More proof we are ruled by morons.
The battle line is drawn, with the ruling elite and neoclassical economists at the center and the flanks occupied by Austrians and Libertarians on the right and clueless progressives on the left, with corporate media in the background, facing off with the MMT economists at the center flanked by MMT advocates, backed by a public that agrees with genuine progressive goals. Now it is a battle for hearts and minds.
Actually, deficits do matter, says Fed chairman Jerome Powell
Benzinga Institute
Fed Chair Powell: 'We Are Prepared To Adjust'
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Fed Chair Powell: 'We Are Prepared To Adjust'
'Just wrong': Jerome Powell rejects AOC's theory about government debt
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Fed chairman Jerome Powell shoots down Ocasio-Cortez's big deficit idea
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Powell’s answers on deficit spending, climate change set up more contentious House hearing
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Jerome Powell Says the Concept of MMT Is 'Just Wrong'
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Powell says economic theory of unlimited borrowing supported by Ocasio-Cortez is just 'wrong'
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Zero Hedge
Zero Hedge
Tyler Durden
21 comments:
A battle for hearts and minds ― economics redefined
Comment on Tom Hickey on ‘Fed Chair Powell gets it wrong, just as did Bill Dudley’
Tom Hickey declares war: “The battle line is drawn, with the ruling elite and neoclassical economists at the center and the flanks occupied by Austrians and Libertarians on the right and clueless progressives on the left, with corporate media in the background, facing off with the MMT economists at the center flanked by MMT advocates, backed by a public that agrees with genuine progressive goals. Now it is a battle for hearts and minds.”
The opioid crisis obviously takes a heavy toll on economists. MMTers like Tom Hickey are currently losing the rest of their lamentable capacity to differentiate between polit-blather and reality.
Whatever the FED chairman says is self-promotion as competent and responsible representative of an institution that claims to be committed to the well-being of WeThePeople. No sober person takes this speech-writer stuff literally.
The task of the FED is to keep the economy going. This is a political mandate. Accordingly, the performance of Wall Street is engineered by the FED and the performance of the real economy is engineered by FED/TREASURY. This team will do “Whatever it takes” to keep the system going and this includes running deficits up to the stratosphere.
MMTers are simply intoxicated of their own rhetoric when they believe that they tell FED/TREASURY something new by pointing out that there is no operational restriction to deficit-spending/money-creation. Wake up MMTers, the governments all over the world know this and practice it since time immemorial. The proof is in the public debt of globally $184 trillion and of $22 trillion alone in the USA.
And, mind you, this amount is the official number. How can MMTers be sure that FED/TREASURY is not doing MMT deficit-spending/money-creation all along without showing it on the official accounts? After all, the Pentagon is on record of losing sight of trillions every year.
There are two worlds: the communicative world and the real world. Political agenda pushers deal with the world of make-belief only scientists deal with reality. Economists are no scientists.
The reality is that the free market economy is on the life-support of the State. The macroeconomic Profit Law boils down to Public Deficit = Private Profit and this means that permanent deficit-spending is necessary to prevent the monetary economy from collapsing. This holds for Capitalism and Socialism alike.
Of course, neither the government nor the FED nor the TREASURY can tell WeThePeople that they are riding the tiger and cannot dismount.
But, luckily, there are the useful idiots of MMT who tell WeThePeople that deficit-spending/money-creation is needed for worthy social purposes and for the survival of humanity and the planet. Nobody can argue against rescuing humanity.
Deficit-spending/money-creation, of course, makes of one problem today two problems in the future. However, this can go on for a long time. Best of all, when things go wrong, the responsible politician steps before the cameras and tells WeThePeople that it was the fault of these MMTers with their reckless social/environmental deficit-spending.
There is NO war between misguided right-wing FED hardliners and progressive left-wing MMTers. The battle for hearts and minds is just a communicative clown show in the political Circus Maximus.#2
Note that neither FED nor MMT arguments have sound scientific foundations. Economics is a failed/fake/cargo cult science Both, mainstream economics and MMT are proto-scientific garbage. What economics needs is to flush Walrasianism, Keynesianism, Marxianism, Austrianism, MMT and the pluralism of provably false theories down the drain.
Egmont Kakarot-Handtke
#1 For the full-spectrum refutation of MMT see cross-references MMT
http://axecorg.blogspot.de/2017/07/mmt-cross-references.html
# 2 The economist as standup comedian
https://axecorg.blogspot.com/2016/11/the-economist-as-standup-comedian.html
(-b±√(b^2-4ac))/2a sin ∮ dy/dx e pluribus bullshittium δy/δx (D=1)=0
Hedgehog Carrot rot-Handcrank
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"It's Just Wrong" - Fed Chair Powell Destroys MMT Dreams
This entire diatribe is based on the lie that the US government borrows its spending money.
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'Just wrong': Jerome Powell rejects AOC's theory about government debt
This is priceless…
“The Fed chairman admitted he’s not familiar with MMT.”
He knows nothing about MMT, except that it’s “just wrong.”
Another brilliant graduate of the Roddis School for the Gifted
More of the "Deficits don't matter". Of course they matter, they matter a lot, and they're usually a good thing.
Nothing new to see here really. The people at the top are often clueless.
facing off with the MMT economists at the center flanked by MMT advocates, backed by a public that agrees with genuine progressive goals. Tom Hickey
And should price inflation result it's the non-rich public that will have to pay higher Federal taxes to go with their higher cost of living, right Tom? Since even if the rich could be taxed at a rate to cut their consumption, they don't consume enough in aggregate to make a difference anyway?
So, according to MMT, taxes may indeed be necessary - but only on the non-rich.
Meanwhile, Federal taxation increases the ability of the banks to lend by removing reserves from the banking system and thus improving their Supplemental Leverage Ratio.
In essence then, Federal taxation under MMT shall make life harder for the non-rich by taxing their deposits away in order that the banks can create even more deposits for the rich ("Bank loans create bank deposits.")
Also note that though MMT proposes to strongly regulate lending by the highly (much more so under MMT) privileged usury cartel, "the banks", such loans as automating jobs away without compensation for the displaced workers would be approved without question.
And that's Progressive?
"according to MMT, taxes may indeed be necessary - but only on the non-rich"
When it comes to making shit up, you are second only to Roddis and Egmont.
If taxes are to control price inflation then they must be levied on enough consumers to matter - that means the non-rich. You can tax the rich too but it's the non-rich consumers who MUST be taxed to control price inflation since the rich do not consume enough to matter.
Now, if you can refute that, go ahead and do so.
And what's your beef with me anyway? I'm for more generous deficit spending than the MMT crowd since I'd eliminate the privileges for banks that enable them to compete for the same real resources as deficit spending does.
Okay, I understand one cannot judge Fed chairman Jerome Powell's views based only on what Natasha Frost, writing for Quartz, says. Maybe Frost isn't a very competent journalist or maybe it was something deliberate: he was maliciously quoted out of context to make him appear like a fool.
But let's assume for a moment he really did say what Frost reports:
“The idea that deficits don’t matter for countries that can borrow in their own currency I think is just wrong,” he said. Instead, politicians should be looking to “spend less or raise more revenue.”
If that quote is correct, Powell never bothered to explain why he thinks the idea that deficits don't matter is just wrong. One must take his word for that.
Fair enough.
Now, if one can conclude things without offering an explanation, then I can conclude, judging by the photo included in that article, that Jerome Powell may have been experiencing an episode of incontinence when he said that. I don't have to explain myself anymore than Jerome Powell has. He doesn't need to substantiate his claims? Well, neither do I.
You have my word, which is no worse than Jerome Powell's.
https://cms.qz.com/wp-content/uploads/2018/07/Jerome_Powell-Face.jpg?quality=75&strip=all&w=1600&h=900
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God, I fucking hate bullies.
Instead, politicians should be looking to “spend less or raise more revenue.”
Jerome Powell is a banker and fiat creation for the general welfare competes with bank deposit creation for the private welfare of the banks themselves and the rich, the most so-called "credit worthy" of what is in essence, because of government privilege for the banks, the public's credit but for private gain.
We now know how, much more than any time in history, imo, how to euthanize the banks and why we should.
Bullies indeed but if we don't take on bank privileges how are we not complicit in their evil?
@AA First you say taxes will be levied only on the non-rich. Then you say tax the rich too but it won't make any difference.
Conveniently forgetting that 1) the rich have all (most of) the money (and asset ownership) and 2) the idea of progressive taxes., where the more you have, the more you pay.
In addition, if the rich were taxed out of existence - and unable to buy government "consideration" - we'd all be in this together, which is how it should be.
You're starting to sound more and more like Roddis.
First you say taxes will be levied only on the non-rich Noah Way
No, I didn't. I only said that it was NECESSARY to tax the non-rich if the aim is to control price inflation via taxation. But that's how your MMT heroes would control price inflation, not me.
@AA
"So, according to MMT, taxes may indeed be necessary - but only on the non-rich."
Direct quote from your post above. Spin whatever bullshit however you like, your credibility is rapdly approaching zero.
You're right, Noah.
I should have said "So, according to MMT, taxes may indeed be necessary on the non-rich."
So instead of using monetary policy to control price inflation, MMT advocates would tax the non-rich instead while allowing the Federal Funds Rate to fall to ZERO percent or pegging it to ZERO percent (Mosler).
So, in a nut-shell, continued or increased (Mosler) welfare for the banks and if excessive price inflation results then the non-rich are to be taxed.
Sure the rich would be taxed too but which MMT advocate has suggested that the rich would be so highly taxed that they would have to cut their consumption?
On Twitter,#1Warren Mosler cites approvingly Macrotourist#2: “Nice to see MMT articles like this: Trump is the most MMT-like-President ever elected.”
Actually, this is long known:
MMT = Trumponomics
https://axecorg.blogspot.com/2018/11/mmt-trumponomics.html
MMT: So-called Progressives as trailblazers for Trumponomics
https://axecorg.blogspot.com/2018/04/mmt-so-called-progressives-as.html
Egmont Kakarot-Handtke
#1 Twitter
https://twitter.com/wbmosler/status/1101129762930655233
#2 Macrotourist
https://www.themacrotourist.com/posts/2019/02/27/bullish/
According to MMT, taxes regulate economic activity. Thus inflation - where there is too much money in circulation, and its value decreases - is corrected by taxation, which removes money from circulation, thereby increasing the value of what remains. This is a mechanism, not a policy. Policy would be how and when it is implemented. Two related but separate issues.
How does taxing the rich control price inflation except for luxury items?
So unless the non-rich are taxed, directly or indirectly, the mechanism for controlling price inflation via taxation DOES NOT EXIST. So whatever policy is chosen, the non-rich MUST be taxed to control price inflation.
Not only that, Federal taxation increases the ability of the banks to create even more deposits than were taxed away, as I've explained.
Otoh, genuine bank reform would be deflationary by itself and allow much more deficit spending - as well as a huge fiat distribution to all citizens equally as government-provided deposit insurance is abolished by degrees.
Genuine bank reform would also put a permanent end to the misery the banks cause and be a major start toward reversing wealth inequality without destroying wealth in the process.
Deficit-spending/money-creation, of course, makes of one problem today two problems in the future. However, this can go on for a long time. AXEC / E.K-H
First, let's note the economy runs off bank deposits and due to government privilege the banks can create amounts of those that rival deficit spending.
So let's eliminate bank privilege and then the demand for fiat shall greatly increase and we'll be rid of the dangerous boom-bust cycle and a great deal of unjust profit distribution too.
Then I don't see any reason against and quite a few reasons for modest deficits forever so long as the new fiat is distributed justly and/or spent for the general welfare only.
Noah Way
You say: “According to MMT, taxes regulate economic activity. Thus inflation ― where there is too much money in circulation, and its value decreases ― is corrected by taxation, which removes money from circulation, thereby increasing the value of what remains.”
Your inflation theory is roughly the old Quantity Theory, i.e. too much money chasing too few goods. So, to begin with, your inflation theory is false.#1, #2
Furthermore, the “value of money” depends on the productivity and not on taxation or on the quantity of money.#3
Egmont Kakarot-Handtke
#1 Economics as tireless production of proto-scientific toilet paper: inflation theory as an example
https://axecorg.blogspot.com/2018/09/economics-as-tireless-production-of.html
#2 Dear idiots, government deficits do NOT cause inflation
https://axecorg.blogspot.com/2019/02/dear-idiots-government-deficits-do-not.html
#3 The creation and value of money and near-monies
https://axecorg.blogspot.com/2017/12/the-creation-and-value-of-money-and.html
@AA All I did was show the inconsitency and contradiction in your own statements and describe the difference between mechanism and policy.
You misrepresented this (tax "only" the poor, tax "only" the rich) because - I guess - you think inventing such interpretations from my comments supports your nonsense. There is certainly no extrapolating them via logic or even and inverse reasoning (I don't like A so I must like B). In fact there is no basis at all for you to make any such interpretation based on my comments in this thread.
Your credibilty has now reached zero and I place you in the same category as Roddis and Egmont: myopic, incapable of logical reasoning, and obnoxiously persistent.
Economists: Either stupid or corrupt or both
‘Comment on Noah Way on ‘Fed Chair Powell gets it wrong, just as did Bill Dudley’’
There is political economics and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda, the goal of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics anything goes; in theoretical economics, the scientific standards of material and formal consistency are observed.
Theoretical economics (= science) had been hijacked from the very beginning by political economists (= agenda pushers). Political economics has produced NOTHING of scientific value in the last 200+ years.
The ancient Greeks introduced the distinction between opinion (= doxa) and knowledge (= episteme). This distinction parallels the distinction between political economics and theoretical economics and it parallels the distinction between the pseudo and the genuine inquirer: “A genuine inquirer aims to find out the truth of some question, whatever the color of that truth. ... A pseudo-inquirer seeks to make a case for the truth of some proposition(s) determined in advance. There are two kinds of pseudo-inquirer, the sham and the fake. A sham reasoner is concerned, not to find out how things really are, but to make a case for some immovably-held preconceived conviction. A fake reasoner is concerned, not to find out how things really are, but to advance himself by making a case for some proposition to the truth-value of which he is indifferent.” (Haack)
Political economists are sham and fake reasoners. Economists never rose above the level of political economics.#1 The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational concept of the subject matter ― profit ― wrong.
Economics is a failed science or, in Feynman’s description a cargo cult science: “They’re doing everything right. The form is perfect. ... But it doesn’t work. ... So I call these things cargo cult science because they follow all the apparent precepts and forms of scientific investigation, but they’re missing something essential.”#2, #3, #4, #5
Cargo cult science is institutionally secured by a curriculum, textbooks#6, selection of teachers, financing, economic associations like the AEA, gatekeeping peer review, prestigious journals as career selectors, a recommendation and applause apparatus, false-hero-memorials, and the establishment of authority vis-a-vis the general public through the economics Nobel Prize.#7 The purpose of this tightly interlocked apparatus is to foster the impression that economics is a science.
Fact is that economics is for 200+ years at the proto-scientific level and that economists simply recycle slightly modified variants of already refuted theories: “In economics we should strive to proceed, wherever we can, exactly according to the standards of the other, more advanced, sciences, where it is not possible, once an issue has been decided, to continue to write about it as if nothing had happened.” (Morgenstern, 1941) The replacement of falsified theories by superior theories does not happen.
Thus the proto-scientific swamp of political economics and false microfoundations and false macrofoundations is perpetuated.#8 Whoever looks with a scientific mind into this mess will find propaganda, senseless blather, and corruption in a dimension that fits the description of the classic Augean stable. Whoever looks for genuine scientific knowledge will not find much.#9
This holds also for the latest swamp creature called MMT. It provides NO exception to the verdict that economists are either stupid or corrupt or both.#10
Egmont Kakarot-Handtke
For References see
https://axecorg.blogspot.com/2019/03/economists-either-stupid-or-corrupt-or.html
Don’t feed the troll.
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