Thursday, January 2, 2020

Crispin Savage — Visiting economist explodes myths of public deficits

Government deficits are normal and even necessary to the health of most economies – that’s according to one of the world’s most influential economists, Professor Stephanie Kelton, who will be a Visiting Professor at the University of Adelaide this month.
Professor Kelton is the Geoff Harcourt Visiting Professor of Economics at the University of Adelaide and Professor of Economics and Public Policy at Stony Brook University, New York.
Senior economic adviser to Bernie Sanders’ 2020 presidential campaign, Professor Kelton has recently been listed by Bloomberg as one of the 50 people who defined 2019. She was previously chief economist on the US Senate Budget Committee (Democratic staff) in Washington DC.
Professor Kelton is one of the leading experts on Modern Monetary Theory (MMT), a new approach to economics that is taking the world by storm.
MMT seeks to overturn the myth that currency-issuing federal governments face similar budget constraints to households, businesses and state governments. It explains that such governments are constrained in their spending decisions only by the risk of inflation, and never by the threat of insolvency. There are real constraints, but there are no purely financial ones.…
University of Adelaide (Australia)
Crispin Savage


Matt Franko said...

"myths of public deficits"

Here we go with the "myth!" again...

Peter Pan said...

Isn't it a saga by now?
An epic legendary saga...

AXEC / E.K-H said...

Why MMTers permanently explode myths of public deficits
Comment on Crispin Savage on ‘Visiting economist explodes myths of public deficits’*

More than 200 years ago, economics started as Political Economy. Those were honest times and the founding fathers identified themselves openly as political agenda pushers. John Stuart Mill, the philosopher of Liberalism, was from 1823 to 1858 on the payroll of the British East India Company.#1 Things changed with Jevons who renamed Political Economy to Economics and claimed to do science.

So, 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.

Despite their commitment to science, economists have produced NOTHING of scientific value in the last 200+ years. The major approaches — Walrasianism, Keynesianism, Marxianism, Austrianism, MMT — are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational economic concept profit wrong.

Economics is proto-scientific garbage but advertises itself as science. Economists deceive the general public. The “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel” is a fraud.

Economics is propaganda for the benefit of the Oligarchy. MMT is just the latest example. Stephanie Kelton is currently the most popular proponent of the false MMT message ‘Deficits Are Good For You’.

“Professor Kelton will deliver the annual Harcourt lecture ― The Deficit Myth ― Modern Monetary Theory and the Birth of the People’s Economy ― at the University of Adelaide on Tuesday 14 January to a packed audience. The event was sold-out almost as soon as it was announced.”

“Her much-anticipated book, The Deficit Myth: Modern Monetary Theory and Creating an Economy for the People (to be published on 9 June, 2020), will show how to break free of the thinking that she says has hamstrung policymakers in Australia and around the world.”

Now, the plain scientific fact of the matter is that the MMT policy of deficit-spending/money-creation is bad for WeThePeople and good for the Oligarchy.#2, #3

According to the macroeconomic Profit Law,#4 MMT deficit-spending/money-creation has serious negative distributional effects:

(i) The Law implies Public Deficit = Private Profit.
(ii) The greater part of private profit is invested in government securities and earns interest which is taxed from WeThePeople as long as the debt is rolled over.#5
(iii) A growing public debt can be rolled over for a very long time but at some future date has to be redeemed. This will cause severe economic problems.#6, #7

The communicative task of MMT academics is to brush all negative distributional effects and the inevitable future problems aside: “Government deficits are normal and even necessary to the health of most economies ― that’s according to one of the world’s most influential economists, Professor Stephanie Kelton, who will be a Visiting Professor at the University of Adelaide this month.”

Economics students are expected to swallow proto-scientific garbage and brain-dead propaganda without turning an eyelid. After all, that is what they have done since the founding fathers.#8

The fact of the matter is that public deficit-spending/money-creation is a free lunch program for the Oligarchy.#9 The fact is that the so-called market economy is on the life support of the State and Wall Street is on the life support of the Central Bank. Macroeconomic profit is in the main produced by public deficits. Financial wealth grows in lockstep with public debt. The Oligarchy, in turn, uses the opulent free lunches to corrupt what remains of the State’s legislative, executive, and judiciary institutions and, not to forget, academia.#10

Egmont Kakarot-Handtke

S400 said...

There he goes with the “myth” again....