Recently on Bloomberg TV, Intelligence Squared’s “That’s Debatable” featured James K. Galbraith, Stephanie Kelton, Todd Buchholz, and Otmar Issing arguing for and against the proposition of the program’s title, “Stop Worrying About National Deficits”. (Continue reading)
For an ordered perspective on the role of culture in the ecology consisting of the schemes of recurrence of a) technology, b) production and exchange, and c) politics, one should read Fred Lawrence’s article, “Money, Institutions, and the Human Good.” Continue reading
PART A – Examples and Comments
Our contention is that a large discretionary injection of “free money” into the channels of Demand – whether by the Fed or the Treasury – rather than as “money justified” through the channels into productive supply, (S’-s’O’) and (S”-s”O”), is intrinsically inflationary. New money channeled into either the market for secondary financial assets or into the market for basic products, without the money being “justified” by productive output, is dangerously inflationary. (Continue reading)
Preliminary note: In this section we are addressing the proper understanding and management of the economic process in normal, non-pandemic times. We affirm that the current pandemic calls for extraordinary measures.
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Unwittingly, first out of ignorance and recently as necessitated by a pandemic, some nations, including the U.S., are wandering into the ultimate menace to the financial system, the spending without constraint blessed and recommended by unscientific Modern Monetary Theory. (Click here and here) The systematic result of MMT’s unconstrained printing of money, unjustified by corresponding production of goods and services, is rampant inflation in prices for a) goods and services and/or b) financial assets. (Continue reading)
Functions are not seen, but must be understood. (Catherine Blanche King, private communication)
A systematic explanation, then, requires a normative theoretical framework. The basic terms and relations of such a framework would specify the distinctions and correlations that articulate the causes, which are not necessarily visible, of events that are apparent to all. (CWL 15, Editors’ Introduction, lv) (Continue reading)
On Saturday, 12/19/ 2020, John Cochrane‘s blog “Bisin on MMT Rhetoric” cited Alberto Bisin’s review of Stephanie Kelton’s Book “The Deficit Myth. “ Alberto Bisin contends, as do we, that So-Called Modern Monetary Theory, as espoused by Kelton and others, does not qualify as a theory. Cochrane quotes Bisin:
The book should be seen as a rhetorical exercise. Indeed, it is the core of MMT that appears as merely a rhetorical exercise. As such it is interesting, but not a theory in any meaningful sense I can make of the word. The T in MMT is more like a collection of interrelated statements floating in fluid arguments. Never is its logical structure expressed in a direct, clear way, from head to toe.
We have commented:
Modern Monetary Theory is a disaster waiting to happen. In its unchecked extreme of printing money unconstrained by relation to the real flow of goods, and services, it would bring about rampant inflation, menace the financial system, and, ultimately, bring about a) the destruction of the financial system, and b) social chaos. The longer unconstrained printing and irresponsible borrowing last, the greater the intractability of ultimate problems.
See herein So-Called Modern Monetary Theory Does Not Qualify as Scientific Economics, FMD’s take on Greg Mankiw’s Take on Modern Monetary Theory, and Modern Monetary Theory is Backward.
(Lonergan’s) economic theory differs in six distinctive ways: Continue reading
I, (Philip McShane) list here six areas of non-functional economic intervention: there are more pointers elsewhere, and more to come from our collaboration. ¶ First, then there is a matter of competence. What Lonergan envisaged is democracy of sufficient understanding of economic rhythms, … ¶ Secondly, there is the challenge of influencing school economics. … What is needed now, and feasible, is the supplementing of present texts – that have to be taught in fairness to students – with a few initial classes that, as well as raising the issue of the good life and good credit, raise bluntly the deep yet obvious mistake that I mention next. ¶ Thirdly, there is the challenge of a multi-faceted intrusion into present economics that would draw attention to the massive mistake regarding basic variables. Ftnt. 20
Footnote. 20: It seems best to note here a strategy not listed: that of comparison and contrast. Present economic theory, application, criticism, is grounded in erroneous fundamental variables, and overlaid with stupidities about money, credit, market indicators, interest rates, government responsibilities. These flaws certainly need exposure. But the larger challenge is the redoing of the statistical work of the past century, as best we can, in the light of the new variables.
¶ Fourthly, there is the central issue … of the nature of credit, implicitly raising – at many levels – the question, What is money? … ¶ Fifthly, there is a massive foundational theoretical effort needed that is quite beyond present economists. Without the doctrines emergent from such foundational efforts, the subtle idiocy of treating money not as a promise but as a commodity will continue its casino frenzy. ¶ Sixthly and finally, I return to the issue of school education, … Under secondly, above , there was the immediate possibility of competent (firstly) Lonergan people persuading grade 12 economics or social studies teachers to build into the accepted course, say, my single class on proper economic variables. …
CONTENTS:
.1. THE STUDY OF ORGANISMS – ANIMAL AND ECONOMIC: (Continue reading)
We print three displays of the same Diagram of Rates of Flow, AKA the Diagram of Interdependent Velocities. The second and third displays simply suggest that the serious reader must keep in mind certain precepts as he/she seeks to achieve a new paradigm and a new framework for macroeconomic dynamics. Continue reading
