Sunday, January 13, 2019

Chris Beck — Modern Monetary Theory Renders a Critic Incoherent

Modern Monetary Theory (MMT), which strives to explain macroeconomics in nations with sovereign, fiat currencies, represents a radical departure from conventional wisdom, making it a lightning rod for criticism. After spotting the headline in The National—“Hot new economic theory is just one piece of the puzzle”—I had some hope that Gordon MacIntyre-Kemp’s analysis would be rigorous and perhaps thought-provoking. My optimism was crushed just a couple of dozen words in, and the cringes lasted right through to the end....

Splice Today
Modern Monetary Theory Renders a Critic Incoherent
Chris Beck


AXEC / E.K-H said...

Debunking idiots does not prove that MMT is valid
Comment on Chris Beck on ‘Modern Monetary Theory Renders a Critic Incoherent’

Yes, there is a lot of idiotic critique of MMT and MMTers can easily debunk it. These lowlife economics wrestling performances are part of Circus Maximus entertainment and distract from the three crucial points, i.e. MMT is bad theory, MMT is bad policy, MMTers are bad people.

(i) “‘MMT promises an end to austerity with the ability to pay for any social policy, infrastructure investment or deficit cancellation without the need to raise taxes. It sounds too good to be true ― and guess what, it is.’ ‘Except that it is true. The U.S. government, which can produce dollars with a few keystrokes, doesn’t need tax revenue to pay for anything.’”

This is technically true, just as it is technically true for any ordinary counterfeiter. Fact is, though, that it is a fraud to bring money at the demand side into the economy. The correct way is to finance the wage bill.#1, #2

(ii) “Under MMT, government deficits are seen as surpluses for the citizens. In fact, the amount of the deficit matches private savings to the penny.”

This is the core of MMT’s scientific failure/fraud. The MMT balances equation reads (I−S)+(G−T)+(X−M)=0, the correct equation reads (I−S)+(G−T)+(X−M)−(Q−Yd)=0 and it boils down to Public Deficit = Private Profit, i.e. (G−T)=Q, in other words, “the amount of the deficit matches” ― NOT private SAVING but private PROFIT ― “to the penny”.

Because the foundational sectoral balances equation is false the whole analytical superstructure of MMT is false. Because the critics of MMT are also too stupid for the elementary mathematics of macroeconomic accounting, they do not spot the lethal defect.

The lethal defect of MMT is Profit Theory and Distribution Theory. MMT policy guidance has NO sound scientific foundations. It is brain-dead agenda pushing.

(iii) “… if a government can spend what it wants there is no restriction on unhinged leaders spending in a way that kills the planet.” This is NOT a fault of MMT. In fact, governments have found this out long ago and this is how wars have always been financed. This is why Kant ruled deficit-spending out back in 1795 in his essay Perpetual Peace.

(iv) “… MMT explicitly states that it’s taxation that gives the dollar much of its value by creating demand for it. People need dollars to pay their taxes. Therefore, MMT could never be used to justify replacing taxation, just as capitalism couldn’t be used to justify the government owning the means of production.”

This is pure MMT nonsense. The value of money does NOT come from taxation.#3 A Zero-Tax Economy is feasible.#4 In fact, it is the logical limiting case of MMT. Remember “The U.S. government … doesn’t need tax revenue to pay for anything.”?

MMTers simply do not understand the implications of the basic tenets of their theory. Their good look is that their critics are even more stupid.

Egmont Kakarot-Handtke

#1 The MMT-Yawner: Government is not a household

#2 MMT Progressives: The knife in the back of WeThePeople

#3 The creation and value of money and near-monies

#4 The Third Way: Towards the happy Zero-Tax Economy

AXEC / E.K-H said...

Correction: good luck instead of good look

Noah Way said...

Don't feed the troll.

Konrad said...

But look at all the brilliance we miss when we don’t feed the trolls.

The temporal equation reads (I−S)+(G−T)+(X−M)=0, the correct equation reads (I−S)+(G−T)+(X−M)−(Q−Yd)=0 and it boils down to Public Deficit = Private Profit, i.e. (G−T)=Q, in other words, “the amount of the deficits” ― NOT private (I−S)+(G−T)+(X−M)=0, SAVING but private (I−S)+(G−T)+PROFIT

~ Hedgehog Carrot-rot Snot-hankie