The epithets being used as put-downs for Modern Monetary Theory (MMT) are growing. But some of the good old terms – that one might actually apply to mainstream macroeconomics – are also in currency. An article in Project Syndicate (May 27, 2019) – Japan Then, China Now – declared MMT to be “the latest strain of voodoo economics” that is “alluring for the Trump administration”. The article by a Yale University lecturing staff member (and former investment banker) really just reminds us why students should avoid studying economics at that university. The voodoo, I am afraid is actually on the other foot! There are some fundamental errors in the logic in the article that highlight why MMT is a superior paradigm for understanding how the monetary system actually operates in comparison to the mainstream logic that the author uses against it.
A related article in the right-wing National Review (July 22, 2019) – New Budget Deal Puts Final Nail in the Tea-Party Coffin – covers a similar terrain from a different perspective.
The author is bemoaning the fact that Trump has wiped out the ‘tea-party’ by breaking with the “2011 Budget Control Act”, which was the centrepiece of small-minded conservative politics a few years ago....I stopped posting articles critical of MMT here at MNE some time ago — unless the criticism is serious and informed. Why waster time on derp? However, there is almost no informed critiques and most are just rants. The only difference among the critical articles is how unserious and uninformed they are.
Bill Mitchell – billy blog
Voodoo economic revisionism abounds – and it is not MMT doing the voodoo
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia
I've long been convinced that MMT pretty much explains how our evil fiat funny money system actually operates. It "works" because the wealth transfers it enables are done in small enough bites that the public cannot follow them. That the system works this way says nothing about the efficacy of paying for massive government obligations (also wealth transfers) painlessly and easily by the creation of new fiat funny emissions, especially in the absence of real savings.
ReplyDeleteMMT, voodoo, and dead-horse-beating
ReplyDeleteComment on Bill Mitchell on ‘Voodoo economic revisionism abounds ― and it is not MMT doing the voodoo’
Science is about true/false and NOTHING else. Economics is supposed to be a science and by consequence it is about how the monetary economy operates and NOT about what journalists, politicians, trolls, tweeters, Mr. Trump, Rush Limbaugh, or any other brain-dead agenda pusher in the Circus Maximus hallucinates.
From an economist one expects to learn the true (= materially/formally consistent) theory and NOT that economic policy guidance in the incarnation of Walrasianism, Keynesianism, Marxianism, Austrianism is voodoo. Everybody knows this by now. No need for Bill Mitchell to repeat the same old folk-psychological crap over and over again.
• “Both articles … are rehearsing the growing angst that the deficit terrorists who were dominant in the 1990s up until recent years are now feeling as their anti-government, anti-fiscal policy message ― their continued prophesies of doom ― but most of all, their relevance ― is evaporating before their very eyes ― exposed by too many predictions of doom and disaster which have never been realised.”
• “The angst these conservatives are now going through is mirrored by the obvious fact that mainstream macroeconomics is growing in irrelevance itself. Which is why many of the ‘big’ names are attacking MMT so relentlessly.”
• “The MMT economists are delivering the alternative paradigm in macroeconomics. No other challenge to the mainstream has succeeded and the heterodox tradition just became lost in peripheral issues. MMT is front and central macroeconomics and the mainstream cannot deal with it.”
• “And when a character like Trump comes along who doesn’t play by the script the world of these ‘free market’ liars is blown apart.”
• “And Trump is demonstrating by his fiscal actions that the main weapon the Republicans used to kill off any progressive policy dreams is now defunct.#1 No one believes the deficit horror stories any more.”
• “Nobody is a fiscal conservative anymore … All this talk about concern for the deficit and the budget has been bogus for as long as it’s been around.” (Limbaugh)#2
• “How many years have people tried to scare everybody about the deficit? The years, how many decades of politicians tried to scare us about deficit the national debt, the deficit, any number of things. And yet, here we’re still here and the great jaws of the deficit have not bitten off our heads and chewed them up and spit them out.” (Limbaugh)
In sum: “Cover blown.” and “… all the deficit terrorists … are now running around like headless chooks because their lies have lost traction.”
Most of this is accurate, of course, but from this he-said-she-said-I-said gossip does NOT follow that MMTers “… are delivering the alternative paradigm in macroeconomics.” Fact is that MMT macro is refuted on all counts.#3
See part 2
Part 2
ReplyDeleteMMT is the academic cover for a straightforward political agenda: to push deficit-spending/money-creation. Bill Mitchell’s message is simple: government deficits and growing public debt are good, there are no risks to speak of and the residual risks can be easily handled and everybody who says otherwise is a liar and deficit-terrorist.
There is not the smallest snippet of science in this talk. Obviously, Bill Mitchell has moved from serious scientific research to Orwell’s propaganda ministry.
MMT is provably false, i.e. materially/logically defective, and therefore, MMT policy guidance lacks sound scientific foundations. MMTers deceive the general public because they never address the toxic distributional effect of their policy.
The policy of deficit-spending/money-creation benefits the Oligarchy because it increases macroeconomic profit according to the Profit Law which entails Public Deficit = Private Profit. MMT is a free lunch program for the Oligarchy. Financial wealth and public debt grow in lockstep and the fabulous financial wealth in the USA is roughly equal to humongous public debt ($22 trillion and counting). The Profit Law explains how billionaires are able to accumulate that much money and why they can buy all the bonds the Treasury issues and cash in the ultra-safe interest that is reliably taxed from WeThePeople as long as the debt is rolled over which can be very long indeed. MMT policy is a Ponzi scheme that works as long as public debt grows. But infinite growth is impossible on a finite planet. This holds also for public debt. The fact that things went fine so far proves NOTHING about the future. And it does NOT prove the scientific validity of MMT.
While it is true that mainstream economic policy is voodoo, the same holds for MMT.
Egmont Kakarot-Handtke
#1 Keynes, Lerner, MMT, Trump and exploding profit
https://axecorg.blogspot.com/2017/12/keynes-lerner-mmt-trump-and-exploding.html
#2 Links on Austerity
https://axecorg.blogspot.com/2019/05/links-on-austerity.html
#3 For the full-spectrum refutation of MMT see cross-references MMT
http://axecorg.blogspot.com/2017/07/mmt-cross-references.html
Bob Roddis
ReplyDeleteFiat money, or evil fiat funny money as you call it, is not the basic problem of the monetary economy but how it is injected into the system. See
The right and the wrong way to bring money into the economy
https://axecorg.blogspot.com/2019/07/the-right-and-wrong-way-to-bring-money.html
Egmont Kakarot-Handtke