A few days ago, Jared Bernstein posed some Questions for the MMTers in order to gain a “better understanding [of our] arguments.” We appreciate his interest in our ideas and, especially, his direct appeal for clarification of our views. He raised four big questions, which our Australian counterpart, Bill Mitchell, has already answered in his own three-part series. What follows is a response from two North American MMTers.New Economic Perspectives
Answers from the MMTers
Stephanie Kelton and Randall Wray
13 comments:
JFTR
MMT = proto-scientific rubbish + deception of the ninety-nine percenters
Down with idiocy!
http://axecorg.blogspot.de/2017/12/down-with-idiocy.html
MMT and grassroots movements
http://axecorg.blogspot.de/2018/01/mmt-and-grassroots-movements.html
Full spectrum refutation: cross-references MMT
http://axecorg.blogspot.de/2017/07/mmt-cross-references.html
Egmont Kakarot-Handtke
They should just tell this trained oboe player to stay the hell out of it..
“It can take excess reserves out of banks (or put them into banks—e.g. via Quantitative Easing), but this does not work like a brake pedal or a gas pedal on bank lending”
It works as a brake...
“the expansion-killing surplus during the Clinton years.”
More “yin creates yang” “sine creates cosine” “day creates night”....
MMT = proto-scientific junk + deception of the 99-percenters
Comment on Stephanie Kelton and Randall Wray on ‘Answers from the MMTers’
Jared Bernstein posed some ‘Questions for the MMTers’ and offered a welcome opportunity for the loudspeakers of MMT to make their strong points. Needless to emphasize that they also repeated with enthusiasm their foundational error/mistake/blunder/fraud.
It is this: “There are three sectoral balances: a domestic private sector, a government sector, and a foreign sector. While any one of these can run a deficit (or surplus), the sum of the balances must sum to zero ― that is, they balance (for every deficit there is a surplus). In the US, the private sector almost always runs a surplus (“saves”) and the foreign sector has run persistent surpluses (the other side of the coin to our current account deficits) since the days of Reagan. That means ― by simple identity ― that our government sector runs deficits.”
The fact of the matter is that there are FOUR macroeconomic sectors (household sector, business sector, government sector, and Rest of the World) but in the MMT presentations one sector is missing, more specifically, the balance of the business sector = profit is nowhere to be seen.#1
MMT is built upon this tripartite macroeconomic balances equation (I−S)+(G−T)+(X−M)=0.#2 Why are two sectors ― the household and the business sector ― lumped together to the “private sector”?
Now, the balance of the household sector is saving/dissaving and the balance of the business sector is profit/loss. By lumping the two sectors together profit vanishes from sight.
The axiomatically correct fourpartite balances equation reads (I−S)+(G−T)+(X−M)−(Qm−Yd)=0 with Qm monetary profit and Yd distributed profit. And from this equation follows Public Deficit = Private Profit given the balances of the household sector and the Rest of the World.
The correct equation tells everybody that MMTers relentless propagation of deficit spending for social purposes is nothing but agenda pushing for the one-percenters. The problem of MMT policy is NOT overheating or inflation, the real problem is distribution.
MMTers are either stupid because they do not know what profit is, or corrupt because they deceive the ninety-nine-percenters or a mixture of both.#3 Jared Bernstein failed to ask the crucial question.#4
Egmont Kakarot-Handtke
#1 Down with idiocy!
http://axecorg.blogspot.de/2017/12/down-with-idiocy.html
#2 Wikipedia, Modern Monetary Theory
https://en.wikipedia.org/wiki/Modern_Monetary_Theory
#3 MMT and grassroots movements
http://axecorg.blogspot.de/2018/01/mmt-and-grassroots-movements.html
#4 Full spectrum refutation: cross-references MMT
http://axecorg.blogspot.de/2017/07/mmt-cross-references.html
I agree with Matt: the para from which that "It can take excess reserves.." quote comes is particularly bad.
10-4 Ralph and what has happened when govt has run surpluses in the past is the Treasury puts the surplus balances into TTL accounts at the depositories “to earn some interest for the taxpayers!” which increases asset level system wide and creates another credit contraction... as banks have to cease adding additional risk assets until they can increase required capital to accommodate the 100s of $B of new deposits the Treasury surplus creates...
Yin does not create yang....
Egmont Kakarot-Handtke argues above that because MMTers lump the household and business sectors together into one “private sector”, this hides the alleged fact that the bulk of a public sector deficit flows to the business sector rather than the household sector.
I’ve no doubt that initially profits do rise given a rise in demand (from whatever source: exports, increased consumer confidence or an increased deficit). But if competitive forces are working, that excess profit will be whittled away over time.
Moreover, profits account for a small % of GDP: between 3% and 10% since WWII: i.e. an average of roughly 6%. Given excess unemployment, I see nothing wrong with the standard MMT and Keynsian cure, namely a deficit. If the proportion of that deficit that flows to profits is initially larger than the above 6% and is then whittled away, what of it? That’s better than sitting around doing nothing about millions of unemployed.
Ralph Musgrave
You say “Egmont Kakarot-Handtke argues above that because MMTers lump the household and business sectors together into one “private sector”, this hides the alleged fact that the bulk of a public sector deficit flows to the business sector rather than the household sector.”
Actually, I say that the lumping together of the household sector and the business sector to the “private sector” is for macroeconomics what is called an accounting fraud on the firm’s level.#1
Of course, it could be also an error/mistake/blunder but this is improbable because the hiding of the fact that Public Deficit = Private Profit, i.e. Qm=G−T given the other balances, is necessary to sell MMT policy measures as a social benefit.#2 And this, in turn, is necessary because MMT is NOT economics but campaign support for Warren Mosler’s candidacy for governor of the US Virgin Islands as announced on Jan 11.
This, of course, holds also for MMT’s alleged full employment policy.#3
So Ralph Musgrave, Kelton, Mitchell, Tcherneva, Wray, Fullwiler, Forstater, Kaboub, Pettifor, Keen, Tymoigne, Willingham, Grumbine and all the MMT rest cannot be taken seriously as economists but at best as useful idiots for Warren Mosler.
Egmont Kakarot-Handtke
#1 Down with idiocy!
http://axecorg.blogspot.de/2017/12/down-with-idiocy.html
#2 Keynes, Lerner, MMT, Trump and exploding profit
https://axecorg.blogspot.de/2017/12/keynes-lerner-mmt-trump-and-exploding.html
#3 Full employment through the price mechanism
https://axecorg.blogspot.de/2017/11/full-employment-through-price-mechanism.html
All Warren has ever said he wants out of this is a chance to see his nations economy run at its full potential for once in his life....
Matt Franko
You say “All Warren has ever said he wants out of this is a chance to see his nations economy run at its full potential for once in his life”
I am enthusiastic about what Berlusconi, Trump, Mosler etc. promise to do for the little man and the forgotten worker but I do not understand why these folks always have to cook the macroeconomic and microeconomic books first.
Perhaps the MMT academics can explain why they violate scientific standards and promote money-making for the Bunga-Bunga one-percenters.
Egmont Kakarot-Handtke
Their motives are all fine... they are all really good people...
Are MMTers stupid or corrupt or both?
Comment on Stephanie Kelton and Randall Wray on ‘Answers from the MMTers’
MMTers are beyond any doubt stupid, more specifically, scientifically incompetent. Put bluntly, they do not even get the elementary mathematics of national accounting right. For the full-spectrum refutation see
Down with idiocy!
http://axecorg.blogspot.de/2017/12/down-with-idiocy.html
and cross-references MMT
http://axecorg.blogspot.de/2017/07/mmt-cross-references.html
The corruption of MMTers consists in the violation of scientific standards. Firstly, they pretend to fight for the benefit of the ninety-nine-percenters but in fact promote the cause of the one-percenters. See MMT = proto-scientific junk + deception of the 99-percenters
http://axecorg.blogspot.de/2018/01/mmt-proto-scientific-junk-deception-of.html
Secondly, MMTers affirm open discussion but block refutation, opposition, and questioning on their blogs/accounts.* Here are some recent examples
https://www.dropbox.com/s/9ir629rhpks6k70/Block01%20Baker%20Jeff%20screenshot-twitter.com-2017-12-30-20-31-21-870.png?dl=0
https://www.dropbox.com/s/x97vs39ii9wlz2y/Block02%20Kelton%20screenshot-twitter.com-2017-12-31-09-12-03-276.png?dl=0
https://www.dropbox.com/s/2zzj8u1mx2a5zck/Block03Holland%20Firefox_Screenshot_2018-01-05T16-39-05.626Z.png?dl=0
https://www.dropbox.com/s/6xyv7w5wuajxy29/Block04%20LordKeynes%20screenshot-twitter.com-2018-01-04-18-37-16-270.png?dl=0
The key message of MMT is that deficit spending solves almost all economic problems and government debt does not matter. Because it holds Public Deficit = Private Profit, MMTers are ― intentionally or unintentionally does not matter ― agenda-pusher for the one-percenters. Public debt matters enormously for the distribution of income and wealth.
Summary: With few exceptions, economists are either not aware of scientific standards or ignore/violate them. There is not much difference with regard to scientific competence between Orthodoxy and Heterodoxy.
Egmont Kakarot-Handtke
* Of course, propaganda, manipulation, and disinformation are not restricted to the proponents of MMT but widespread among both orthodox and heterodox economists. After all, economics started as Political Economy and is a cargo cult science since Adam Smith/Karl Marx. Which blogs promote serious research/discussion and which are mere propaganda outlets can only be found out by testing, that is, by submitting well-argued posts. From concrete experience over a longer time span follows this random selection of blogs that have blocked/deleted/manipulated challenging posts. If this not yet independently double-checked list contains errors/omissions a notification is welcome (handtke@axec.de).
References
https://axecorg.blogspot.de/2018/01/are-mmters-stupid-or-corrupt-or-both.html
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