Monday, July 13, 2020

The Money Printers — Dave Denison



Backgrounder and commentary on The Deficit Myth.

The Baffler
The Money Printers
Dave Denison

10 comments:

AXEC / E.K-H said...

The counterfeit currency printers
Comment on The Baffler/Dave Denison on ‘The Money Printers’*

It is pretty obvious that Dave Denison has NO idea how the monetary works. Because of this, he cannot properly assess MMT.

The underlying problem is that the monetary economy (capitalism or communism does not matter) is NOT a self-optimizing equilibrium system but eventually breaks down.#1

The Profit Law#3 Qm≡I−Sm tells one that macroeconomic profit is positive in a growing economy as long as the business sector’s investment is greater than the household sector’s saving. If this fails, macroeconomic profit turns into loss and the economy breaks down. This must eventually happen, what is unknown is the exact date.#2

However, there is a way to postpone the breakdown. The Profit Law including the state sector reads Qm≡(I−Sm)+(G−T), that is, the second component of macroeconomic profit is the state sector’s deficit. It holds Public Deficit = Private Profit.

The MMT policy of deficit spending/money creation is ultimately a means of postponing the breakdown of the US economy. From a political standpoint, the COVID pandemic provides a good rationale to mute the budget-balancers and to blow the deficit up to hitherto unknown proportions.

The volume of the deficit and the popularity of MMT#4 is a good metric for the acceleration of the breakdown.#5

If MMTers intend to learn economics I recommend the new textbook Sovereign Economics.#6

Egmont Kakarot-Handtke

* https://thebaffler.com/salvos/the-money-printers-denison
#1 Major Defects of the Market Economy
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2624350

#2 Mathematical Proof of the Breakdown of Capitalism
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2375578

#3 Wikimedia
https://commons.wikimedia.org/wiki/File:AXEC143d.png

#4 Keynes, Lerner, MMT, Trump and exploding profit
https://axecorg.blogspot.com/2017/12/keynes-lerner-mmt-trump-and-exploding.html

#5 Criminals and the monetary order
https://axecorg.blogspot.com/2019/10/criminals-and-monetary-order.html

#6 Amazon or BoD
https://www.bod.de/buchshop/sovereign-economics-egmont-kakarot-handtke-9783751946490

AXEC / E.K-H said...

Correction

... has NO idea of how the monetary economy works.

Peter Pan said...

So what is likely to happen, in terms of monetary/fiscal policy?

AXEC / E.K-H said...

Peter Pan

Predicting the future is not for scientist's but for prophets and other sociopaths.#1 Today it is mainly used by the media for the psychological conditioning of a mass audience.

Egmont Kakarot-Handtke

#1 Scientists do not predict
https://axecorg.blogspot.com/2016/02/scientists-do-not-predict.html

Peter Pan said...

What are climate scientists doing?

Besides, I'm asking what the policies will be. Perhaps there is no reason to believe current policies will change, in which case we'll KNOW what will happen.

AXEC / E.K-H said...

Peter Pan

I say “Scientists do not predict the future.”

You ask “What are climate scientists doing?”

Same thing. Genuine scientists try to figure out how the climate works. Political agenda pushers like Al Gore then grab some preliminary research findings, blow the big political tuba, and buy the stocks of the companies that are the most probably climate change winners.

Future-tellers or warners are political/psychological frauds since time immemorial. Read the so-called holy books if you want to know how the prophecy business works.

Egmont Kakarot-Handtke

Tom Hickey said...

@ AXEC

True, theoretical scientists are not concerned with prediction other than experimental testing of theoretical hypotheses generated for the purpose.

But applied scientists (engineers, physicians, etc.) often are. They couple data with theory to formulate hypotheses about the future, e.g., how long a structure will last given expected conditions.

AXEC / E.K-H said...

Tom Hickey

Of course, scientists who have a true theory can make a conditional prediction, i.e. if a, b, c the outcome will be y.

Economics is a failed science and economists do not have the true theory. So, all debates about what the future will bring are vacuous prophecies, i.e. attempts to brainwash the public.

Go to zerohedge or youtube and you can have as many economic prophecies as you like. Nothing of it is a scientifically acceptable prediction because economists have no true theory. Economics has never been anything else than political agenda pushing, MMT included.

Egmont Kakarot-Handtke

Tom Hickey said...

@ AXEC

There is not even a framework in terms of which scientific theories could be generated and evaluated in social science, inclucing economics, that provide a general explanation of data in the field in any way comparable to natural science. This owing to the subject matter not being ergodic and also being historically relative and complex, for example.

A lot of very smart people have been working on formalizating a general explanation in social science for a long time — economoists, mathematicians, biologists and physicists included. A "satisfactory" general explanation of social phenomena, as well as psychology, remains elusive, since contemporary science stipulates the necessity of a formal explanation that can be evaluated naturalistically in terms of direct or indirect observations. (My own view is that this may be arbitrarily restrictive and needs to be revisited. The boundary between philosophical speculation and theoretical speculation in science is not sharp.)

The most that can be accomplished so far in the social science is to apply scientific method to the limited degree possible, recognizing the limitations of the nature of the susject matter only one hand, and obtaing reliable data over time. It is possible to look at special areas analystically but not yet to give a satisfactory general explanation of social phenomena.

There are no so-called laws of nature operative in social sciences, since "law of nature" means a theoretical hypothesis that is well-confirmed by observation over time. There are no synthetic a priori propositions that express "laws of nature." Neither are tautologies (analytic a priori propositions) capable of rising to become laws of nature either. That is, if one wants to observe the boundaries of naturalism, and naturalism is a foundation (necessary condition) of scientific method — a sine qua non.

But modern social sciences, being naturalistic, are more explanatory that anything that preceded them. They can be useful if one takes account of the limitations. So it is possible now to arrive at a better understand of what is likely in the future within a limited scope and scale. It seems to be possible, for example, to use scientific method to explain limited areas of a body of subject matter in the social sciences — limited not only by subject matter but also time and place. Paying atttention to accuracy and precision so as not to overstretch in making claims is also a requirement.

Now we are in the domain of philosophy (aka foundations) of science, social science, and economics. A lot has been written professionally on philosophy of science and philosophy of social science, but little on philosophy of economics.

Why is this important? To temper knowledge claims in terms of real limits.

Peter Pan said...

Climate science is in the prediction business. Otherwise, it wouldn't be of interest to the public. It wouldn't make the news either.

If you're a climate denier, AXEC, just come out and say so.