MMT’s true program

Comment on Bill Mitchell/Thomas Fazi on ‘Seize the Means of Production of Currency ― Part 2’

Blog-Reference and Blog-Reference

Bill Mitchell and Thomas Fazi tell the representatives of the Labour Party and the general public: “There is no MMT program! The ‘Labour’s own economic programme’ will be implemented, if they gain office, in the context of a monetary system that is best understood through the MMT lens and the principles outlined in ― Seize the Means of Production of Currency ― Part 1.”#1

The Labour Party’s representatives, though, are too stupid to live: “Trying to set up a comparison to show ‘Labour’s own economic programme’ is superior or more sensible demonstrates Meadway’s complete lack of understanding of what MMT is. It is such a basic error that he should disqualify himself from further discussion until he takes the time to understand this key difference between a ‘lens’ that allows for understanding and a policy program.”

And this is MMT’s true program in a nutshell: Serve the Oligarchy/Undermine the Labour Party.

Modern Monetary Theory ― or the lens as MMTers like to call it ― is refuted on all counts.#2 The macroeconomic Profit Law entails Public Deficit = Private Profit, which means that the central MMT policy recommendation of deficit-spending/money-creation benefits the Oligarchy and certainly not the membership of the Labour Party. In other words, MMTers attempt “… to get citizens and workers to accept ― demand even ― policies that are not in their class interest.”

Accordingly, MMTers vehemently attack the two traditional economic planks of Labour: budget-balancing over the business cycle and taxing the rich.

Budget-balancing in any shape or form is anathema for MMT.

With regard to taxes, which are, according to MMT, not needed at all for funding government programs but only in the improbable case of inflation, Bill Mitchell and Thomas Fazi rhetorically ask: “Does this mean that we shouldn’t ‘tax the rich’? The present authors’ values indicate we are all for taxing the rich. But not to get their money. Rather, the rich should pay higher taxes in order to deprive them of their purchasing power, which translates into economic and political power. This is not a minor issue. Ultimately, fuelling the notion that we need the rich folk’s money to ‘[pay for] our schools and our caring services’, as the likes of Jeremy Corbyn and John McDonnell never tire of repeating, is a dangerous and misguided narrative for progressives to engage in. Not only because it fuel damaging myths about how the monetary system works, but also because it also elevates the rich and high-income earners to an indispensable status that is unwarranted.

As Pavlina Tcherneva, from the Levy Economics Institute, notes in her excellent response to Doug Henwood’s rather loopy attack on MMT…: I would say that Henwood (like other “tax-the-rich-to-pay-for-progress” lefties) is tethered to the wealthy by an imaginary umbilical cord that holds his progressive agenda hostage to his oppressors. To me, this is the definition of self-induced paralysis. Time to cut the cord. MMT has a profound emancipatory power and the Left would do well to awaken to its potential. Progressives should come to terms with the fact that the incomes and taxes paid by the rich do not enhance the capacity of a currency-issuing government to provide first-class public services and infrastructure.”

Deficit-spending/money-creation and not taxing the rich are clearly in the interest of the Oligarchy. The policy guidance of MMT, whose proponents call themselves Progressives, is definitely NOT in the class interest of Labour members and voters.

If the general public finds all this perplexing, however, they should not blame MMTers: “If the reader finds all this perplexing, it is because for the past forty or so years policymakers and mainstream economists and commentators have peddled a series of false myths about how modern monetary systems work.”

The claim: “There is no MMT program!” is plain fraud. The true program of MMT is to brainwash WeThePeople. If anything, deficit-spending/money-creation and not taxing the rich, and driving a wedge between Labour leadership and membership, are in the class interest of the Oligarchy. Bill Mitchell and Thomas Fazi are neither scientists nor Friends-of-the-People but useful idiots of the Oligarchy.

Egmont Kakarot-Handtke


#1 MMT: A new myth for WeThePeople
#2 For the full-spectrum refutation of MMT, see cross-references MMT

Related 'MMT: A Trojan Horse for Labour courtesy of the Oligarchy' and 'No MMT illusions! YOU are going to pay for it' and 'How MMT fools the ninety-nine-percenters' and 'How to pay for the war and to be bamboozled by economists' and 'Just one more day: How deficit-spending postpones the breakdown of Capitalism' and 'For MMT = For the Oligarchy' and 'Links on MMTers push Wall Street’s agenda' and 'The not so funny MMT vs Neoliberalism slapstick' and 'Economics has arrived at the bottom of the proto-scientific shithole' and 'MMT has an offer that Labour cannot refuse' and 'Some nasty MMT surprises behind the time horizon' and 'Prophet Stephanie divines the seizure of the means of production of currency' and 'State capture ― time to switch rhetoric' and 'MMT sucks'.

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AXEC142

Very busy these days: Wall Street’s agents

Comment on Kaivey on ‘Presidential Lecture Series: Stephanie Kelton’

Blog-Reference

Matt Franko cites Bill Mitchell: “I mean by that, that while MMT provides a clear lens for viewing the system, to advance specific policy platforms, one has impose a value system (an ideology) onto that understanding.” and resumes “They are not politically neutral... they are Democrat/Labour allied....”

NO!

MMT is NOT a clear scientific lens but an obscure political smoke-screen. Science tells everyone that Public Deficit = Private Profit, and this follows straight from the TRUE sectoral balances equation (X−M)+(G−T)+(I−S)−(Q−Yd)=0, which compares to the FALSE MMT balances equation (X−M)+(G−T)+(I−S)=0, which obviously LACKS/HIDES macroeconomic profit.

The scientific content of MMT is ZERO. Looking at the economy through the MMT lens is as enlightening as looking through the toilet seat.

Of course, MMT is NOT politically neutral. Just the opposite. MMT is plain political agenda pushing, and it is NOT for the cause of WeThePeople but against it. MMT is an attempt to capture genuine grassroots movements in the US and the UK. Under the banner of Progressives, MMTers pretend to overtake the traditional Left and to be the true Friends-of-the-People. #1…#7

Bill Mitchell resumed his recent meeting with John McDonnell in London: “I said that the social democratic parties had let the progressive side of politics down in recent years and that it was good to see this oppositional left capacity coming back into British politics to give people an effective choice.”

Isn’t it a bit curious that an academic from Australia tours around the world and lectures the Labour Party? It is NOT curious if one sees Bill Mitchell and Stephanie Kelton as fake scientists and agents of Wall Street.

Bloomberg hypes Warren Mosler as a “hedge fund guy Lefties can love” and Tom Hickey sells MMT on this blog as modern Marxism. This is more than naive because Alternative History has, in the meantime, arrived at a conclusion that “Karl Marx is, and always was, a double agent working for bankers and industrialists.” #8

Economics has finally gotten rid of 200+ years of political BS. The scientific and historical fact of the matter is: deficit-spending/money-creation is and has always been a program for the self-alimentation of the Oligarchy. #9

Bill Mitchell reports: “JMD [John McDonnell, British Labour's Shadow Chancellor] began the meeting by asking me ‘What are we getting right?’” My guess is that Bill Mitchell told him that British Labour still has some way to go to meet Wall Street’s strategic goals.

Egmont Kakarot-Handtke


#1 MMT: agenda-pushing and money-making for the Oligarchy
#2 MMT and the promotion of Wall Street's idea of social policy
#3 MMT, Warren Mosler, and the little helpers from Wall Street and Academia
#4 The Kelton-Fraud
#5 MMT, Bill Mitchell, and the lack of basic scientific integrity
#6 MMTers are NOT Friends-of-the-People
#7 For the full-spectrum refutation, see cross-references MMT
#8 Reddit
#9 MMT = proto-scientific garbage + deception of the 99-percenters

Related 'Mission impossible: economists join WeThePeople' and 'Dean Baker: progressive agenda pusher for the Oligarchy' and 'MMT = Modern Monetary Trash' and 'Smart! How to make people fund their brain-washing' and 'Good news for the one-percenters' and 'Both Mainstreamer and MMTer are either stupid or corrupt or both' and 'Forget mainstream economics, scrap MMT, move on to the new paradigm' and 'Both mainstream economics and MMT are axiomatically false' and 'MMT and the single most stupid physicist' and 'MMT: How the Oligarchy communicates with WeThePeople' and 'Why the British Labour Party should NOT adopt MMT' and 'MMT-Progressives: stupid or corrupt or both?' and 'How Bill Mitchell stalks Jeremy Corbyn' and 'Links on Liza N. Burby‘s ‘Cutting-Edge Economist Stephanie Kelton Delivers Presidential Lecture’' and 'The page where Stephanie Kelton gets macroeconomics wrong' and 'MMT and the overall political corruption of economics.'

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REPLY to Matt Franco, Andrew Anderson, Ralph Musgrave on Oct 22

Lest the crucial point gets lost: Stephanie Kelton, Bill Mitchell, and the other MMT loudspeakers push ― intentionally or unintentionally doesn’t matter ― the agenda of Wall Street #1 and you are ― intentionally or unintentionally doesn’t matter ― obscuring this fact with your waffling about the Job Guarantee. Therefore, you are ― intentionally or unintentionally doesn’t matter ― complicit in political fraud.


#1 For details of the big picture, see cross-references MMT

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AXEC122b

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Twitter Aug 1, 2020

Twitter Oct 10, 2022

Is MMT Alt-Right? No, it is fake science

Comment on Bill Mitchell/Tom Hickey on ‘On visiting Japan and engaging with conservative politicians’*

Blog-Reference

Tom Hickey maintains: “First, there is no such thing as bad publicity. It provides exposure anyway, and name recognition (‘brand identification’) is a good thing. Secondly, on the ‘first they ignore you’ metaphor, being attacked is a forward step that acts as confirmation that you are winning. I no longer link to most criticism of MMT, first, because it is stupid, and secondly, so as not give it exposure.”

This, obviously, is NOT the language of a scientist but of a propagandist, PR/Marketing professional, or social media troll. For a scientist, the question is always whether an assertion is provably true/false. For a political agenda pusher, the question is always how many followers/likes/clicks does an assertion generate? The truth value of an assertion is not an issue for a propagandist.

The problem with economists is that they claim to do science but that they have never been anything else than clowns and useful idiots in the political Circus Maximus. The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational economic concept of profit wrong. The newcomer MMT is no exception.

Accordingly, the economic discussion has zero scientific content but is a more or less open smear. Bill Mitchell complains: “The mainstream economists and those who profess to be ‘free marketeers’ bring out their big guns pretty quickly ― inflation and socialism/ Stalinism. … More recently, those who claim to be on the ‘progressive’ side of the debate have become more vociferous in their attacks, sensing, I suspect, that MMT have supplanted their relevance as the defenders of the anti-neoliberal wisdom. These characters resort to all sorts of snide-type attacks ranging from accusations of anti-Semitism (which I have covered previously), siding with Wall Street, ‘America-first corporatist sycophants’ …, giving succour to fascists and the Alt-Right, and that sort of stuff.”

Accordingly, the philosopher Tom Hickey as chief information manipulator of the Mike Norman Blog simply filters “that sort of stuff” out as “stupid criticism” of MMT. Not only this, under the label of “stupid criticism” MMTers conveniently suppresses valid scientific refutation of MMT.

MMTers claim (i) that MMT is scientifically superior to mainstream economics, (ii) that MMT policy is for the benefit of WeThePeople, (iii) that MMTers are the real Progressives.

The fact is that all three claims are false. Like their mainstream colleagues, MMTers are too stupid for the elementary math that underlies macroeconomics. Therefore, the whole analytical superstructure of MMT is just as scientifically worthless as that of mainstream economics.

Scientifically, MMT is dead but politically it is very much alive. The MMT policy of deficit-spending/money-creation clearly benefits the Oligarchy because of the macroeconomic Profit Law’s logical implication Public Deficit = Private Profit. MMTers either do not understand the Profit Law or ignore/suppress the proof of the falsity of their sectoral balances equation which lacks the all-important balance of the business sector, i.e. profit.#1 MMTers are just as stupid/corrupt as mainstream economists as censors/ suppressors/manipulators in the econblogosphere (see #EconBlocker).

MMT is NOT Alt-Right or anything else of the usual silly smear. MMT is a relatively new political project that is driven under the mantel of Science and Progressiveness by scientifically incompetent/corrupt academics and promoted/sponsored by the Oligarchy.

It is NOT a lucky scientific event that: “Core MMT economists (and that means the original team plus those who came soon after but are prominent) are getting invitations to speak all around the world now as more and more people, organisations and government agencies are seeking to learn about MMT and its implications for them.” All this only proves that the Oligarchy has changed its marketing strategy. In personality terms, Paul Krugman’s worn-out “Conscience of a Liberal” is out and Stephanie Kelton’s “Birth of the People's Economy” is in.

In economics, the package ― or as Tom Hickey puts it the “brand identification” ― is currently changing but the product is the same since Adam Smith/Karl Marx: BS for WeThePeople.

Egmont Kakarot-Handtke


* Bill Mitchell’s blog
#1 For the full-spectrum refutation of MMT see cross-references MMT

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REPLY to Matt Franko on Sep 12

You ask: “Why would you seek to hold them accountable to the scientific methodology when they never said they are doing that in the first place?”

You are mistaken. Bill Mitchell and others claim that MMT is an objective scientific lens: “MMT is not a regime that you ‘apply’ or ‘switch to’ or ‘introduce’. Rather, MMT is a lens that allows us to see the true (intrinsic) workings of the fiat monetary system. It helps us better understand the choices available to a currency-issuing government. It is not a regime but an accurate perspective on reality. It lifts the veil imposed by neo-liberal ideology and forces the real questions and choices out in the open. In that sense, MMT is neither right-wing nor left-wing ― liberal or non-liberal ― or whatever other description of value-systems that you care to deploy.” #1, #2

Because they claim to do science, MMTers have to be judged according to well-defined scientific criteria. The outcome is that they fail already at basic math.

The real progress is that in these days Wall Street sends Stephanie Kelton and Bill Mitchell to bring Japan up to speed while in the old days, they sent Commodore Perry.

Japan, not to forget, is living proof that the MMT policy of deficit-spending/money-creation works to never dreamt of levels of public debt. MMT’s message for Japan is to continue ― as they say on Wall Street ― doing God’s work.


#1 YouTube MMT Is A Lens, Not A Regime
#2 MMT is just plain good economics

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REPLY to Matt Franko on Sep 13

You invoke the methodological invective Model-Platonism. There is no need to go into the finer point of economic methodology here. The point is that economists fail already at the elementary level of putting 2 and 2 together. For details see

► Econ 101: Economists flunk the intelligence test at the first hurdle
► Economics: No method to the madness
► How incompetent are economic methodologists? Very!
► For details of the big picture see cross-references Methodology

Totally schizo ― MMT and policy

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

Blog-Reference and Blog-Reference

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

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

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

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

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

Egmont Kakarot-Handtke


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

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

Occasional Tweets: Not so smart, those MMT agenda pushers

 

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

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

— E.K-H (@AXECorg) March 10, 2021

 

For more about MMT as a lens see AXECquery.

What comes first: eco-self-destruction or oeco-self-destruction?

Comment on Sandwichman on ‘Business As Usual: Running on Empty’

Blog-Reference

Ecological self-destruction is the subject matter of physics, biology, climatology, etcetera. Economists have nothing to say about these scientific issues because they are simply too incompetent for science. Economics is, after 200+ years, still at the proto-scientific level.

To make matters short, the central economic question is: Is the monetary economy sustainable on its own terms, that is, even if it faces no physical limits? The answer is NO.

Let us agree that, roughly speaking, the monetary economy as we know it can only exist if macroeconomic profit is positive and that the economy will break down if macroeconomic profit turns to loss. So, the question is, can it happen? And in case yes, when will it happen?

Now, the axiomatically correct macroeconomic Profit Law says Q≡Q_m+Q_n (i) with Q_m≡Y_d+(X−M)+(G−T)+(I−S_m) (ii), which simplifies to Q_m≡I−S_m (iii) if Q_n, Y_d, X, M, G, T is set to zero.#1 Eq. (iii) says that monetary profit Q_m is positive as long as the business sector’s investment expenditures are greater than the household sector’s saving. Or, if the household sector’s budget is balanced in each period, i.e., S_m=0 ⇒ Q_m=I (iv), and this means that monetary profit Q_m is positive as long as investment expenditures are positive (depreciation is a sub-item of Q_n). In other words, the economy must grow or it dies. This may happen before the economy reaches the physical limits of growth.

The basic message of the Profit Law is that the monetary economy gets in trouble as soon as economic growth, expressed by I, slows down. The critical point is in the most elementary case at I=0.

However, the economically critical point may be reached earlier or later. The axiomatically correct macroeconomic Profit Law tells everyone that the point is reached earlier if, for example, the household sector’s saving S_m is greater than zero. The point is reached later if the government runs a deficit, i.e., if G−T is greater than zero.

The task of economic policy is to end economic growth before the physical limits are reache,d without destroying the economy by unknowingly switching from macroeconomic profit to loss. Needless to emphasize that economists have NO idea how to accomplish this feat. Walrasian, Keynesian, Marxian, and Austrian economics are proto-scientific garbage and therefore absolutely useless for economic policy.

The sad fate of humanity is: the (world-)economy will NOT break down for physical/ ecological reasons but because of the scientific incompetence, a.k.a. stupidity of economists. How shabby an end compared to flood or fire.

Egmont Kakarot-Handtke


#1 For details of the big picture, see cross-references Profit

Related 'Which breakdown?' and 'Mathematical Proof of the Breakdown of Capitalism' and 'Zero-sum capitalism' and 'Major Defects of the Market Economy' and 'Squaring the Investment Cycle'.

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REPLY to Anonymous on Nov 1

Obviously, you lack basic knowledge of the history of economic thought: “Late in life, moreover, he [Napoleon] claimed that he had always believed that if an empire were made of granite the ideas of economists if listened to, would suffice to reduce it to dust.” (Viner, 1963)

Nothing has changed since Napoleon. The stupidity of economists is as destructive as it ever was.#1, #2


#1 As Napoleon said: don’t listen to economists
#2 Economists and the destructive power of stupidity

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REPLY to Sandwichman on Nov 1

You complain: “GDP and GDP growth has become the increasingly opaque lens through which we view society and ‘the economy.’ It is a cracked, scratched, smudged, distorting lens that may not even enable us to tell whether what we view through it is upside up or upside down.”

The fact is that economists have never gotten their foundational concepts straight and are too stupid for the elementary mathematics that underlies macroeconomics. The concept of GDP is a case in point.

For the axiomatically correct relationship between aggregate demand, investment, depreciation, productivity, price, income, and profit, see Squaring the Investment Cycle.

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REPLY to Barkley Rosser, Sandwichman on Nov 2

Thank you for the information. The improved sentence reads: “The axiomatically correct macroeconomic Profit Law tells everyone that the [critical] point is reached earlier if, for example, the household sector’s saving Sm is greater than zero. The point is reached later if the government runs a deficit, i.e., if (G−T) is greater than zero.”

The beauty of this summary consists of answering the fundamental economic question: “... is the existing economic system in any significant sense self-adjusting?” (Keynes)

So, macrofounded economics tells everyone that microfounded equilibrium or steady-state models are a priori false and that the market system will eventually break down because of its built-in positive feedback mechanisms and NOT for sociological reasons, i.e., the revolution of the proletariat, or for ecological reasons, i.e., the limitedness of resources or the overabundance of pollution.

At the moment, the US economy is already on life support, i.e. on government deficit spending. Take it away, and macroeconomic profit turns into macroeconomic loss, and the economy breaks down. There is really no need for economists to calculate the “ … costs of abating carbon dioxide emissions and the long-term future climate impacts from climate change.” (Newbold, Summary of the DICE model) because the economy as we know it has NO long-term future. #1

Economists should know how the economic system works, but they don’t. For 150+ years, they waffle about supply-demand-equilibrium, implying that the system regulates itself. This tenet is either self-deception or fraud or both. In any case, it catapults economists out of science.


#1 Mathematical Proof of the Breakdown of Capitalism

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REPLY to Blissex on Nov 4

You say: “Dear Sandwichman welcome to the branch of Rabbit Hole Studies that is national statistics. :-)”

Economists know that science is about formal and material consistency: “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) Logical consistency is secured by applying the axiomatic-deductive method, and empirical consistency is secured by applying state-of-the-art testing.

Economists also know that their proper business is political agenda pushing and NOT science. So, they deliberately try to keep everything in the swamp of vagueness and inconclusiveness because they know also: “Another thing I must point out is that you cannot prove a vague theory wrong.” (Feynman) This, of course, is the life insurance of failed/fake scientists. #1, #2

It is not an accident that economists apply concepts like utility, rational expectations, and aggregate real capital, which are obviously not measurable. And when the discussion comes to empirical testing, economists vanish through the jib door like the would-be gold makers of earlier times. The door bears the inscription ‘Measurement Problems’.

Political agenda pushers have learned this trick from priests.#3 The subject matter of priests is NONENTITIES. As J. S. Mill put it: “Mankind in all ages have had a strong propensity to conclude that wherever there is a name, there must be a distinguishable separate entity corresponding to the name; ...” This is the Fallacy of Reification.

The characteristic of economists is that they avoid well-defined concepts like the plague. Note that income, monetary profit, aggregate demand, and GDP can, in principle, be defined and measured with the precision of two decimal places, but economists have managed to make a veritable mess of these foundational concepts. #4, #5

Economists advertise their stuff as science, well knowing that their theories/models are built upon NONENTITIES and that they will break down as soon as it comes to testing: “… suppose they did reject all theories that were empirically falsified ... Nothing would be left standing; there would be no economics.” (Hands)

National Statistics is NOT a Rabbit Hole but has been deliberately made a jib door through which failed/fake economists vanish when their proto-scientific fool’s gold is put to the acid test. #6, #7


#1 Postmodernism — the philosophy of scientific write-offs
#2 For details, see cross-references Failed/Fake Scientists
#3 Wikipedia, Priest
#4 The Common Error of Common Sense: An Essential Rectification of the Accounting Approach
#5 Wikipedia and the promotion of economists’ idiotism
#6 Go! ― test the Profit and Employment Law
#7 Failed economics: The losers’ long list of lame excuses

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REPLY to Blissex on Nov 6

You say: “… unfortunately I very strongly disagree that studies of the political economy can be a ‘science’ as in proper accuracy and falsification, in large part because experiments are difficult and repeatability is pretty rare, and never mind with the measurement problems, because the ‘Laws of Economics’ are not immutable, unless they are kept in ‘the swamp of vagueness and inconclusiveness’.”

Of course, you disagree. Take notice that your worn-out excuses have been refuted long ago.#1

According to its self-definition, economics is a science since Adam Smith/Karl Marx, and this is celebrated once a year with the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”. #2 So, economics has to be judged according to the well-known scientific standards of material/formal consistency.

Your fatal blunder is to maintain that economics is a social science while, in fact, it is a systems science. #3 And while there are no behavioral laws, there are systemic laws.

Economists have not figured out these laws to this day. In fact, they are too stupid for the elementary mathematics that underlies macroeconomics.

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

Keynes got macroeconomic profit wrong: “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.)

Let this sink in: the economist Keynes NEVER understood the foundational concept of his subject matter. Because profit is ill-defined, the complete theoretical superstructure of Keynesianism is false. Keynesian policy guidance NEVER had valid scientific foundations. It has NEVER been anything else than political blather.

The elementary version of the axiomatically correct Profit Law, which is measurable with the precision of two decimal places, reads Q_m≡I−S_m with Q_m as monetary profit and S_m as monetary saving. And this means that since Keynes/Hicks ALL I=S/IS-LM models are false.#4 Macroeconomics is proto-scientific garbage. Microeconomics is even worse.

So after 80+ years of storytelling/blather, Keynesians, Post-Keynesians, Anti-Keynesians, New Keynesians, MMTers, Sandwichman, Blissex, and the rest of stupid/corrupt political agenda pushers, together with all their peer-reviewed articles/textbooks/blog posts, have finally to be flushed down the scientific toilet.


#1 Failed economics: The losers’ long list of lame excuses
#2 The real problem with the economics Nobel
#3 Economics is NOT a social science
#4 Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It

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#PointOfProof
Nov 7
before
 after

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

MMT and the Green New Deal: Where is the snag? (I)

Comment on Randall Wray on ‘How To Pay For The War’

Blog-Reference

MMT claims to be a theory, i.e. a materially/formally consistent mental representation of reality, and NOT a policy.#0 Accordingly, MMT is, as a matter of principle, compatible with any policy: “Consequently, the message from the MMT camp to all those campaigning on progressive … economic issues is that MMT macro is complementary, is something to be added and should prove a boost to whatever the specific issue, e.g., GND, happens to be.”#1

This is correct, MMTers jump on any bandwagon from unemployment to healthcare to a Pony-for-every-American to the Green New Deal.#2 MMTers have a solution to almost all social/economic problems and it consists of deficit-spending/money-creation.#3

The first schizophrenic fact of the matter is, though, that MMTers present themselves as real Progressives ― in contradistinction to the debilitated old Left ― who fight hard for the cause of WeThePeople. The second schizophrenic fact is that MMTers are not so much social activists but agenda pushers for the Oligarchy. On closer inspection, MMT is neither a scientific theory nor a social program but a political fraud.

The first thing to note is that MMTers always mix up Employment Theory and Allocation Theory and Monetary Theory. For the purpose of analysis, these issues have to be treated separately.

Since Keynes, most economists agree that unemployment can be reduced by government deficit spending. However, most economists do not know the macroeconomic Profit Law which entails Public Deficit = Private Profit. By consequence, to fight unemployment with deficit-spending/money-creation means to feed the Oligarchy.#4

Let us assume for a moment that the employment problem has been solved and turn to the question of allocation. So, what is now the answer to the question of how will you pay for the Green New Deal?

The answer is pretty obvious: shift the money from the military budget to the environmental protection budget. This has two effects, (i) because the military is the greater polluter compared to the average household, CO₂ emissions and other negative environmental impacts go down immediately as a result, and (ii), neither tax increases nor additional deficit-spending/money-creation is necessary. A quite ordinary re-allocation of the existing budget is sufficient for the implementation of a Green New Deal program.

So, the answer of MMTers that a Green New Deal can be realized at any time by deficit spending is a bit misleading.#5, #6 As a matter of principle, any New Green Deal can be realized with a balanced budget. But in the MMT scheme of things, a balanced budget is something for the Swabian housewife and permanent deficit spending is the prerogative of a Sovereign State.

The point is that MMTers are not so much interested in how the government’s budget is allocated but that the government runs a deficit because it is the deficit as such that produces the macroeconomic profit for the Oligarchy.#7 From a higher standpoint, it is a matter of economic indifference whether a deficit stems from military or environmental spending. This is the reason why MMTers jump on any popular social movement with the well-received message that money is not a problem for a sovereign government because the money-issuer cannot go bankrupt. This is true, of course, but only obfuscates the economic fact that MMT policy amounts to stealth taxation of WeThePeople and a free lunch for the Oligarchy.

Real Progressives would answer the question How are you going to pay for a GND? with Simple, by re-allocating the budget. Phony Progressives answer with Simple, by telling the Central Bank to digitally create some extra money on the government’s account.

MMT is NOT science but political agenda pushing in a social cloak. MMT and GND together are the dream team for a financial coup of mind-blowing proportions in the tradition of John Law.#8

Egmont Kakarot-Handtke


#0 “MMT should not been seen as a regime that you ‘apply’ or ‘switch to’ or ‘introduce’. As I have noted regularly, MMT is rather a lens which allows us to see the true (intrinsic) workings of the fiat monetary system. … The point is that MMT is agnostic about policy bar its preference for an employment buffer rather than an unemployment buffer to discipline inflation. … In general, it makes no sense to talk about an “MMT-type prescription” or an “MMT solution”. To make that MMT understanding operational in a policy context, a value system or ideology must be introduced. MMT is not intrinsically ‘Left-leaning’.” (Bill Mitchell)
#1 Twitter David Merrill Message from the MMT camp
#2 MMT: If you’ve got a problem, I don’t care what it is, let me help
#3 Twitter William J. Luther, MMT in a nutshell
#4 Keynes, Lerner, MMT, Trump, etc. and exploding profit
#5 How counterfeiters save America with an extra profit and make WeThePeople pay for it
#6 How to pay for the war and to be bamboozled by economists
#7 MMT and the promotion of Wall Street's idea of social policy
#8 Wikipedia John Law (economist)

Related 'MMT and the Green New Deal: Where is the snag? (II)' and  'Full employment through the price mechanism' and 'Economics debate ― just another variant of hardcore wrestling' and 'MMT Progressives: stupid or corrupt or both?' and 'Deficit-spending/money-creation is always a bad deal for WeThePeople ― to paint it green makes no difference'. For the full-spectrum refutation of MMT see cross-references MMT.

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Twitter: MMT in a nutshell

Twitter Jun 20

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Economics: a hereditary mental disease with scientific incompetence as father and political fraud as mother

Comment on Bill Mitchell on ‘When neo-liberal masquerades as anti-establishment’

Blog-Reference and Blog-Reference

There is the political sphere and there is the scientific sphere. It is quite obvious that both are fundamentally different and because of this, it is of utmost importance to radically separate the two. The mixing of the two is the hereditary mental disease of economics.

Politics is about the realization of the Good Society. This presupposes an idea of what the Good Society is and the practical capacity to make things happen. In very general terms, the political sphere is about values and action, and the crucial distinction is between good/bad or better/worse. Science is about knowledge and the crucial distinction is between true/false with truth unequivocally defined by material and formal consistency.

That much is clear after more than 200 years: economics is a failed science. 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.

So, this is the situation: economists dabble in politics where they have, to begin with, NO legitimate business. Worse, economists’ policy guidance has NO sound scientific foundations at all. This starts with Adam Smith/Karl Marx and ends with current orthodox and heterodox economics. MMT is NO exception.

Political economics is not only cargo cult science but ― intentionally or unintentionally does not matter ― political fraud: “In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum)

Economists are supposed to deliver knowledge (= episteme) but produce for 200+ years scientifically worthless political opinion (= doxa). To promote opinion under the label of science is a fraud.

MMT is a case in point. Bill Mitchell criticizes mainstream economics in its incarnation of New Zealand’s TOP party. All his arguments are accurate, except when it comes to the theoretical underpinning of MMT policy proposals.

Bill Mitchell claims “… MMT is a lens which allows us to see the true (intrinsic) workings of the fiat monetary system. It helps us better understand the choices available to a currency-issuing government. It is not a regime but a perspective on reality. … In that sense, MMT is neither right-wing nor left-wing.”

MMT claims to be an objective scientific truth. The fact is that it is proto-scientific rubbish, qualitatively not at all different from orthodox economics. MMT’s profit/employment/ money theory is provably false. In methodological terms, MMT is NOT a valid new paradigm because its axiomatic foundations are false just like Walrasian microfoundations and Keynesian macrofoundations are materially/formally inconsistent.

One example. Bill Mitchell claims: “Third, it is 100% correct to say that if the government runs a fiscal surplus then it condemns the non-government sector to run a deficit (spending more than its income) as a matter of accounting, dollar for dollar.”

No, this is NOT 100% correct. This is misleading, to say the least. The correct accounting truth is this. There is no such thing as a non-government sector, to begin with, only a business sector and a household sector. So, if the household sector chooses its saving/dissaving in a given period then a government deficit/surplus “condemns” the business sector to profit/loss.

These are the axiomatically correct accounting identities:
Q_m≡C+G−Y_w     profit/loss Q_m, business sector,
S_m≡Y_w−T−C      saving/dissaving S_m, household sector,
B_m≡T−G           budget surplus/deficit B_m, government sector,
-----------------
Q_m+S_m+B_m=0.

For THREE sectors, proper accounting yields THREE sectoral balances which add up to zero. It holds Public Deficit = Private Profit. The question is, why makes MMT profit disappear by creating an artificial sector called the non-government sector? In other words, why is MMT cooking the books? There is NO scientific justification, so it must be some political reason.#1

MMT is NOT a new scientific paradigm but old political crap in a new scientific bluff package. This holds for ALL of economics: when profit is false the whole analytical superstructure is false and economic policy guidance has NO sound scientific foundation.

Egmont Kakarot-Handtke


#1 For more details see ‘MMT and the magical profit disappearance’ and cross-references MMT

Related 'MMT is NOT an alternative to neoliberalism' and 'Cryptoeconomics ― the best of Bill Mitchell’s spam folder' and 'What is so great about cargo cult science? or, How economists learned to stop worrying about failure'.

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REPLY to wilwon32 on Aug 22

(i) You ask: “Am I the only one who sees little value in attempting to infer some special significance in E K-H’s profit argument.”

Yes, you are the only one left who does not understand that profit is the core concept of economics.

(ii) You maintain: “I thought that the advancement of economic understanding provided by MMT related to the special character of national sovereignty …”

Sovereignty is the core concept of political science. The legitimate national sovereign decides every political question. This is NOT a new insight of MMTers but a tautological paraphrase of what sovereignty means.

Economics is NOT about how the political system works but about how the economic system works. Economics is a science and the subject matter is “the economy” in the abstract and the universal properties of a monetary economy and ― as a matter of principle ― NOT so much the accidental specifics of any national economy. Laypersons, of course, have a quite narrow perspective and are mainly interested in what happens in their backyard and who pays for the wall. Because of this, they cannot see that there are two economixes: political economics (= agenda-pushing) and theoretical economics (= science).

Politics and science do not fit together and have to be kept strictly apart. This is known since the founding fathers: “A scientific observer or reasoner, merely as such, is not an adviser for practice. His part is only to show that certain consequences follow from certain causes, and that to obtain certain ends, certain means are the most effectual. Whether the ends themselves are such as ought to be pursued, and if so, in what cases and to how great a length, it is no part of his business as a cultivator of science to decide, and science alone will never qualify him for the decision.” (J. S. Mill)

As a rule of thumb, it can be said that every economist who dabbles in politics is NOT a competent scientist but a brainless blatherer who masquerades as a scientist. It does not matter whether the blather is right-wing or left-wing.

(iii) You say: “It seems as if one could also develop an argument for the importance of DEBT in economic arguments …”

Obviously, you do not understand the macroeconomic Profit Law, Q_m≡−S_m, which says explicitly that the business sector’s profit/loss is equal to the change in the household sector’s debt. Profit and debt are the two sides of the SAME coin.

(iv) The trouble with you, Bill Mitchell, and the rest of the MMT crowd is that you suffer from a complete lack of understanding of how the profit- and price mechanism works. This is not so terribly bad because although stupidity is the criterion for exclusion in science it is at the same time the criterion for admission in politics. So, there stands nothing in the way of a clear-cut separation of science and politics. All, you, Bill Mitchell, and the rest of the MMT crowd have to do is to leave economics ― it is as simple as that.

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REPLY to ANC Driver on Aug 23

You sum up: “there is no way we can all be solvent all at the same time. To prove this scientifically … is one thing, but it still leaves us with the ill-feeling of ‘what the hell am I supposed to do about this?’”

This, exactly, is the significance of profit theory.

The macroeconomic Profit Law in its most elementary form says Qm≡−Sm or monetary profit for the economy as a whole has nothing to do with greed or monopoly power or innovation or productivity but is the mirror image of dissaving. In other words, in the pure production-consumption economy profit depends in the most elementary case on the growth of the household sector’s debt.

Now, only if profit is greater than zero the business sector maintains or increases employment. This is the minimum condition. If overall profit turns into loss firms go bust and employment decreases. If the losses continue the economy eventually breaks down.

From the fact that profit is the mirror image of the growing household sector’s debt follows logically that overall profit turns into an overall loss as soon as the household sector starts to pay back the accumulated debt. Hence, the economy eventually breaks down because of immanent logical necessity (no crisis and no criminals and no banksters and no exploding real estate or stock market bubble is needed) as soon as private and/or public households start to redeem their debt in the aggregate (i.e. new credit, rollovers, and redemption netted out).#1

The macroeconomic Profit Law for the investment economy without profit distribution says Q_m≡I−S_m or monetary profit for the economy as a whole is given by the difference between the business sector’s investment I and the household sector’s monetary saving/dissaving S_m. Let S_m for simplicity here be zero then profit depends directly on the GROWTH of the capital stock.#2

This worked fine since the Industrial Revolution but it cannot work for all eternity. The snag is this: if growth weakens or is stopped overall profit turns into overall loss and the whole economy breaks down. The situation is analogous to that of a car driver who cannot slow down because if he jams on the brakes the car explodes.

The challenge as it follows from the correct profit theory is this: how can the growth path be flattened or even reversed without causing a full-scale economic breakdown?

Because Walrasians, Keynesians+MMTers, Marxians, and Austrians have NO idea until this day what profit is they do not even see that the actual life-and-death question of economics is how to engineer a soft landing on a reasonably high plateau. All the rest of economics is sitcom blather.


#1 Mathematical Proof of the Breakdown of Capitalism
#2 Squaring the Investment Cycle

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REPLY to ANC Driver on Aug 24

You say: “What I would love is for someone like you, who obviously can see things how they actually are (i.e. 100% solvency is not possible), is to channel your knowledge into helping people like me and others to find a way to use this knowledge to get some people away from the solvency game altogether.”

The task of the economist as a scientist is to figure out how the actual economy works. This is comparable to the task of a physicist/engineer to figure out how a heavy piece of metal can get off the ground, travel great distances at high altitudes, and arrive safely and in time at some faraway place. The physicist/engineer does NOT care who is on board the craft which he is designing/constructing and whether these folks are happy, drunk, or vomiting.

If you are in an identity crisis and need psychological or philosophical help do NOT go to an economics blog but google a self-help group in your neighborhood.

People who claim that they save the world, work for the welfare of humankind, promote liberty and democracy, make you rich and happy, and help the little guy to have a better life are NOT economists who are committed to well-defined scientific standards.

No scientist ever raises peoples’ hopes/expectations, only presidential candidates, political parties, and MMTers do.

MMT: A new myth for WeThePeople

Comment on Bill Mitchell on ‘Seize the Means of Production of Currency ― Part 1’

Blog-Reference and Blog-Reference

Bill Mitchell accuses the former British Labour Party advisor James Meadway and indirectly the current Labour leadership of incompetence/foul play: “In doing so, Meadway demonstrates that he has not grasped (or refuses to grasp) the subtleties of MMT. In a political sense, his arguments repeat those that Chancellor Dennis Healey used when he lied to the British people in the mid-1970s about the Government running out of money. These falsehoods eased the path for Margaret Thatcher, created the space within Labour for the highly damaging Blairite years, and constrain the current British Labour leadership’s conception of what is possible in terms of economic policy formation.”

Bill Mitchell contrasts stupid/corrupt Labour policy with the superior scientific approach of MMT: “At the outset, it is important to note that MMT should not been seen as a regime that you ‘apply’ or ‘switch to’ or ‘introduce’. Rather, it is a lens which allows us to see the true (intrinsic) workings of the fiat monetary system.”

MMT pursues the noble goals of (i) myth-busting, and (ii), improving democracy: “An MMT understanding means that statements such as the ‘government cannot provide better services because it will run out of money’ are immediately known to be false. Such an understanding will change the questions we ask of our politicians and the range of acceptable answers that they will be able to give. In this sense, an MMT understanding enhances the quality of our democracies. MMT is agnostic about policy, bar its preference for an employment buffer rather than an unemployment buffer to discipline inflation.”

This, in a nutshell, is the MMT myth. The fact is that MMT theory is scientifically refuted on all counts#1 and MMT policy is actually NOT for the benefit of WeThePeople but for the benefit of the Oligarchy.#2

The core claims of MMT are provably false:

1. “It [the government] creates a demand for its otherwise worthless currency by requiring all tax liabilities to be extinguished in that currency.” FALSE! TRUE: The currency is created by the Central Bank as a means of transaction. The creation and value of money does NOT depend on the taxing power of the State.#3, #4

2. “The government spends its currency into existence through the purchase of goods and services from the non-government sector (so-called government spending) which provides the non-sector with the funds necessary to pay its tax obligations.” FALSE! TRUE: Spending on current output with newly created money is analogous to the spending of the counterfeiter.#5 The Central Bank’s creation of fiat money for the payment of the wage bill is the correct way of bringing money into the economy.

3. “The consequence of this logical ordering of events (spending to fund taxation) is that currency-issuing governments do not have to ‘fund’ their spending and can never run out of currency.” FALSE because of 1. and 2. TRUE: Unlimited spending is possible because of the government’s unlimited overdrafts at the Central Bank. Overdrafts are public debt that may be consolidated through bond issuance or not. Interest on the public debt redistributes income from WeThePeople to the Oligarchy as long as the debt is rolled over.

4. “In general, MMT uses the sectoral balances (or flow of funds) approach, which tells us that the government sector’s deficit (surplus) is always equal to the non-government sector’s surplus (deficit).” Indeed, but the MMT sectoral balances equation, i.e. (I−S)+(G−T)+(X−M)=0, is provably false. Because of this, the whole analytical superstructure of MMT is scientifically worthless.

As a result, Bill Mitchell’s policy conclusion is false: “… it follows that the only way private debt ― and the power of financial institutions over society ― can be brought under control without driving the economy into recession is for the government to run persistent and substantial fiscal deficits.”

Persistent and substantial fiscal deficits are persistent and substantial free lunches for the Oligarchy.#6 MMT policy guidance is, contrary to the social/environmental optic, ultimately to the detriment of WeThePeople and Democracy. MMTers are not competent scientists but useful idiots for the Oligarchy.

Egmont Kakarot-Handtke


#1 For the full-spectrum refutation of MMT see cross-references MMT
#2 MMT: A Trojan Horse for Labour courtesy of the Oligarchy
#3 The creation and value of money and near-monies
#4 MMT: fundamentally false
#5 How counterfeiters save America with an extra profit and make WeThePeople pay for it
#6 For MMT = For the Oligarchy

Related 'Controlled demolition of MMT ― an exercise in elementary logic' and 'Against the mainstream! Against MMT!' and 'How to pay for the war and to be bamboozled by economists' and 'Stephanie Kelton sells children into debt slavery'.

Just one more day: How deficit spending postpones the breakdown of Capitalism

Comment on Bill Mitchell on ‘Japan Finance Minister getting paranoid about MMT’

Blog-Reference and Blog-Reference

MMT claims to be a theory, i.e., a materially/formally consistent mental representation of reality, and NOT a policy. “MMT should not been seen as a regime that you ‘apply’ or ‘switch to’ or ‘introduce’. As I have noted regularly, MMT is rather a lens which allows us to see the true (intrinsic) workings of the fiat monetary system. … The point is that MMT is agnostic about policy bar its preference for an employment buffer rather than an unemployment buffer to discipline inflation. … In general, it makes no sense to talk about an ‘MMT-type prescription’ or an ‘MMT solution’. To make that MMT understanding operational in a policy context, a value system or ideology must be introduced. MMT is not intrinsically ‘Left-leaning’.” (Mitchell)

This is a futile attempt to obfuscate MMT’s true agenda.

Scientifically, MMT is refuted on all counts. #1 MMT is axiomatically false, just like mainstream economics. However, there are degrees of falsehood, and it is obvious that MMT is superior to mainstream economics for the simple reason that it is impossible to surpass the idiocy of mainstream economics. #2 In methodological terms, economics has to be based on macrofoundations, but mainstream economics is based on microfoundations. The bad luck of economics is that Keynes messed up the Paradigm Shift from microfoundations to macrofoundations.

So, Bill Mitchell is right: “The conclusion is obvious. … It is clear that the mainstream macroeconomic explanation of the relationships between fiscal deficits, interest rates, bond yields and inflation rates is unable to adequately capture the real world dynamics in Japan. Such a categorical failure to provide an explanation suggests that the mainstream theory is seriously deficient.” #3

Mainstream economics claims to have proved that the free market economy has some very desirable properties, first and foremost, optimality, efficiency, and stability. Now, General Equilibrium Theory is based on microfoundations, which is to say that it is proto-scientific garbage and proves NOTHING. From axiomatically correct macrofoundations follows that the market economy is intrinsically unstable and that it will eventually break down. The ultimate reason lies in the macroeconomic Profit Law, which is given by Q≡Yd+(I−S)+(G−T)+(X−M).

The reduced macroeconomic Profit Law Q≡(I−S)+(G−T) tells one that profit in the monetary economy is positive (i) if business sector investment I is greater than household sector saving S and (ii) if the state runs a deficit, i.e., (G−T) is greater than 0.

Case (i) is characteristic of early Capitalism, and case (ii) is characteristic of late Capitalism. Currently, the so-called free market economy is on the full life support of the state. 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. Capitalism will break down as soon as the sum of (i) and (ii) turns negative. The same holds for Socialism. #4

As the example of Japan shows, the state and its Oligarchy are literally forced to run deficits in order to keep the economy going for just another day. However, it would certainly not be such a good idea to cause panic among the public in general and investors, in particular, by admitting that the government is riding a tiger and cannot dismount. This means that the government actually follows the MMT policy of permanent deficit-spending/money-creation while denying it publicly: “Money, Monetary Theory … MMT for short … this is often spoken about now by politicians, various people … I don’t think we need to explain the theory here … there are many people in the US – many officials including Larry Summers who are against it … But to do it in Japan … and think about that kind of reaction the market would have … I do not intend to make Japan an experimental site for it.”

This is the government's political fraud. The political fraud of MMTers consists of claiming that MMT policy is for the benefit of WeThePeople. #5 This is correct only in the trivial sense that everybody suffers if the economy breaks down. This, though, does not change the fact that MMT is NOT science but political agenda-pushing for the Oligarchy. In this respect, MMT is not different from mainstream economics. MMTers are no exception to the verdict that economists are either stupid, corrupt, or both.

The fact of the matter is that the so-called free-market economy and its Oligarchy have already, for a long time, been on full life-support of the state, and this is something that cannot be openly admitted. The MMT policy of permanent deficit-spending/money-creation prolongs the situation; it does NOT really solve any social/economic problems but only shifts them beyond the time horizon. #6

Egmont Kakarot-Handtke


#1 For the full-spectrum refutation of MMT, see cross-references MMT
#2 To this day‡, economists have produced NOT ONE textbook that satisfies scientific standards
#3 MMT is better than mainstream economics but still not good enough
#4 No future for Socialism and Capitalism
#5 MMT and the Green New Deal: Where is the snag? (I)
#6 Some nasty MMT surprises behind the time horizon

Related 'MMT vs The Rest of Economics ― a Punch and Judy show' and 'If religion is opium of the people, economics is crack of the people' and 'Economics as storytelling and entertainment for the masses' and 'Economics debate ― just another variant of hardcore wrestling' and 'Econ 101: Economists flunk the intelligence test at the first hurdle' and 'The Palgrave Dictionary ― a comprehensive collection of False-Hero Memorials' and 'Wikipedia, economics, scientific knowledge, or political agenda pushing?' and 'Mathematical Proof of the Breakdown of Capitalism'.

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Twitter/X Sep 18, 2025  Japan, six years later