Tesla $125 per month as well as paying his rent at the Hotel New Yorker, expenses the Company would pay for the rest of Tesla’s life. Accounts of how this came about vary. Several sources say Westinghouse was worried about potential bad publicity surrounding the impoverished conditions their former star inventor was living under. It has been described as being couched in the form of a “consulting fee” to get around Tesla’s aversion to accept charity, ...” #2

Between Rutherford’s independent research and Tesla’s living from corporate charity, something has gone badly wrong with science.†

Roughly speaking, scientists are individuals who are confident that they can figure out exactly how a greater or smaller part of the universe works. Often, this part of reality is outside the perimeter of commonsensical everyday reality or of what Marshall called the ordinary business of life. What scientists need is time, absence of all kinds of disturbances/ distractions, more or less expensive tools, cooperation/exchange of ideas, protection from morons/commonsensers/trolls, and, just like anybody else, food/clothing/shelter/health-care. Whether this investment of time/resources/talent produces (i) new scientific knowledge, and (ii) an economic profit is highly uncertain. This makes scientists dependent on people with a mindset and an agenda that is very different from their own, i.e., investors, speculators, bankers, sponsors, financiers, entrepreneurs, CEOs, politicians, etcetera.

While for the individual scientist, the outcome of her/his research is highly uncertain, the net financial gain of science as a collective enterprise is gigantic. What science as an institution — let us call it the New Academy — has to achieve is to get x percent of the selling price of every product/service that incorporates the results of scientific research. This money then flows back to new research. It takes two forms: (i) unconditional lifelong support of researchers with the normal/minimum necessities of life, (ii) spending on necessary tools/instruments/hardware/software/materials, etc.. The decisions about the budget lie in the sovereignty of the members of the New Academy. Thus, the efforts/risks/rewards of scientific research are shared within the scientific community without any interference from non-scientists.

The basic idea is to make science entirely free from other-directedness and to put it on its own financial feet. Needless to emphasize that the New Academy is strictly focused on science, education, and the dissemination of knowledge. It is separated from politics and all other non-, anti-, or unscientific activities by a very strong Chinese Wall.

What we have learned from the failure of political economics is that the political/business mindset is incompatible with the scientific mindset and that the former invariably cripples and corrupts the latter: “A genuine inquirer aims to find out the truth of some question, whatever the color of that truth. ... A pseudo-inquirer seeks to make a case for the truth of some proposition(s) determined in advance. There are two kinds of pseudo-inquirer, the sham and the fake. A sham reasoner is concerned, not to find out how things really are, but to make a case for some immovably-held preconceived conviction. A fake reasoner is concerned, not to find out how things really are, but to advance himself by making a case for some proposition to the truth-value of which he is indifferent.” (Haack)

The practical/institutional separation of politics and science is an urgent task for economists in particular and scientists in general. The pluralism of false but politically backed theories, as proposed by Keen and quite a number of heterodox and orthodox economists, has no future.

Egmont Kakarot-Handtke


#1 Source PSW
#2 Wikipedia

† Added Apr 2023: For an explanation, see chapter The Electric Antipodes in Alexander Unzicker Make Physics Great Again

Related 'Will economics ever become a science?' and 'Free academia from economics' and 'MMT: The fusion of Wall Street and Academia' and 'Academia and Science is NOT the same thing ― in economics, they are opposites' and 'Failed institutions' and 'Toward the New Academy'

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Twitter Nov 8, 2021

Twitter Dec 31, 2022 A universal basic income is the wrong way to fund scientists because it undermines the independence of science and the strict separation of science and politics

Twitter Jan 17, 2023 Science and profit

Twitter/X Oct 10, 2024 Science and funding

Twitter/X Aug 26, 2025

Twitter/X Jan 1, 2026  Science as a job

Twitter/X Apr 2, 2026  Daniel Smith, Mill’s (1848) defense of professorships

Google AI Jun 25, 2026 Funding

Google AI Jul 12, 2026 Crucial difference between Leibniz's Academy of Athens and the New Academy

What is wrong with MMT? and What is wrong with Brad DeLong?

Comment on Brad DeLong on ‘By Popular Demand: What Is “Modern Monetary Theory”?’

Blog-Reference and Blog-Reference

Brad DeLong defines macroeconomic common sense: “We do not like high unemployment. We do not like excessive inflation. Thus the government should make it its first priority to use its tools of economic management so that we do not experience either.” and asks “So what can go wrong with MMT?”

Like all economic common non-sensers, Brad DeLong forgets to mention distribution. What is missing in his list is: We do not like an extremely skewed distribution of income and financial wealth.

In his post, the word profit does not appear once. MMTers, too, desperately avoid mentioning profit. Mere coincidence?

In a nutshell, the lethal defect of MMT policy guidance is that, according to the macroeconomic Profit Law, it holds Public Deficit = Private Profit, or in common-sense terms: permanent MMT deficit-spending/money-creation is a permanent free lunch for the one-percenters. #1

Keynes got macroeconomic profit wrong 80+ years ago, #2, but neither Post-Keynesians,  nor Anti-Keynesians, nor MMTers, nor Brad DeLong spotted the blunder to this day.

There is NO such thing as scientifically valid economics. It holds: false economic theory makes bad economic policy. Scientifically incompetent economists are the ultimate cause of unemployment, distributional implosion, financial collapse, and disaster. MMT is only the latest example of a 200+ year-old fatal tradition.

Egmont Kakarot-Handtke


#1 Keynes, Lerner, MMT, Trump and exploding profit
#2 How Keynes got macro wrong and Allais got it right

Related 'MMT and the magical profit disappearance' and 'Stephanie Kelton’s legendary Plain-Sight-Ink-Trick' and 'Profit, income, and the Humpty Dumpty Fallacy' and 'Down with idiocy!' and 'False economic theory makes bad economic policy'.

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REPLY to Alan on Jan 23 and Blog-Reference

You say: “I’m not ready to ditch Keynes based on this effort.”

You are simply one of the many retarded economists who have not realized that Keynes messed up macro.

Keynes’ scientific incompetence can be exactly located in the GT: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)

“His Collected Writings show that he wrestled to solve the Profit Puzzle up till the semi-final versions of his GT but in the end he gave up and discarded the draft chapter dealing with it.” (Tómasson et al.)

So, the economist Keynes NEVER understood profit. Because of this, all I=S/IS-LM models and the rest of Keynesianism and Post-Keynesianism, including MMT, are false. #1

Keynes’ premise that income = value of output is false. From the correct macroeconomic axioms follows:
(1) Q=−S in the elementary production-consumption economy,
(2) Q=I−S in the elementary investment economy,
(3) Q=Yd+I−S in the investment economy with profit distribution,
(4) Q=Yd+I−S+(G−T)+(X−M) in the general case with government in an open economy.

From (3) follows Allais’ correct equation Qre=I−S.

From (4) follows the correct sectoral balances equation (I−S)+(G−T)+(X−M)−(Q−Yd)=0, which contrasts with the false MMT equation (I−S)+(G−T)+(X−M)=0.#2, #3

From (4) follows Public Deficit = Private Profit. And this tells one that MMT is a program for the permanent self-alimentation of the Oligarchy.

Macroeconomics is provably false from Keynes onward to MMT. The representative economist has not realized anything to this day because he is too stupid for the elementary mathematics that underlies macroeconomics.

Scientific incompetence is the reason why economics is, after 200+ years, still at the proto-scientific level.


#1 For more details see cross-references Refutation of I=S
#2 Rectification of MMT macro accounting
#3 Wikipedia and the promotion of economists’ idiotism

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REPLY to mulp on Jan 24

Yes, Friedman was an economics blatherer and political fraudster. He is now buried at the Flat-Earth-Cemetery together with the rest of failed/fake scientists. What about looking after the living and very busy fraudsters of present-day academia?

MMTers like Stephanie Kelton let profit disappear before your very eyes #1, and you don’t understand anything but conjure up the ghost of Mad Milton. What is wrong with you?


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

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REPLY to Jared on Jan 26

Inflation is NOT the problem of MMT deficit-spending/money-creation. This is simple-minded Quantity Theory nonsense. Deficit spending causes a one-time price hike. Growing public debt is compatible with a stable price level.#1

The government can deficit-spend by simply increasing its overdrafts at the Central Bank and not consolidating this debt by issuing interest-bearing bonds. And the CB can at any time monetize bonds in circulation. So, as a matter of principle, the bond market is not a serious obstacle to MMT policy.

The government can spend without taxing. A stable Zero-Tax Economy is feasible in principle.#2

The lethal effect of the MMT policy is on distribution. Because of the macroeconomic Profit Law, it holds that Public Deficit = Private Profit. So MMT policy is, first of all, a free lunch for the Oligarchy. MMT’s social policy measures are paid for in real terms by WeThePeople themselves through stealth taxation.#3 To pay for social benefits with deficit-spending/ money-creation is simply a political fraud.

Brad DeLong, as the representative economist, has NEVER understood what profit is, and because of this, he does not understand that MMT is a program for the permanent self-alimentation of the Oligarchy. As a rule of thumb, the financial wealth of the Oligarchy grows in lockstep with the public debt.

Politically speaking, MMT policy is a suicide program for US democracy. The thing is that economists are part of it.


#1 MMT and the inflation-red-herring
#2 The Third Way: Towards the Happy Zero-Tax Economy
#3 MMT, money creation, stealth taxation, and redistribution

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REPLY to Jared on Jan 28 and Blog-Reference on Jan 30

You say: “This is the real threat that MMT represents to the oligarchy.”

MMT represents NO threat to the oligarchy because MMTers are the agents of the Oligarchy. This follows from the fact that MMT policy guidance boils down to deficit-spending/money-creation. Now, the macroeconomic Profit Law tells everyone that Public Deficit = Private Profit, and from this follows as a rule of thumb that the financial wealth of the Oligarchy grows in lockstep with the public debt. In other words, the fabulous wealth of the Oligarchy is the counterpart of humongous public debt ($21.5 trillion). To remove all obstacles to the further growth of public debt is the mission of MMTers. #1, #2, #3, #4

Now, everybody is entitled to use any medium between the soapbox and the blogosphere and to communicate any imaginable BS. In the political sphere, anything goes. However, this does not apply to the scientific sphere. While the currency in the political sphere is opinion, the currency in the scientific sphere is knowledge and both cannot coexist. This is known for 2300+ years: “There cannot be both opinion and knowledge of the same thing at the same time.” (Aristotle)

The political sphere and the scientific sphere have to be kept apart because politics always and everywhere corrupts science. This happened to economics. According to the scientific criteria of material and formal consistency, MMT is refuted on all counts.#5 However, MMT is not expelled from the sciences but allowed to use academia as a forum for pushing its political agenda.

The problem with Brad DeLong is that he is either too stupid to realize that MMT is proto-scientific garbage or he is part of the general political corruption of economics.

To say of MMT, or, for that matter, of Walrasianism, Keynesianism, Marxianism, and Austrianism that it poses a threat to the oligarchy is a blatant misinterpretation of the history of economic thought since Adam Smith.


#1 Stephanie Kelton on how to become fabulously wealthy
#2 MMT: The fusion of Wall Street and Academia
#3 Very busy these days: Wall Street’s agents
#4 MMT and the promotion of Wall Street's idea of social policy
#5 For the full-spectrum refutation of MMT, see cross-references MMT

MMT: cross-references

Posts

• The MMT fraud in slow motion, so that even economists can get it
• The page where Stephanie Kelton gets macroeconomics wrong
• Proving Bill Mitchell wrong ― burying MMT for good
• The memorable Kelton/Trump victory against WeThePeople
• MMTers are too stupid for science but well-suited as useful idiots
• A rather incomplete list of MMT fake scientists
• Political fraud and the silence of academia
• MMT pushes the Oligarchy's agenda ― and they push MMT
• MMT refuted in three easy steps
• From the debt economy to the gift economy: how America is brainwashed to love budget deficits
• MMT — an exercise in newspeak
• MMT works just fine
• Advancing humanity. Really?
• MMT: nice try to paint it pink
• MMT ― now official doctrine
• The counterfeit currency printers
• MMT ― a Wall Street myth
• What Is MMT? (II) ― Short Version
• MMT Basics
• The value of money and the worthlessness of economics
• Wikipedia, economics, scientific knowledge, or political agenda pushing?
• Master of MMT ― Master of proto-scientific garbage
• MMTers: too stupid for simple math
• Economics: Not a pretty story
• Economics, MMT, and the corruption of science
• Another MMT shitshow
• Bill Mitchell, MMT, Progressives: economists as Oligarchy hacks
• Stephanie Kelton: “All deficits are good for someone” Yes, Someone=Oligarchy
• The problem with economics as a discipline
• Why MMTers permanently explode 'myths of public deficits'
• Mankiw vs Mitchell ― another clown show
• Blowing smoke about bipartisan failure
• MMT: Corbynism is dead, British Labour is next
• Mission accomplished: Economists as useful idiots of the Oligarchy
• Economic backstabbing: Bill Mitchell hits again
• Q: How are you going to pay for it? MMT: By stealth taxation!
• How Randall Wray takes the piss out of the House Budget Committee
• Bill Mitchell’s pure MMT teachings for British Labour
• Exploding the Household Fallacy
• A beginner’s guide to MMT
• Gosh! the One Percent have gotten $21 trillion richer: Links on Distribution
• The state of MMT? Stone-dead!
• MMT/GND: Another case of bad people capturing a good cause
• Swabian housewife vs Wall Street loan shark
• Is MMT Alt-Right? No, it is fake science
• How MMT disgraces itself
• MMT undermines democracy
• Trump and MMT: Make profits great again
• The decisive reason to worry about government debt
• MMT, voodoo, and dead horse beating
• Bill Mitchell ― Wall Street’s hitman keeps an eye on MMT defeatists
• Prophet Stephanie divines the seizure of the means of production of currency
• How Stephanie Kelton brain-washes a lovely young English girl
• The right and the wrong way to bring money into the economy
• A less than 320 words explanation of why MMT is a fraud
• MMTers are false Progressives and false Friends-of-the-People
• Is MMT good for WeThePeople or for the Oligarchy?
• MMT and the woes of useful political idiots
• Totally schizo ― MMT and policy
• MMT: The communicative war on budget-balancers
• MMT has an offer that Labour cannot refuse
• Are economics professors really that incompetent? Yes!
• MMT’s true program
• MMT: A new myth for WeThePeople
• MMT: A Trojan Horse for Labour courtesy of the Oligarchy
• For MMT = For the Oligarchy
• Against the mainstream! Against MMT!
• Controlled demolition of MMT ― an exercise in elementary logic
• Links on MMTers push Wall Street’s agenda
• Stephanie Kelton sells children into debt slavery
• Quick MMT 101 refutation
• The missing elephant of full employment policy
• MMT: doom or survival?
• No MMT illusions! YOU are going to pay for it
• Links on Austerity
• MMT and the Green New Deal: Where is the snag? (II)
• Just one more day: How deficit-spending postpones the breakdown of Capitalism
• How to pay for the war and to be bamboozled by economists
• MMT, money, value, and transcendental Capitalism
• Economics a science? Surely you are joking, Mr. Cochrane
• Settling the MMT―Inflation issue for good
• Economics ― nothing but claptrap, twaddle, drivel, slip-slop, wish-wash, waffle, and proto-scientific garbage
• Mad but true: 200+ years after Adam Smith economists still have no idea what profit is
• Macroeconomics: Economists are too stupid for science
• Safe assets ― how the State pampers the Oligarchy
• MMT: economics for suckers
• Economics, MMT, and the capture of science by the political mob
• How a Swedish professor cares about the Oligarchy’s financial well-being
• Dear idiots, it is deficit spending that creates the distribution people complain about
• From Keynes’ fatal blunder to the true economic model
• Dear idiots, MMTers are Wall Street’s agenda pushers
• MMTers: too much thought-reading, too little thinking
• MMT is an economic policy fraud
• MMT vs Mainstream: examining proto-scientific garbage in detail
• Dear idiots, government deficits do NOT fund private savings
• MMT: fundamentally false
• Love and hate in economics: the PsySoc shell game
• MMT vs WSJ: Another futile exercise in moron bashing
• Meet the MMT smart arses
• MMT is better than mainstream economics but still not good enough
• The public-debt and private-profit pushers
• Economics: The proto-scientific mob embroiled in just another gang war
• Where MMT goes off the rails
• The retirement of a fake scientist and real agenda pusher
• Refuting MMT’s Macroeconomics Textbook
• Hype does not help: MMT is toast
• The clock runs down on economics
• Too much ado about deficit spending
• MMT-Refutation for Dummies
• Paul’s and Stephanie’s economic delirium talk
• Economists: Either stupid or corrupt or both
• Dear idiots, time to get saving and investment straight (II)
• Links on Lars Syll’s ‘What’s wrong with MMT? Nothing!’
• How counterfeiters save America with an extra profit and make WeThePeople pay for it
• Economists: Trolls with a mortarboard
• Economics as a cover for agenda pushing
• MMT for beginners
• Misrepresenting MMT
• Some nasty MMT surprises behind the time horizon
• Dear idiots, government deficits do NOT cause inflation
• Krugman vs MMT ― like the blind talking about colors
• The half-truths and half-falsehoods of MMT
• Understanding public deficits, money, and profit
• Opinion, conversation, interpretation, blather: the economist’s major immunizing stratagems
• Fraud comes always in the cloak of philanthropy, salvation, or threat of doom
• The day when WeThePeople sends debt-deranged economists to hell
• Thinking about economic policy for future PM Corbyn
• What and where is profit?
• From MMT misunderstandings to the true Theory of Money
• A clueless MMTer explains macroeconomics to clueless beginners
• MMT ― backstop or advanced life support for the Oligarchy?
• MMT: If you’ve got a problem, I don’t care what it is, let me help
• MMT vs The Rest of Economics ― a Punch and Judy show
• MMT: Distribution is the drawback NOT Inflation
• Stephanie Kelton and the self-destructive stupidity of the super-rich
• Economics as storytelling and entertainment for the masses
• Here is the long-overdue scientific death certificate for Marx and Marxists
• Stephanie Kelton on how to become fabulously wealthy
• Both Austrianism and MMT are proto-scientific garbage
• MMT and the clash of old and new agenda pushers
• The misleading nitty-gritty defense of MMT principles
• What is wrong with MMT? and What is wrong with Brad DeLong?
• MMT’s virtue-signaling distracts from failure/fraud
• MMT: How to get out of the infinite meta-communication loop
• MMT: Not a joke but a fraud
• Warren Mosler: scientific dilettante and political fraudster
• Stephanie Kelton’s legendary Plain-Sight-Ink-Trick
• MMT is NOT bold policy but spineless fraud
• Debunking idiots does not prove that MMT is valid
• MMT: The art of shooting oneself in the head
• MMT: An overdose of public-debt tranquilizers for WeThePeople
• Trust in economics as a science?
• MMT sucks
• MMT Progressives: The knife in the back of WeThePeople
• MMT: The fusion of Wall Street and Academia
• You are fighting for life? On all fronts? MMT can save you! Or maybe not?
• MMT: Time to say goodbye
• Economics: A pointless left-right wrestling show
• MMT = Trumponomics
• MMT and Marxism: A debate between proto-scientific zombies
• Macroeconomics: Drain the scientific swamp
• How MMT makes everybody happy
• MMT: A free lunch for the Oligarchy
• The MMT defenders of interest on public debt: stupid or corrupt or both?
• Keynes, Kalecki, MMT, and the accidental invention of the perpetual profit machine
• MMT in a nutshell
• #PublicDeficitIsPrivateProfit #MMT #JustAnotherFraud
• Oxford economics — still at the proto-scientific level
• MMT and the overall political corruption of economics
• Very busy these days: Wall Street’s agents
• MMT, Warren Mosler, and the little helpers from Wall Street and Academia
• MMT: agenda-pushing and money-making for the Oligarchy
• Mission impossible: economists join WeThePeople
• Dean Baker: progressive agenda pusher for the Oligarchy
• Stephanie and Noah ― economics at the intellectual zero lower bound
• Why the MMT benefactors of humanity never talk about profit
• MMT = Modern Monetary Trash
• Smart! How to make people fund their brain-washing
• Good news for the one-percenters
• Both Mainstreamer and MMTer are either stupid or corrupt or both
• Forget mainstream economics, scrap MMT, move on to the new paradigm
• Both mainstream economics and MMT are axiomatically false
• MMT and the single most stupid physicist
• MMT: How the Oligarchy communicates with WeThePeople
• Secret Champagne for the MMT gods
• Why the British Labor Party should NOT adopt MMT
• MMT-Progressives: stupid or corrupt or both?
• Lock them up
• MMT, Bill Mitchell, and the lack of basic scientific integrity
• How Bill Mitchell stalks Jeremy Corbyn
• MMTers are NOT Friends-of-the-People
• How Keynesians, Lernerians, MMTers make the Oligarchy great
• Debunking MMT in one Counter-Tweet
• The MMT-Yawner: Government is not a household
• The Magic Money Tree is real ― too bad that the magic is fraud
• MMT is criminal economics
• MMT: How mathematical incompetence helps the Kelton-Fraud
• The first to leave the sinking MMT ship?
• The Kelton-Fraud
• Profit: after 200+ years, economists are still in the woods
• What’s the use of economists?
• MMTers make capitalism work
• Wikipedia and the promotion of economists’ idiotism (II)
• Wrapping up the MMT narrative
• Richard Murphy: the MMT fraudster dressed up as realist
• MMT: Richard Murphy’s battle-for-money hoax
• The Third Way: Towards the Happy Zero-Tax economy
• Neoclassics and MMT ― much like pest and cholera
• Austerity and the political games Progressives play
• Additional proof of MMT’s inconsistency
• How MMT enlightens Washington
• Progressive shell games
• Marx’s bicentennial ― nothing to discuss, nothing to celebrate
• Poor Schumpeter — abused as a testimonial for MMT
• Poor Wicksell — abused as a testimonial for MMT
• MMT: Just another political fraud
• MMT: So-called progressives as trailblazers for Trumponomics
• MMT and the inflation-red-herring
• MMT vs Keynesianism: nothing to chose
• MMT vs Neoliberalism: Just another clown show
• MMT is dead: An unfriendly critique of Bill Mitchell
• Non-lethal and lethal critique of MMT
• Bill Mitchell, MMT’s fake scientist
• DSGE and profit―forget it! MMT and profit―forget it!
• MMT is idiocy and fraud
• How MMT fools the ninety-nine-percenters
• Political economics: Who hijacks British Labour?
• MMT: Academic snake oil for the people
• Deficits matter for distribution
• Economics: a comedy of errors full of intrigue and aberration
• MMT: miscommunication, mistakes, misdirection
• Cryptoeconomics ― the best of Bill Mitchell’s spam folder
• Macro for retarded economists
• Are MMTers stupid or corrupt or both?
• MMT = proto-scientific junk + deception of the 99-percenters
• MMT and grassroots movements
• Down with idiocy!
• The creation and value of money and near-monies
• Keynes, Lerner, MMT, Trump and exploding profit
• Throw them out! Orthodox and heterodox economists are unfit for science
• Selling public debt with Ricardo’s tear gland rhetoric
• Deficit-spending/money-creation is ALWAYS a bad deal for WeThePeople
• MMT, money creation, stealth taxation, and redistribution
• Some fatal flaws of MMT
• Full employment through the price mechanism
• MMT: The one deadly error/fraud of Warren Mosler
• MMT and the promotion of Wall Street's idea of social policy
• On the saying “We owe the debt to ourselves”
• The Law of Interdependent Balances
• Basics of monetary theory: the two monies
• Everything you know about MMT is wrong
• MMT: Redistribution as wellness program
• MMT was always right: Gov-Deficits do NOT cause inflation
• Why is MMT so false?
• MMT: Just political heat, no scientific light
• MMT: Money-making for the one-percenters
• The profit effect of a Job Guarantee
• National Accounting: scientific incompetence or political fraud?
• Solving Mill’s starting problem
• MMT ― the economics moron as problem solver
• MMT: For the record
• MMT: scientific incompetence or political fraud?
• Rectification of MMT macro accounting
• MMT: NO sound scientific foundations
• MMT, fake science
• Keynesians ― terminally stupid or worse?
• MMT: another case of inverted economics
• MMT: soapbox economics just like the others
• Austerity: Who takes the little man for a ride?
• Debunking MMT’s hallucinatory income-expenditure model
• MMT’s two shots in the head
• Economics: a hereditary mental disease with scientific incompetence as father and political fraud as mother
• MMT is NOT an alternative to Neoliberalism
• Advancing to the correct multiplier
• MMT and the magical profit disappearance
• MMT: The joy of public deficit spending
• How some MMTers got inflation wrong
• MMT and some economic essentials
• What is MMT?
• MMT is dead
• The ultimate ― analytical ― origin of money
• Money and time
• Money: from silly stories to the true theory
• A tale of three accountants
• How money emerges out of nothing ― the functional account
• Macro for dummies
• A crash course in macro accounting
• Macrofounded labor market theory
• MMT: No sound basis
• Economics is NOT about Human Nature but the economic system
• Where MMT got macro wrong
• Windmill economics
• Rectification and generalization of MMT
• Why Bernie Sanders is unintentionally a godsend for the one-percenters
• Going beyond Wicksell, Keynes, and MMT
• Economists: Incompetent? Stupid? Corrupt?
• Economics as poultry entrails reading
• Why economists know nothing
• Rethinking MMT
• The final implosion of MMT
• Hobson got full employment policy almost right
• Clueless about money and profit
• History and future of the monetary economy
• Hayek, or, How economists miss their subject matter since 200+ years
• The unintended consequences of deficit spending
• Macro of and for the scientifically blind and deaf
• Helicopter money — a free lunch for the one-percenters
• Money and debt in six elementary steps
• Money, cranks, and morons
• How to start off on the right foot
• Australian upside-down economics
• Modern Moronomic Theory

Working Papers

• Essentials of Constructive Heterodoxy: Money, Credit, Interest
• Essentials of Constructive Heterodoxy: Financial Markets
• Exchange in the Monetary Economy
• The Emergence of Profit and Interest in the Monetary Circuit
• Reconstructing the Quantity Theory (II)
• Reconstructing the Quantity Theory (I)

***

MMT: Key arguments postcard

Source: Twitter Rhona Sykes

‏

***

Grok on Mar 6, 2025

What does the AXEC project say about MMT in general and about the effects on distribution in particular?

The AXEC (Axiomatic Economics) project, led by economist Egmont Kakarot-Handtke, provides a critical perspective on Modern Monetary Theory (MMT) that is grounded in a rigorous axiomatic approach to economics. The AXEC framework seeks to establish a scientifically valid basis for economic analysis, emphasizing formal consistency and empirical testability, and it often challenges prevailing economic theories—including MMT—for failing to meet these standards. Below, I outline what the AXEC project generally says about MMT and its specific critique regarding the effects of MMT on distribution, based on Kakarot-Handtke’s publicly available writings, such as those found on the AXEC blog and related commentary.

General Critique of MMT by the AXEC Project

The AXEC project views MMT as fundamentally flawed and scientifically deficient. Kakarot-Handtke argues that MMT lacks a coherent theoretical foundation and fails to adhere to the principles of rigorous economic science. Specifically:

1. Logical and Mathematical Defects: AXEC contends that MMT’s foundational sectoral balances equation—often expressed as (G - T) = (S - I) + (X - M), where G is government spending, T is taxes, S is saving, I is investment, X is exports, and M is imports—is logically and mathematically defective. According to AXEC, this equation does not properly account for the profit dynamics in the economy, rendering MMT’s macroeconomic framework invalid from the start. Kakarot-Handtke asserts that without a correct understanding of profit, MMT cannot accurately describe how the economy functions.
2. Proto-Scientific Status: MMT is dismissed as "proto-scientific" or "scientifically worthless" because it does not meet the criteria of formal axiomatization and empirical falsifiability that AXEC demands. Instead, AXEC portrays MMT as a politically motivated narrative rather than a genuine economic theory, accusing it of being more about agenda-pushing than advancing knowledge.
3. Refutation on All Counts: Kakarot-Handtke claims that MMT has been "refuted on all counts" due to its failure to correctly model the monetary economy. He argues that MMT’s assertion that a sovereign government can create money without constraint overlooks critical structural realities, such as the interplay between monetary flows and real economic variables like profit and income.
4. Moral and Political Critique: Beyond its theoretical shortcomings, AXEC labels MMT proponents as "stupid or corrupt or both," suggesting that their advocacy serves the interests of specific groups (e.g., Wall Street or the oligarchy) rather than the public good. This reflects AXEC’s broader skepticism of economic theories that align too closely with political agendas.

In summary, the AXEC project rejects MMT as a "bad theory" that misrepresents how the economy operates, particularly by ignoring the centrality of profit and relying on flawed accounting identities. It positions MMT as part of a broader failure in economics to move beyond storytelling to a true science.

AXEC’s View on MMT and Effects on Distribution

The AXEC project places significant emphasis on distribution as a critical economic outcome and argues that MMT’s policies exacerbate distributional inequities in ways that its proponents either fail to recognize or deliberately obscure. Here’s what AXEC specifically says about MMT’s effects on distribution:

1. Deficit Spending and Distributional Consequences: AXEC asserts that "deficit spending creates the distribution people complain about." In the AXEC framework, public deficits—central to MMT’s policy prescriptions—directly increase the financial assets of the private sector. However, Kakarot-Handtke argues that this process disproportionately benefits the business sector (particularly profit-earning firms) rather than households or wage earners. He encapsulates this in the axiomatically derived insight: "Public Deficit = Private Profit." This means that government deficit spending, as advocated by MMT, funnels money into the hands of the profit sector, worsening income and wealth inequality.
2. Lethal Consequence on Distribution, Not Inflation: While MMT focuses on inflation as the primary constraint on government spending, AXEC counters that "the lethal consequence of MMT policy is NOT on inflation but on distribution." Kakarot-Handtke argues that the real danger of MMT lies in its tendency to redistribute income and wealth upward—toward corporations and the wealthy—rather than causing generalized price increases. He suggests that MMT’s emphasis on inflation as the limiting factor distracts from this more insidious effect.
3. A Free Lunch for the Oligarchy: AXEC frames MMT as providing "a free lunch for the oligarchy." By enabling deficit-financed spending without addressing how the newly created money flows through the economy, MMT effectively subsidizes the profit sector at the expense of wage earners and the broader population. This critique aligns with AXEC’s broader narrative that MMT serves the interests of economic elites, such as Wall Street, rather than promoting equitable growth.
4. Empirical and Theoretical Underpinning: In the AXEC model, the economy is analyzed through a set of axioms that explicitly include profit and distinguish between the business sector and the household sector. Kakarot-Handtke uses this framework to show that MMT’s money creation (via deficits) increases the stock of financial assets held by the business sector, leading to higher profits without a corresponding increase in wages or household income. This contrasts with MMT’s claim that deficit spending can achieve full employment without adverse side effects, as AXEC insists that the distributional impact undermines such promises.
5. Comparison to Other Critiques: Unlike mainstream critiques of MMT that focus on inflation or fiscal sustainability, AXEC’s focus on distribution is distinctive. For example, where critics like Larry Summers or Kenneth Rogoff warn of hyperinflation risks, AXEC argues that the real issue is not price stability but the structural enrichment of the profit sector over time, which perpetuates inequality.

Conclusion

In general, the AXEC project views MMT as a scientifically invalid theory that misrepresents the monetary economy and serves as a tool for political and economic agendas rather than a contribution to economic understanding. On the specific issue of distribution, AXEC argues that MMT’s reliance on deficit spending systematically favors the profit sector, exacerbating income and wealth inequality rather than addressing it. This distributional critique is framed as MMT’s most significant flaw—more damaging than its potential inflationary consequences—and is seen as evidence of its alignment with the interests of the oligarchy rather than the public.

This analysis is drawn from Kakarot-Handtke’s consistent arguments on the AXEC blog and related platforms, where he repeatedly ties MMT’s policy implications to adverse distributional outcomes. While AXEC’s perspective is heterodox and uncompromising, it offers a unique lens on MMT that prioritizes formal rigor and distributional dynamics over the more common inflation-focused critiques.

***

DeepSeek on Mar 18, 2025

Q:

What does the AXEC Project say about MMT (= Modern Monetary Theory) in general and specifically about (i) the scientific validity of its foundational assumptions and (ii) the distributional effects of the MMT policy of deficit-spending / money-creation?

A:

The AXEC Project, led by economist Egmont Kakarot-Handtke, is highly critical of Modern Monetary Theory (MMT). Below is a summary of the AXEC Project's stance on MMT, based on its foundational assumptions and distributional effects, as reflected in its blog posts, papers, and other resources:

---

### **General Critique of MMT**

1. **Scientific Validity**:

   - The AXEC Project argues that MMT lacks scientific rigor and is based on flawed foundational assumptions. It claims that MMT is not grounded in a consistent macroeconomic framework and fails to meet the standards of formal economic theory.

   - Specifically, AXEC criticizes MMT for its reliance on sectoral balances (e.g., the government deficit equals the non-government surplus) as a descriptive tool rather than a causal explanation. It argues that MMT's accounting identities do not provide actionable insights into economic dynamics.

   - AXEC also challenges MMT's treatment of money creation, arguing that MMT underestimates the inflationary risks and institutional constraints associated with deficit spending and central bank operations.

2. **Misinterpretation of Keynes**:

   - AXEC accuses MMT of misrepresenting Keynesian economics. It argues that MMT selectively appropriates Keynesian ideas while ignoring the broader theoretical context, particularly the role of profit and investment in a monetary economy.

---

### **Distributional Effects of MMT Policies**

1. **Deficit-Spending and Money Creation**:

   - AXEC contends that MMT's advocacy for deficit spending and money creation as tools for achieving full employment overlooks the distributional consequences of such policies. It argues that these policies disproportionately benefit financial elites and asset holders, exacerbating wealth and income inequality.

   - The project highlights that deficit spending financed by central bank money creation can lead to asset price inflation (e.g., in stocks and real estate) rather than productive investment or wage growth, further widening the wealth gap.

2. **Inflation and Real Wage Erosion**:

   - AXEC warns that MMT's reliance on money creation to fund government spending risks triggering inflation, which disproportionately harms low- and middle-income households. Inflation erodes real wages and savings, while asset owners benefit from rising prices.

3. **Political Economy Critique**:

   - AXEC emphasizes that MMT's policy prescriptions are politically naive, as they assume that governments will use deficit spending and money creation for socially beneficial purposes (e.g., public investment, job guarantees). In practice, AXEC argues, such policies are more likely to be captured by vested interests, leading to rent-seeking and crony capitalism.

---

### **Key Resources**

1. **Blog Posts**:

   - The AXEC blog (https://axecorg.blogspot.com/) contains numerous critiques of MMT, often focusing on its theoretical inconsistencies and policy implications.

   - Example: Posts criticizing MMT's sectoral balances approach and its treatment of money creation.

2. **SSRN Papers**:

   - Egmont Kakarot-Handtke's papers on SSRN (https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=1210665) provide detailed critiques of MMT from a formal theoretical perspective.

   - Example: Papers analyzing the relationship between profit, investment, and money in a monetary economy, contrasting AXEC's approach with MMT's.

3. **Social Media**:

   - The AXEC Twitter accounts (E.K-H@AXECorg and AXEC@EgmontHandtke) frequently post critiques of MMT, often linking to blog posts or academic papers.

---

### **Conclusion**

The AXEC Project views MMT as scientifically flawed and politically dangerous. It argues that MMT's foundational assumptions lack rigor and that its policy prescriptions—particularly deficit spending and money creation—have adverse distributional effects, exacerbating inequality and inflation. AXEC advocates for a more robust and consistent macroeconomic framework, grounded in formal theory and focused on the structural dynamics of profit, investment, and distribution.

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Q:

One minor point: That the MMT policy of deficit-spending/money-creation causes inflation is the standard objection against MMT. The AXEC approach says that this objection is based on a false inflation theory i.e. the naive Quantity Theory. A deficit causes a one-off price hike but no inflation. For details see the resources:

MMT: Distribution is the drawback NOT Inflation

https://axecorg.blogspot.com/2019/02/mmt-distribution-is-drawback-not.html

Settling the MMT―Inflation issue for good

https://axecorg.blogspot.com/2019/05/settling-mmtinflation-issue-for-good.html

Dear idiots, government deficits do NOT cause inflation

https://axecorg.blogspot.com/2019/02/dear-idiots-government-deficits-do-not.html

MMT and the inflation-red-herring

https://axecorg.blogspot.com/2018/04/mmt-and-inflation-red-herring.html

Gov-Deficits do NOT cause inflation

https://axecorg.blogspot.com/2017/10/mmt-was-always-right-gov-deficits-do.html

A:

Thank you for the clarification and for pointing out the nuanced position of the AXEC Project regarding inflation and MMT. Indeed, the AXEC Project distinguishes itself from the standard critique of MMT by rejecting the naive Quantity Theory of Money (QTM) as the basis for understanding inflation. Instead, AXEC argues that deficit spending and money creation lead to a **one-off price hike** rather than sustained inflation. Below is a refined summary of AXEC's position on this issue, based on the resources you provided:

---

### **AXEC's Critique of the Standard Inflation Objection to MMT**

1. **Rejection of the Quantity Theory of Money (QTM)**:

   - AXEC argues that the standard objection to MMT—that deficit spending and money creation cause inflation—is based on the flawed and outdated Quantity Theory of Money. QTM assumes a direct and proportional relationship between the money supply and price levels, which AXEC considers overly simplistic and empirically unsupported.

   - Instead, AXEC emphasizes that inflation is a more complex phenomenon, influenced by factors such as productivity, wage dynamics, and institutional arrangements, rather than simply the quantity of money in circulation.

2. **Deficit Spending Causes a One-Off Price Hike, Not Inflation**:

   - AXEC contends that deficit spending financed by money creation can lead to a **one-off increase in the price level**, but this does not equate to sustained inflation. Inflation, by definition, is a continuous rise in the price level over time, whereas a one-off price hike is a singular adjustment.

   - This distinction is crucial because it shifts the focus away from inflation as the primary concern of MMT policies and toward other issues, such as distributional effects.

---

### **Distributional Effects as the Real Drawback of MMT**

1. **Wealth and Income Inequality**:

   - AXEC argues that the real problem with MMT's deficit-spending/money-creation policies is not inflation but their **distributional consequences**. These policies tend to benefit asset holders and financial elites, exacerbating wealth and income inequality.

   - For example, deficit spending can inflate asset prices (e.g., stocks, real estate), which primarily benefits those who already own such assets, while wage earners and low-income households see little to no improvement in their economic position.

2. **Profit and Power Dynamics**:

   - AXEC highlights that MMT policies do not address the underlying structural issues in a monetary economy, particularly the role of profit and power dynamics. Deficit spending may temporarily boost demand, but it does not resolve the systemic issues of profit distribution and economic power imbalances.

---

### **Key Insights from the Provided Resources**

1. **"MMT: Distribution is the drawback NOT Inflation"**:

   - This post argues that MMT's focus on achieving full employment through deficit spending overlooks the distributional consequences of such policies. Inflation is a red herring; the real issue is how these policies affect wealth and income distribution.

2. **"Settling the MMT―Inflation issue for good"**:

   - This post provides a detailed critique of the standard inflation objection to MMT, emphasizing that deficit spending causes a one-off price hike rather than sustained inflation. It calls for a more nuanced understanding of price dynamics.

3. **"Dear idiots, government deficits do NOT cause inflation"**:

   - This post challenges the simplistic view that government deficits automatically lead to inflation. It argues that the relationship between deficits and inflation is mediated by other factors, such as productivity and institutional arrangements.

4. **"MMT and the inflation-red-herring"**:

   - This post critiques the inflation-focused objections to MMT, arguing that they distract from the real issues, such as distributional effects and the structural flaws in the monetary economy.

5. **"Gov-Deficits do NOT cause inflation"**:

   - This post reiterates that government deficits, when properly managed, do not lead to inflation. It emphasizes the need to focus on the broader economic implications of deficit spending, particularly its impact on distribution and power dynamics.

---

### **Conclusion**

The AXEC Project's critique of MMT is unique in that it rejects the standard inflation objection based on the Quantity Theory of Money. Instead, AXEC argues that deficit spending and money creation cause a **one-off price hike** rather than sustained inflation. The real drawback of MMT policies, according to AXEC, lies in their **distributional effects**, which exacerbate wealth and income inequality without addressing the underlying structural issues in the economy. This nuanced critique shifts the debate away from inflation and toward the broader implications of MMT's policy prescriptions.

Meta-References