| DR. VITUS

March 11, 2019

Hype does not help: MMT is toast
Comment on Bill Mitchell on ‘The conga line of MMT critics ― marching into oblivion’

Blog-Reference and Blog-Reference Mar 12 and Blog-Reference Mar 13

After 200+ years of failure, economists still present themselves as scientists and experts. Fact is, though, that economics is NOT part of science but an integral part of the political Circus Maximus. Accordingly, by mentioning MMT in the context of her Green New Deal initiative, the representative Alexandria Ocasio-Cortez’s triggered an avalanche of political/economical comments.

As Bill Mitchell observes: “The rising popularity of MMT is bringing out a lot of people from the woodwork who have ignored our work until now but who, for one reason or another, feel they have to have a stake in the game or look stupid.”

It is indeed pretty obvious that a lot of mainstream critique of MMT is just stupid.#1 This is no surprise because, by definition, one must be rather stupid to be a card-carrying mainstreamer, which means still failing to realize that standard economics is proto-scientific garbage. Therefore, Bill Mitchell is right: “And, they mostly end up looking foolish given the quality of their criticisms.”

To win an argument against a mainstreamer is easy but does by no stretch of the imagination imply that MMT itself is scientifically acceptable. What MMT has actually achieved is this: “The whole MMT journey to date has been to caution readers about the actual nature of constraints on government spending rather than the false constraints taught in economics courses around the world and wheeled out continually by self-serving politicians and lobbyists. By showing there are no intrinsic financial constraints on such spending, MMT, in no way, is advocating a carte blanche.”

This, though, is a rather trivial point. MMT has clarified a lot of silly misunderstanding and the unqualified critique of mainstreamers. MMT is clearly superior to mainstream economics because it is macrofounded. However, MMT has not answered to the scientific refutation, i.e. the proof of inconsistency#2 and its far-reaching implication.#3

• MMT’s macroeconomic foundations are unacceptable, i.e. MMT’s foundational sectoral balances equation is mathematically false, more specifically (I−S)+(G−T)+(X−M)=0 is false and (I−S)+(G−T)+(X−M)−(Q−Yd)=0 is true. This is a testable proposition.

• Because the axiomatic foundations are false, one can safely forget the rest. MMT is fake science.

• By not addressing refutation but systematically blocking it, MMTers violate scientific standards.

• On the one hand, Bill Mitchell claims: “MMT is not about political theory or praxis.” On the other hand, MMTers present themselves as Progressives and criticize the genuine left-wing parties and movements for having swallowed Neoliberalism.#4

• As a matter of fact, MMT is political agenda pushing in a scientific bluff package.

• Because of the macroeconomic Profit Law, i.e. Public Deficit = Private Profit, the MMT policy of deficit-spending/money-creation is NOT for the benefit of WeThePeople but of the Oligarchy.#5 MMT is just another political fraud.

In the final analysis, MMTers are either stupid or corrupt ― just like mainstream economists. This turns every discussion between the two political sects into an absurd proto-scientific performance.#6

Egmont Kakarot-Handtke

#1 Paul’s and Stephanie’s economic delirium talk
#2 The final implosion of MMT
#3 MMT for beginners
#4 MMT Progressives: stupid or corrupt or both?
#5 Very busy these days: Wall Street’s agents
#6 The clock runs down on economics

Related 'MMT-Refutation for Dummies' and 'Misrepresenting MMT' and 'Krugman vs MMT ― like the blind talking about colors' and 'The half-truths and half-falsehoods of MMT' and 'Opinion, conversation, interpretation, blather: the economist’s major immunizing stratagems' and 'From MMT misunderstandings to the true Theory of Money' and 'Debunking idiots does not prove that MMT is valid' and 'Very busy these days: Wall Street’s agents' and 'MMT and the promotion of Wall Street socialism' and 'MMT = proto-scientific junk + deception of the 99-percenters' and 'How MMT enlightens Washington' and 'MMT, Warren Mosler, and the little helpers from Wall Street and Academia' and 'MMT: The fusion of Wall Street and Academia'.

Posted by AXEC / E.K-H at 3/11/2019 10:27:00 PM

Labels: Ethics, Failure, MMT, Paradigm, zBB, zML, zMNE

March 7, 2019

The clock runs down on economics
Comment on Stephanie Kelton on ‘The Clock Runs Down on Mainstream Keynesianism’*

Blog-Reference

Almost everybody knows by now that mainstream economics is dead. As a matter of fact, mainstream economics was already dead in the cradle 140+ years ago. The real wonder is why it is still around and why failed scientists like Paul Krugman are still producing proto-scientific garbage. For some reason, the basic methodological principle of science, i.e. to discard falsified theories, does not work in economics. The simple idea of scientific progress is that theories that have been proven materially/formally inconsistent are unceremoniously buried at the Flat-Earth-Cemetery and the attention turns to a more promising research program.

Applied to economics, this means that mainstream folks like Krugman are done.#1 However, there is a snag: “… it takes a new theory, and not just the destructive exposure of assumptions or the collection of new facts, to beat an old theory.” (Blaug)

Stephanie Kelton claims that MMT is the new theory that hammers the final nail in Paul Krugman’s coffin: “No economist is going to get everything right. But the odds of getting things right improve dramatically when you’re working with a macro framework that doesn’t lead you astray. The IS-LM framework is a gadget that will often align with sensible real-world analysis. It may perform better than a stopped clock, but it is no match for MMT.” and “The [IS-LM] model remains the workhorse for many mainstream Keynesians. MMT considers it fundamentally flawed.”#2

On this point, Stephanie Kelton is absolutely right: IS-LM is refuted on all counts#3 and only stupid or corrupt economists still apply it.

However, from this does not follow that MMT is the long-awaited replacement for mainstream economics. Although MMT is way better than IS-LM it is still flawed. The curious thing is, that IS-LM and MMT share the same foundational blunder which can be traced back to Keynes’General Theory.#4

From the methodological standpoint, both New Keynesianism and MMT is empirically/ logically inconsistent and not much more than commonsensical storytelling. Neither Paul Krugman’s nor Stephanie Kelton’s policy guidance has sound scientific foundations.

In order to make her point, Stephanie Kelton cites Galbraith: “There are two ways to get the increase in total spending that we call ‘economic growth.’ One way is for government to [deficit] spend. The other is for banks to lend. For ordinary people, public budget deficits, despite their bad reputation, are much better than private loans. Deficits put money in private pockets…This is called an increase in ‘net financial wealth’… In contrast, when a bank makes a loan, the cash is not owned free and clear.”

This is a hard to disentangle analytical half-truth and a full political fraud. Because it holds Public Deficit = Private Profit, MMT deficit-spending/money-creation puts money in the pockets of the Oligarchy. The fundamental law of Capitalism is the macroeconomic Profit Law and it says Q=Yd+(I−S)+(G−T)+(X−M) which boils down to Q=(G−T), i.e. profit Q is equal to the government’s deficit spending G>T.

The claim that MMT policy is for the benefit of WeThePeople is provably false. Because MMT gets the foundational concept of profit wrong, the whole theory is scientifically worthless. Politically, MMT is for the benefit of the Oligarchy.#5, #6 In the final analysis, MMTers are either stupid or corrupt ― just like mainstream economists..#7, #8, #9

The clock runs down not only on Paul Krugman’s New Keynesianism but also on Stephanie Kelton’s MMT.

Egmont Kakarot-Handtke

* BloombergOpinion, The clock runs down and BloombergOpinion, 4 Answers
#1 Enough! Economists, retire now!
#2 How to finally hammer down the nails in the coffin of Monty Python economics
#3 Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It
#4 Krugman vs MMT ― like the blind talking about colors
#5 Keynes, Lerner, MMT, Trump and exploding profit
#6 MMTers make Capitalism work
#7 The Kelton-Fraud
#8 MMT: The one deadly error/fraud of Warren Mosler
#9 Bill Mitchell, MMT’s fake scientist

Related 'Paul’s and Stephanie’s economic delirium talk'

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Short version: The clock runs down on economics

Blog-Reference Mar 8

Almost everybody knows by now that mainstream economics is dead. As a matter of fact, mainstream economics was already dead in the cradle 140+ years ago. The real wonder is why it is still around and why failed scientists like Paul Krugman are still producing proto-scientific garbage. For some reason, the basic methodological principle of science, i.e. to discard falsified theories, does not work in economics. The simple idea of scientific progress is that theories that have been proven materially/formally inconsistent are unceremoniously buried at the Flat-Earth-Cemetery and the attention turns to a more promising research program.

Applied to economics, this means that mainstream folks like Krugman are done.#1 However, there is a snag: “… it takes a new theory, and not just the destructive exposure of assumptions or the collection of new facts, to beat an old theory.” (Blaug)

Stephanie Kelton claims that MMT is the new theory that hammers the final nail in Paul Krugman’s coffin.
…
For the full 3618-character post see here
…
The claim that MMT policy is for the benefit of WeThePeople is provably false. Because MMT gets the foundational concept of profit wrong, the whole theory is scientifically worthless.

The clock runs down not only on Paul Krugman’s New Keynesianism but also on Stephanie Kelton’s MMT.

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