accelerated-mobile-pages domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /home/daabdfcs/continentaltelegraph.com/wp-includes/functions.php on line 6121Much of Modern Monetary Theory is, as its proponents insist, simply true. Governments can create more of their own fiat currency at will. How much tax there is at the Treasury isn’t, unless in extremis, a limitation on how much government can spend. There are parts that aren’t quite and wholly true. It isn’t so that fiat money only gains its value from the willingness of a government to accept it as tax payments. Bitcoin has value, however absurdly, it’s a fiat currency and you can’t pay tax in it. Sure, the willingness to accept for tax purposes will aid in creating a value, it’s the only which is at issue.
What gives a currency value is that people will accept that it has value. That the government will accept it aids in that but consider it this way. How much value will a fiat currency have if the government will accept it for taxes but no other bugger will for beer, bread or barns? And then reconsider, what if everyone will accept the pieces of paper for beer, bread and barns, but government won’t? The US dollar has private value in Russia and no official value when dealing with government.
But here’s what the truly large problem with MMT is:
Sixth, the fact that the government spends first, and taxes second, means that the answer to the question ‘how are you going to pay for it?’ is always available to anybody who understands this process. A government decision can always be paid for, presuming the actual resources required to deliver it exist within the economy, simply by commanding the central bank to pay for it and then arranging, if necessary, for the additional tax due on the income that has been generated (because all government expenditure is, by definition, somebody else’s income) to be collected.
That’s just casuistry. OK, so, accept the MMT thesis. Tax doesn’t actually pay for stuff, tax only limits the inflation arising from having paid for stuff. OK, so, how different are these two questions:
1) Who are you going to tax to pay for this?
2) Who are you going to tax to stop the inflation from having paid for this?
The interesting difference between these two questions is what? Nowt that anyone can see now, is it? We’re going to increase the government abstraction of real resources from the economy – that’s what government direction of resource use means, that the private sector or private individual doesn’t get to do so – and someone, somewhere, has to lose control over those resources so that government gains it. This is tax again.
Another way to put this is that sure, MMT means that we can have a high spending government, one that consumes more of GDP. Great. To balance this we need higher taxation to limit the resultant inflation. Great. The difference between this high spend high tax economy and the traditional Old Labour high tax, high spend, economy is what? We’re still in an economy where government controls more of said economy. And someone ends up paying more tax as a result.
And that’s the problem with MMT. If government gains a larger proportion of the economy then everyone not government must have a smaller portion of it. How money is created doesn’t change that in the slightest. Our end result isn’t any different from the traditional tax the hell out of everyone to allow the establishment to spend all the cash. We did also try that, we call the experiment the 1970s and who wants that decade back?
And now a prediction. Anywhere that really did follow the MMT prescription would find itself with stagflation. Lots of government spending, yes, with all its inefficiencies. And high taxation, with all its inefficiencies, to limit the resultant inflation. Quite, welcome back to the 1970s. An inflationary and inefficient economy. Super, eh?
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View Comments
"presuming the actual resources required to deliver it exist within the economy" is the bit many MMT advocates fail to understand. They think that because there are a million unemployed unskilled labourers they can boost the economy by creating a demand for half-a-million computer programmers and half-a-million teachers or they can reduce unemployment among fishermen by employing lecturers in gender studies (no, you cannot get a fisherman to give a lecture on gender equality because he is evidence to the contrary).
What MMT does is, firstly, to promote the value of cigarettes as a means of exchange because fiat money loses its attraction as a store of value, secondly to destroy any incentive to save, then thirdly as a consequence wreck the ability to invest. Believers in the magic money tree don't believe that if you want to eat while you're building your house or factory or machine you need to have saved up some food by consuming less than you produce in the recent past.
Stagflation is just a first step on the downward path to Zimbabwe or Venezuela or the Weimar Republic.
MMT in a nutshell
Comment on Tim Worstall on ‘The Problem With Modern Monetary Theory’
Tim Worstall argues: “Much of Modern Monetary Theory is, as its proponents insist, simply true. Governments can create more of their own fiat currency at will.”
This is a shared and empirically corroborated insight of counterfeiters and governments since time immemorial. However, MMT claims to be a theory and the fact of the matter is that it does not satisfy the scientific criteria of material and formal consistency. In other words, MMT is provably false. MMTers are simply too stupid for the elementary mathematics that underlies macroeconomics.#1, #2
As a result, MMT policy has NO sound scientific foundations. It is only operationally true.
Technically speaking, MMT is based on this sectoral balances equation (X−M)+(G−T)+(I−S)=0 and this equation is mathematically false. The correct balances equation reads (I−S)+(G−T)+(X−M)−(Q−Yd)=0 and from it follows that Public Deficit = Private Profit. In other words, the MMT policy of deficit-spending/money-creation boils down to money-making for the Oligarchy.
For the general public, the essential points are:
• MMT has NO sound scientific foundations,
• MMT’s sectoral balances equations are mathematically false,
• MMTers violate scientific standards on a daily basis,
• MMT is political agenda pushing in a scientific bluff package,
• MMT is not for the benefit of WeThePeople but of WeTheOligarchy,
• MMT is just another political fraud.#4
Egmont Kakarot-Handtke
#1 MMT = Modern Monetary Trash
https://axecorg.blogspot.com/2018/09/mmt-modern-monetary-trash.html
#2 Wikipedia and the promotion of economists’ idiotism
https://axecorg.blogspot.com/2018/07/wikipedia-and-promotion-of-economists.html
#3 Keynes, Lerner, MMT, Trump and exploding profit
https://axecorg.blogspot.com/2017/12/keynes-lerner-mmt-trump-and-exploding.html
#4 For details of the big picture see cross-references MMT
http://axecorg.blogspot.de/2017/07/mmt-cross-references.html
"presuming the actual resources required to deliver it exist within the economy" is the bit many MMT advocates fail to understand. They think that because there are a million unemployed unskilled labourers they can boost the economy by creating a demand for half-a-million computer programmers and half-a-million teachers or they can reduce unemployment among fishermen by employing lecturers in gender studies (no, you cannot get a fisherman to give a lecture on gender equality because he is evidence to the contrary).
What MMT does is, firstly, to promote the value of cigarettes as a means of exchange because fiat money loses its attraction as a store of value, secondly to destroy any incentive to save, then thirdly as a consequence wreck the ability to invest. Believers in the magic money tree don't believe that if you want to eat while you're building your house or factory or machine you need to have saved up some food by consuming less than you produce in the recent past.
Stagflation is just a first step on the downward path to Zimbabwe or Venezuela or the Weimar Republic.
MMT in a nutshell
Comment on Tim Worstall on 'The Problem With Modern Monetary Theory'
Tim Worstall argues: "Much of Modern Monetary Theory is, as its proponents insist, simply true. Governments can create more of their own fiat currency at will."
This is a shared and empirically corroborated insight of counterfeiters and governments since time immemorial. However, MMT claims to be a theory and the fact of the matter is that it does not satisfy the scientific criteria of material and formal consistency. In other words, MMT is provably false. MMTers are simply too stupid for the elementary mathematics that underlies macroeconomics.#1, #2
As a result, MMT policy has NO sound scientific foundations. It is only operationally true.
Technically speaking, MMT is based on this sectoral balances equation (X−M)+(G−T)+(I−S)=0 and this equation is mathematically false. The correct balances equation reads (I−S)+(G−T)+(X−M)−(Q−Yd)=0 and from it follows that Public Deficit = Private Profit. In other words, the MMT policy of deficit-spending/money-creation boils down to money-making for the Oligarchy.
For the general public, the essential points are:
• MMT has NO sound scientific foundations,
• MMT's sectoral balances equations are mathematically false,
• MMTers violate scientific standards on a daily basis,
• MMT is political agenda pushing in a scientific bluff package,
• MMT is not for the benefit of WeThePeople but of WeTheOligarchy,
• MMT is just another political fraud.#4
Egmont Kakarot-Handtke
#1 MMT = Modern Monetary Trash
https://axecorg.blogspot.com/2018/09/mmt-modern-monetary-trash.html
#2 Wikipedia and the promotion of economists' idiotism
https://axecorg.blogspot.com/2018/07/wikipedia-and-promotion-of-economists.html
#3 Keynes, Lerner, MMT, Trump and exploding profit
https://axecorg.blogspot.com/2017/12/keynes-lerner-mmt-trump-and-exploding.html
#4 For details of the big picture see cross-references MMT
http://axecorg.blogspot.de/2017/07/mmt-cross-references.html