Tuesday, September 7, 2021

Bill Mitchell — As the mainstream paradigm breaks down

On September 2, 2021, the Head of the BIS Monetary and Economic Department, Claudio Borio gave an address – Back to the future: intellectual challenges for monetary policy = at the University of Melbourne. The Bank of International Settlements is owned by 63 central banks and provides various functions “to support central banks’ pursuit of monetary and financial stability through international cooperation”. His speech covers a range of topics in relation to the conduct of monetary policy but its importance is that it marks a clear line between the way the mainstream conceive of the role and effectiveness of the central bank and the view taken by Modern Monetary Theory (MMT) economists. I discuss those issues in this blog post....
Bill Mitchell – billy blog
As the mainstream paradigm breaks down
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

1 comment:

AXEC / E.K-H said...

From the fact that mainstream economics is false does not logically follow that MMT is true
Comment on Bill Mitchell on ‘As the mainstream paradigm breaks down’

Bill Mitchell comments on the address the Head of the BIS Monetary and Economic Department, Claudio Borio, gave at the University of Melbourne and claims that the mainstream economics central bankers have in the back of their minds is false.

This, of course, is true but not news. Macroeconomics in all its variants is known to be proto-scientific garbage since Keynes.#1 So, criticizing mainstream economics is nothing else than dead-horse beating. It is a cheap pleasure for Heterodoxy with no consequences for the advancement of science.#2

The correct conclusion from Bill Mitchell's debunking is that economics needs a Paradigm Shift and the one and only task of economists is to implement the new Paradigm.

This, however, is not Bill Mitchell's conclusion. He suggests that MMT and he personally were right all along. This is true with regard to mainstream economics which is based on false microfoundations. However, MMT, too, is axiomatically false but with regard to macrofoundations.

Both mainstream economics and MMT get macroeconomic profit wrong.#3-#5 So both are scientifically worthless.

Egmont Kakarot-Handtke

#1 Forget Keynes

#2 For more about dead horse beating see AXECquery

#3 Profit: The most powerful formula of economics

#4 Refuting MMT’s Macroeconomics Textbook

#5 The page where Stephanie Kelton gets macroeconomics wrong