Sunday, November 17, 2019

New Economic Perspectives — Wray Appearing Before Congress

L. Randall Wray will be providing testimony for Congress on November 20 at 10 am. The topic is the government debt and deficits. His full statement will be available at 10:30AM at the Levy Institute.
New Economic Perspectives
Wray Appearing Before Congress


AXEC / E.K-H said...

Mr. Wray goes to Washington
Comment on New Economic Perspectives on ‘Wray Appearing Before Congress’*

MMT is two things: a novel theoretical approach that claims scientific superiority compared to the mainstream and political activism with a progressive agenda. This dual strategy violates the principle of the separation of politics and science. This First Principle of Science has been clearly formulated by J. S. Mill#1 but economists of all stripes have forgotten it. Today, economists are, with few exceptions, first agenda-pushers and second scientists.

The strict separation of the scientific realm and the political realm is non-negotiable because science cannot improve politics but politics always and everywhere corrupts science.

Contrary to their progressive appearances, MMTers are agenda-pushers for the Oligarchy.#2, #3, #4 The common denominator of all MMT policy proposals is deficit-spending/money-creation. This amounts to stealth taxation of WeThePeople and free lunches for the Oligarchy.#5

Needless to emphasize that MMTers play down all negative consequences of MMT policy. Here is what Randal Wray is going to tell in Washington: “His goal is to explain a) why we needn’t fear sovereign government deficits and debt; b) why in some important sense, deficits and rising debt are ‘normal’; c) the deficit is in any case largely outside the control of Congress; d) deficits and rising debt ratios will not lead to government insolvency or bankruptcy; e) all government payments can be made on time, unless f) Congress forces a default (due to the debt ceiling it imposes).”

It is important to notice that the lethal effect of MMT policy is is NOT inflation or bankruptcy. Because of Public Deficit = Private Profit the lethal effect is on the distribution of income and wealth. You will not learn much about distribution in Randall Wray’s testimony.

In essence, Wray tells Congress not to worry about the public debt but to do the bidding of Wall Street and to get out of the way of increasing deficit-spending/money-creation.#6-#9

Egmont Kakarot-Handtke

* New Economic Perspective

#1 “A scientific observer or reasoner, merely as such, is not an adviser for practice. His part is only to show that certain consequences follow from certain causes, and that to obtain certain ends, certain means are the most effectual. Whether the ends themselves are such as ought to be pursued, and if so, in what cases and to how great a length, it is no part of his business as a cultivator of science to decide, and science alone will never qualify him for the decision.”

#2 Is MMT good for WeThePeople or for the Oligarchy?

#3 Deficit cheerleaders ― the Oligarchy’s useful idiots

#4 How MMT enlightens Washington

#5 MMT: A free lunch for the Oligarchy

#6 Dear idiots, MMTers are Wall Street’s agenda pushers

#7 Very busy these days: Wall Street’s agents

#8 MMT: The fusion of Wall Street and Academia

#9 MMT and the overall political corruption of economics

Matt Franko said...

“MMT is two things: a novel theoretical approach that claims scientific superiority”

Keep dreaming they claim no such thing...

Unknown said...

This is courtesy the Bernie contingent on the budget committee - Ro Khanna, Ilhan Omar, Pramila Jayapal

Matt Franko said...

Yo Bernie wants to tax bill gates to get munnie for clean water...

Unknown said...


Bernie knows MMT probably a bit better than you do by now. However, the Congress either does not, or pretends that deficits are a problem. The deficits are never a problem when the defense budget comes up, or never a problem when giving a tax cut to the rich.

And as the deck is stacked, "How do you pay for it?" is always an issue when the Congress has institutionalized "Pay Go" for any programs that help the people on the lower rungs of life. So Bernie's stand is a tongue in cheek response to that - we will tax the rich to pay for the programs that help the 99%. The rich do need to be taxed because of the increase in inequality that low tax rates bring. This is extremely clear from all the data and studies.

Matt Franko said...

“So Bernie's stand is a tongue in cheek response ”

Now you’re a mind reader...

Matt Franko said...

“Bernie knows MMT probably a bit better than you do by now. ”

There is no evidence of that...

S400 said...

”Yo Bernie wants to tax bill gates to get munnie for clean water...”
No, he wants to diminish bill gates unearned power through taxation.

AXEC / E.K-H said...

Matt Franko

I say: “MMT is a novel theoretical approach that claims scientific superiority compared to the mainstream …”

You say: “Keep dreaming they claim no such thing …”

Bill Mitchell says: “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.”*

Egmont Kakarot-Handtke

* Voodoo economic revisionism abounds – and it is not MMT doing the voodoo

Calgacus said...

Gotta agree with you there AXEC / E.K-H - of course the MMTers claim scientific superiority. As do you. As does Matt, surely. IMHO logical reasoning indicates that the MMTers claim is correct, and that the refutations and criticisms are based on misunderstandings, often the same ones that the MMTers painstakingly refute, but which critics don't even seem to be able to read, judged by their inability to follow "normal" academic behavior of quoting, reading, citation etc.

AXEC / E.K-H said...

How Randall Wray takes the piss out of the House Budget Committee
Comment on New Economic Perspectives on ‘Wray Appearing Before Congress’

In section 5. Sectoral balances of his testimonial Randall Wray states: “One of the concepts that Modern Money Theory economists use to elucidate the impact of budget deficits on the economy is the sectoral balance identity developed by Wynne Godley (1996). At the level of the economy as a whole, aggregate spending is identically equal to aggregate income ― every dollar spent is received as income. It is useful to divide the economy into three sectors: government (national, state, and local), domestic private (households and firms), and foreign (rest of the world). If one sector spends more than its income (deficit), at least one other must spend less than its income (surplus) to maintain the aggregate identity that total spending equals total income. The balances (income minus expenditure) of the three sectors have to add up to zero since we are adding up all the income in the economy and subtracting all the spending, which are equal by identity. We can then write the aggregate identity as: government balance + domestic private balance + foreign balance = 0. For the US, the government balance taken as a whole is usually negative (government spending is greater than its revenue ― mostly taxes), the domestic private balance is usually positive (approximated as saving is greater than investment ), and the foreign sector balance is positive (the rest of the world has a surplus in relation to the US since our current account balance is a deficit). Figure 7 shows the US sectoral balances, with each sector’s balance presented as a percent of GDP.”#1

The scientific blunder is in the sentence “At the level of the economy as a whole, aggregate spending is identically equal to aggregate income ― every dollar spent is received as income.”

This leads to the false MMT sectoral balances equation (I−S)+(G−T)+(X−M)=0. The true balances equation reads (I−S)+(G−T)+(X−M)−(Q−Yd)=0.#2-#5

Because the foundational macroeconomic relationship is ill-defined the whole theoretical superstructure of MMT is false. The testimonial of Randall Wray is scientifically worthless.#6

Worse, MMT either ignores or deliberately hides the distributional consequences of the policy of deficit-spending/money-creation: “Although MMT has a set of policy prescriptions to achieve full employment and price stability, what I have discussed here is largely descriptive. MMT allows us to look at the economy through a different lens. While economists and policymakers may advocate for reducing government deficits and debt, MMT cautions that what we might be reducing is economic growth, as well as the private sector’s surpluses and net financial wealth.”

For “the private sector” read “the Oligarchy”. The MMT policy of deficit-spending/money-creation = growing public debt is to the advantage of the Oligarchy and to the disadvantage of WeThePeople ― not only in the present but even more so in the future.#7

Egmont Kakarot-Handtke

#1 Levy Economics Institute, Publications

#2 Dear idiots, government deficits do NOT fund private savings

#3 Rectification of MMT macro accounting

#4 Down with idiocy!

#5 The sectoral balances obfuscation: stupidity or corruption?

#6 The state of MMT? Stone-dead!

#7 Gosh! the One Percent have gotten $21 trillion richer: Links on Distribution