Summary
The US budget deficit is $214 billion in August 2018; this is a net add of income to the private sector and a bumper month.
Seeking Alpha
- The good news is that dollars are being added to the economy by the Federal government, allowing the private sector to post a $214 billion surplus.
- Further, net inflows are expected for the rest of the year from the Federal government and private credit growth.
- Private credit growth is a big surprise, growing strongly despite Fed rate rises.
Good News: U.S. Government Posts A $214 Billion Deficit For August 2018, The U.S. Private Sector Posts A $214 Billion Surplus
Alan Longbon
“The good news is that dollars are being added to the economy by the Federal government, allowing the private sector to post a $214 billion surplus.”
ReplyDeleteCool! Now if only we could prevent most of those dollars from being stolen by the rentier class and FIRE sector.
“Further, net inflows are expected for the rest of the year from the Federal government and private credit growth.”
What are “net inflows”?
“Private credit growth is a big surprise, growing strongly despite Fed rate rises.”
Cool! That means more debt bondage. More student loan debt. More “payday loan” debt. Higher housing prices, and therefore more homelessness. More prison inmates (in many states, creditors can have you thrown into prison). The article includes a chart on credit growth (i.e. on debt growth) that is quite terrifying.
Sorry to be pessimistic, but we really need to reform U.S. society and values.
Pete Peterson will be having a nervous breakdown: he won't know whether to celebrate the private sector surplus or deplore the public sector deficit.
ReplyDeletePeter G. Peterson returned to hell on 20 March 2018.
ReplyDeleteGood news for the one-percenters
ReplyDeleteComment on Alan Longbon ‘Good News: U.S. Government Posts A $214 Billion Deficit For August 2018, The U.S. Private Sector Posts A $214 Billion Surplus’
Alan Longbon rejoices: “The US budget deficit is $214 billion in August 2018; this is a net add of income to the private sector and a bumper month.” and “Professor Wynne Godley first comprehended the strategic importance of the accounting identity, which says that measured at current prices, the government’s budget balance, less the current account balance, by definition is equal to the private sector balance. GDP = Federal Spending [G]+ Non-Federal spending [P] + Net Exports [X].”
Unfortunately, the MMT balances equation is false. From the axiomatically correct Profit Law for the open economy with government and profit distribution, follows (I−S)+(G−T)+(X−M)−(Q−Yd)=0 which boils down to Public Deficit = Private Profit.
MMTer hide this distributional fact by lumping the business and the household sector together to the private sector and saying Public Deficit = Private Sector Surplus suggesting that private sector means WeThePeople. This is a verbal shell game. Given the saving/dissaving of the household sector = WeThePeople, the public deficit increases the macroeconomic profit of WeTheOligarchy one to one.#1, #2
Alan Longbon’s good news is MMT’s shot in the head of WeThePeople.
Egmont Kakarot-Handtke
#1 MMT and the single most stupid physicist
https://axecorg.blogspot.com/2018/09/mmt-and-single-most-stupid-physicist.html
#2 Keynes, Lerner, MMT, Trump and exploding profit
https://axecorg.blogspot.com/2017/12/keynes-lerner-mmt-trump-and-exploding.html
Well said Konrad
ReplyDeleteWhat gets me is that all the economists including MMT don't actually do real work..they don't drive trucks or buses, they don't grow food, they don't make clothing, they don't make things, they don't fix things, they don't engineer things, they essentially do not know how to get their hands dirty at anything...they get paid to just dribble utter shit and then make others think that they are working for us real workers! The saddest part of all of it is that especially those who actually predicted the GFC and who thus have a better understanding of the monetary economy, they make it appear they are trying to help workers but they keep all their insights locked up in books, copyrights, and advisory services so they can cash in on their knowledge.
Most MMT professors claim that politicians and oligarchs "misunderstand" economics. This claim is insulting. Oligarchs pay pundits, politicians, and professors to knowingly lie. If politicians create endless trillions for war and weapons, while claiming that there is "no money" for federal social programs, then this is not a "misunderstanding." It is a lie.
ReplyDeleteWhat's that book by Warren Mosler? The seven deadly innocent frauds of economic policy.
Innocent my a**.
And don't get me started on the unworkable MMT "jobs guarantee," which I will discuss if asked.
I don't agree with the JG program on many reasons, including economic, but the main reason is purely on principle... the way MMTers treats labour as some stock like wheat to be bought up by government so it can regulate a market, whilst they sells books and gets funded by others - that is insulting! It is people like this which make me 'not' want to work. I'm out there busting my gut just so people like economists and politicians can feed off me. It's sickening.
ReplyDeleteThe Economists Challenge:
ReplyDeleteThis principled opposition gets things backwards. A JG is a right to work, which has been a cornerstone of socialism for centuries. If you don't want to participate in a JG program. Don't.
What is insulting about getting paid for work? MMT economists - at least two of whom have worked on "JG" programs - work on their books. Other people pay them for it. What is the difference between that & the JG? Nothing. FDR's "JG" - the WPA - paid many people to write books. Every money-using government everywhere and forever has bought up labor, created a labor market. Why is this wrong, why do you think MMT should make some obscure, gigantic change here?
There are no economic objections to a JG. It would clearly and safely make any society run better. You would bust your gut less, and the better off would feed off the masses less, not more. What is sickening about that? That's the way full employment/ guaranteed jobs has worked everywhere. Everybody would be happier and better off except sadists who derive their pleasure from others suffering.
I agree that a JG is a good next step on which to focus.
ReplyDeleteI think that a lot of opposition to it from people that would otherwise be for it as an interim step lies in the mistake that it is a panacea instead of an analgesic.
A JG is not a remedy for all ill regarding employment.
It has the advantage of being economically efficient by increasing use of available real resources that would be idle as well as beginning to address issues in employment, distribution, etc.
At the same time, it would also maintain the value of human resources and improve some as well, whereas the policy now is deterioration.
Socially, it would also reduce dysfunction.
The tradeoffs involve degeneration into workfare, inflationary pressure through indexing the wage, and other mostly political issue around it.
Perhaps the biggest tradeoff is putting off reforms that are needed instead of dealing with all issues at once. That is a matter of strategy and the argument against it is that the perfect is the enemy of the good. Take what you can now and come back for more later.
Tom Hickey, Konrad, The Economists Challenge, Calgacus
ReplyDeleteI am well aware that you suffer from ADHD but even you will realize that the issue is NOT the Job Guarantee but the “Good News: U.S. Government Posts A $214 Billion Deficit For August 2018, The U.S. Private Sector Posts A $214 Billion Surplus.” This is the MMT fraud in a nutshell.
There is no such thing as the private sector but there is the business sector and the household sector. Hence, the MMT balances equation is false. From the axiomatically correct Profit Law for follows (I−S)+(G−T)+(X−M)−(Q−Yd)=0 which boils down to Public Deficit = Private Profit.
So Alan Longbon’s good news is NOT good news for WeThePeople but for WeTheOligarchy.
MMT is one of the most devious attempts to deceive WeThePeople since Karl Marx #1, #2 and you are part of it.
Egmont Kakarot-Handtke
#1 Wolfgang Waldner, Der preußische Regierungsagent Karl Marx
https://www.amazon.de/preu%C3%9Fische-Regierungsagent-Karl-Marx-Innenministers/dp/3839114012/ref=sr_1_1?ie=UTF8&qid=1537381183&sr=8-1&keywords=wolfgang+waldner
#2 Wolfgang Waldner, Karl Marx, Prussian government agent
https://postflaviana.org/wolfgang-waldner-marx/
Tom Hickey: I think that a lot of opposition to it from people that would otherwise be for it as an interim step lies in the mistake that it is a panacea instead of an analgesic. A JG is not a remedy for all ill regarding employment.
ReplyDeleteTom, the MMTers almost always say it is not a panacea. Nowadays I'm the only one who always says it damn well is. So how could people be turned off by something they don't hear? Do you really think I am that influential?
Again, this is not a mistake. The mistake is being made by people who don't see how powerful and essential a JG is. Who don't see that not having a JG is "logically absurd" (Mosler). Mosler is just rediscovering a centuries old, forgotten point of the highest importance, that most MMT fans don't seem to understand. Interestingly, Dean/dingo/ANC Driver, a lawyer who posts here and elsewhere occasionally, is not an MMT fan (yet), but he understands the crucial argument very clearly.
The mistake is not understanding it is a remedy for all unemployment ills, because having a JG = deciding not to have unemployment, which causes the lion's share of poverty. Doing something like 2/3 or more of the work of addressing issues is not just "a beginning" or "an interim step". Occasionally the MMTers, most clearly Wray that I have seen, do let it slip out that the JG is as much a panacea as anything could be.
degeneration into workfare, inflationary pressure through indexing the wage
Start off with a real job program, a real JG. Nobody has ever had any practical difficulty telling the difference between that and workfare. Degeneration into workfare is basically only a theoretical possibility. It was never seen anywhere where countries genuinely tried to eliminate unemployment, which practically can only be done by a JG or JG-ish measures.
MMT opposes indexation, which just feeds inflation. The JG wage is a fixed wage, not indexed. Indexation would defeat the anti-inflation effect. If one tries to think clearly about things, it is obvious that unemployment naturally causes inflation rather than fights it. One has to look at logically absurd policies in a logically absurd way to think differently.
EKH:There is no such thing as the private sector but there is the business sector and the household sector.
ReplyDeleteDefine "the private sector" as "the business sector" plus "the household sector". Did Zeus strike me down with lightning? As far as I know, you are the only person ever who has objected to making such definitions. Why? The (impossible) burden of proof is on you to defend the bizarre assertion that some well-defined and useful ways of dividing up an economy are "real" while others are not. This isn't Karl Mannheim; it is just common sense and using natural language and accounting in a completely unexceptionable and humdrum way, when they entirely coincide.
In any case, where do the actual numbers of such statistics come from? While reading about Morris Copeland a while ago - the father of Flow of Funds analysis - I learnt that these business sector numbers and household numbers partly come from the "private sector" numbers. The reason is that many small businesses do not separate their household and business accounts, and in aggregate they are quite significant. So econometricians have to estimate the business sector and household sector numbers for small businesses/proprietors based on the "private sector" numbers.
On your more serious points, basically about distribution, the MMTers are aware of the issues, but they analyze it in a more serious and correct way, with more material and formal consistency. For instance look at Wray's recent Levy paper defending Minsky against Bill Mitchell's ludicrous assertion that he was not an MMT forefather. (Mitchell has a very great deal of historical knowledge, but he is an awful historian.) There is a good amount about the negative distributional consequences of recent trickle-down policies. Trickle down a la Trump is not what MMT recommends, but it seems that your analysis is too coarse to see the difference between that and MMT's trickle up, JG proposals.
Unfortunately, the MMT economists no longer exclusively speak for MMT. Perception is reality and the loudest voice is the fan club.
ReplyDeleteThere was a thread on Twitter today begun by Bruce Bartlett criticizing MMT as pie in the sky. When challenged on the basis of the work of the MMT economists, he replied that he was not talking about them but the fan club that is now representing MMT in the media wars.
Almost no one actually gets the nuance and detail of MMT as set forth by the MMT economists and I confess to not having read all their work myself.
So the charade goes on about this, in addition to everything else that is "debated" publicly, for example, the armchair generals.
The mistake is not understanding it is a remedy for all unemployment ills, because having a JG = deciding not to have unemployment, which causes the lion's share of poverty. Doing something like 2/3 or more of the work of addressing issues is not just "a beginning" or "an interim step". Occasionally the MMTers, most clearly Wray that I have seen, do let it slip out that the JG is as much a panacea as anything could be.
ReplyDeleteI agree that the JG is much more than most take it to be, even those who see it as a panacea rather than an analgesic.
It is a shot aimed that the heart of capitalism which depends on capital controlling wage labor.
This is why I see it as an interim step on the way to replacing capitalism with socialism.
Don't think that capital doesn't realize this.
Some of the MMT economists may get this (Wray?), but for sure they are not going to get caught saying this publicly, for obvious political (strategic) reasons.
Calgacus
ReplyDeleteYou say: “Define ‘the private sector’ as ‘the business sector’ plus ‘the household sector’. Did Zeus strike me down with lightning? As far as I know, you are the only person ever who has objected to making such definitions. Why? The (impossible) burden of proof is on you to defend the bizarre assertion that some well-defined and useful ways of dividing up an economy are ‘real’ while others are not. This isn’t Karl Mannheim; it is just common sense and using natural language and accounting in a completely unexceptionable and humdrum way, when they entirely coincide.”
You are just parroting long refuted arguments.#1 To think that one is free to define anything in any way is the Humpty Dumpty Fallacy.#2, #3
Common sense is NOT a valid argument in science because since the Middle Ages it is well-known that the ‘sun goes up’ is well-accepted among common-sense imbeciles but not accepted among scientists.#4
Take notice that MMT has NO sound scientific foundations, MMT’s sectoral balances equations are mathematically false, MMTers violate scientific standards on a daily basis, MMT is political agenda pushing in a scientific bluff package. #5, #6
From the fact that Zeus does not strike you and the rest of brain-dead/corrupt MMTers down with lightning does not follow anything because that is not how science works. MMT is long dead because of material/formal inconsistency. The fact that common-sense folks have not realized that MMT is a proto-scientific zombie is only a redundant confirmation of their abysmal stupidity.
Egmont Kakarot-Handtke
#1 Failed economics: The losers’ long list of lame excuses
https://axecorg.blogspot.com/2017/01/failed-economics-losers-long-list-of.html
#2 Profit, income, and the Humpty Dumpty Fallacy
https://axecorg.blogspot.com/2018/02/profit-income-and-humpty-dumpty-fallacy.html
#3 Wikipedia and the promotion of economists’ idiotism (II)
https://axecorg.blogspot.com/2018/07/wikipedia-and-promotion-of-economists.html
#4 Why J. S. Mill had no friendly word for the bigots and votaries of common sense
https://axecorg.blogspot.com/2015/01/why-j-s-mill-had-no-friendly-word-for.html
#5 For the full-spectrum refutation of MMT see cross-references MMT
http://axecorg.blogspot.com/2017/07/mmt-cross-references.html
#6 Are MMTers stupid or corrupt or both?
https://axecorg.blogspot.com/2018/01/are-mmters-stupid-or-corrupt-or-both.html