Sunday, November 11, 2018

The problem with modern monetary theory

More libertarian bias from Worstall here.... boy am I glad I am not libertarian or logically I would  have to agree with him here:

And that’s the problem with MMT. If government gains a larger proportion of the economy then everyone not government must have a smaller portion of it.

I don't know who is more stupid; Worstall here or a left libertarian supporter of MMT?

Hard to figure out....


Marian Ruccius said...

A larger public proportion of the economy does not mean a smaller absolute portion for the private sector.

Expanded public spending means rising incomes for the private sector.

Matt Franko said...


You must not be a libertarian...

Ralph Musgrave said...

Worstall’s “casuistry” point is fair enough. What he is saying is this.

The conventional view is: “government collects tax to pay for stuff and then spends a bit more, i.e. implements stimulus, by simply printing money, assisted by its central bank.”

In contrast, the MMT view is: “government prints money and pays for whatever it wants, and then collects enough tax to damp down any excess inflation resulting from that “print and spend” operation.”

As Worstall says, those two boil down to the same thing. They are just two different ways of making a point. However, I think the MMT way of putting it is worthwhile because it helps conventional folk get away from the “how are we going to pay for it” obsession and the “deficit and debt cannot be allowed to rise” obsession.

AXEC / E.K-H said...

MMT in a nutshell
Comment on Tim Worstall on ‘The Problem With Modern Monetary Theory’

Tim Worstall argues: “Much of Modern Monetary Theory is, as its proponents insist, simply true. Governments can create more of their own fiat currency at will.”

This is a shared and empirically corroborated insight of counterfeiters and governments since time immemorial. However, MMT claims to be a theory and the fact of the matter is that it does not satisfy the scientific criteria of material and formal consistency. In other words, MMT is provably false. MMTers are simply too stupid for the elementary mathematics that underlies macroeconomics.#1, #2

As a result, MMT policy has NO sound scientific foundations. It is only operationally true.

Technically speaking, MMT is based on this sectoral balances equation (X−M)+(G−T)+(I−S)=0 and this equation is mathematically false. The correct balances equation reads (I−S)+(G−T)+(X−M)−(Q−Yd)=0 and from it follows that Public Deficit = Private Profit. In other words, the MMT policy of deficit-spending/money-creation boils down to money-making for the Oligarchy.#3

For the general public, the essential points are:
• 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,
• MMT policy is not for the benefit of WeThePeople but of WeTheOligarchy,
• MMT is just another political fraud.#4

Egmont Kakarot-Handtke

#1 MMT = Modern Monetary Trash

#2 Wikipedia and the promotion of economists’ idiotism

#3 Keynes, Lerner, MMT, Trump and exploding profit

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