Wednesday, September 26, 2012

MMTers also cannot defend their claim that fiat funny money gets its value because people have to pay their taxes with it

Warren "Hut Tax" Mosler again makes the phony central MMT claim Contrary to general perception, fiat money is driven by the fact that taxpayers need the government’s money to pay their taxes. By levying a tax, the government creates a need for its fiat currency.

As with most everything MMT, that central claim too is a load of crap. People got used to using bank notes for specie and then went to government schools where economic denialism is taught. Thus, they didn’t notice when the essential phrase about being redeemable in gold/silver started to be left off the notes and when the coins stopped being silver and became copper. The government imposed sales and exchange taxes on the use of other forms of money such as gold, silver and foreign money. That is what keeps people using U.S. fiat inflationary funny money. Absent the taxes on the sales and exchanges of gold, silver and foreign money, people could easily use other more stable forms of money and then exchange their good money for U.S. fiat funny money at the last possible moment to pay their U.S. taxes. 

Note the lame to non-existent defense of their central claim by the MMT commenters.

Tuesday, September 11, 2012

MMTers still cannot answer the big question: Where will all the stuff come from to satisfy the unpayable debt?

The MMTers are in a giggly mood because Greenspan said this:

“Well, I wouldn’t say that the pay-as-you-go benefits are insecure, in the sense that there’s nothing to prevent the federal government from creating as much money as it wants and paying it to somebody. The question is, how do you set up a system which assures that the real assets are created which those benefits are employed to purchase.”

Bob Wenzel reports that German officials are worried about U.S. debt levels:
It's not only German officials who are concerned with [U.S.] debt levels. Former senior finance officials in the U.S. have indicated grave concern to me about U.S. government debt levels. Major inflation or default are the only two ways they see out for the U.S.

But for the MMTers, all such problems are easily AND painlessly solved because the government can never run out of “dollars”!  Only “morons” worry about from where the actual goods and services will come.

In response, Dan Kervick demonstrates his deep understanding of economic calculation and the pricing process plus how fiat funny money creation and government spending distort that process [not]:
One part of the MMT answer to Greenspan's question about the creation of a sufficient amount of real assets is to insist that we should always hire everyone willing and able to work, so that they are usefully producing useful real assets, rather than remaining unemployed.

The private sector system [emphasis added] foolishly misallocates large numbers of our people to the role of non-producing consumers of subsistence incomes. This system is both stupid and cruel. It's a ridiculous failure to invest our human resources wisely, and a savage failure to provide social solidarity and justice.

Tom Hickey simply exclaims that MMT shows how the economy operates optimally:

Bob Roddis, "That's the big question your silly MMT cannot answer, isn't it?"

Greenspan's could have been said in exactly the same words by any MMT proponent that understands MMT. The real resources will be available if the economy operates optimally in resolving the trifecta of growth (production) employment, and price stability. MMT shows how to accomplish that. [WHERE DOES IT SHOW THIS?]

And Roger Erickson employs some passive [aggressive] language to announce that the government will have to continuously monitor everybody and everything all of the time to make sure that no one is “hoarding”, the MMT term applied someone to trying to save some more of his earnings than the secret MMT police might allow.

Excessive or insufficient hoarding of static, financial assets, unused or poorly used are the simple tolerance limit we're tasked with avoiding.

I pointed out that none other than Hayek has said the very same thing almost 40 years ago: "No country can go bust!" But they naturally ignored that point.

Hayek: "No country can go bust. All that happens is that economic conditions of daily life are getting much worse, so there will be scarcities. People will find that their income is no longer sufficient to maintain their standard of life. They will come to distrust first the present government and present policies, and may then be willing to return to an altogether different system. But I'm no prophet; 

Aren’t you glad that the MMTers explained where all the stuff to pay the debt will be coming from?  And aren’t you glad they showed us their deep understanding of economic calculation?

Sunday, September 9, 2012

The essence of MMT: When people save or refrain from "spending", that shrinks the pool of funds so the government must inject more fiat funny money into society

I asked the MMTers if it was true that when people save or refrain from "spending", that shrinks the pool of funds so the government must inject more fiat funny money into society.

Tom Hickey explains:

What do you think will happen if saving erodes the amount of money for consumption? Let me guess. "Prices will decline."

Well, we know what actually happens. Prices don't decline fast enough to offset, so unplanned inventory builds, businesses cut back production and lay of workers so that unemployment rises.

When commenter Paul wrote: "There is another option, tax or confiscate all excess savings and spend it back into the economy.

Yes, and in a saner system this would be standard operating procedure in the case of gain through rent-seeking, from which most of the saving in excess of reasonable provision for future need (hoarding) arises.

They know this to be true because MMTers know how our monetary system works. And because they know how the monetary system works, they can determine EXACTLY what amounts people should be allow to save in excess of reasonable provision for future need, right?  These conclusions follow logically and directly from noticing that the government can create all of the “dollars” it wants to out of thin air.  That's logical, right?  

Wackiest MMTer of the week (for the second time): Septeus7

Septeus7 declares:

Every Austrian believes that government should constantly monitor the unions of poor workers 

Really. I mean that's all we ever plot and scheme about, isn't it?

For future reference - MMT's Tom Hickey finally solves the mystery of the origin of the value of money

MMTers are obsessed with proving that the value of money is not based upon the subjective whims of the populace but upon the enforceable pronouncements of the Assaultive and Omniscient State.  But then yesterday, Tom Hickey made this amazing admission:

"You are confusing nominal value and exchange value. The nominal value is stamped on the face of the coin. This is determined by the issuer. What the exchange value may be at any time is market determined" 

So called "nominal value" concerns weights, measures and purity.  It has nothing to do with “value” as that term is used today. As usual, MMTers engage in obscurantism.  However, this is an amazing admission. 

No Austrian denies that governments have mandated the weight, measure and purity of coins over the ages. We deny that governments can impose "exchange value", which is what "value" means. People have subjective values and since we cannot read minds, objective prices resulting from voluntary exchange are the only method for determining and making informed decisions as to the exchange value of zillions of goods and services as valued by 7 billion strangers on this planet. Fiat funny money fatally distorts that calculation process.  Keynesians, MMTers and monetarists are oblivious to even the existence of the calculation process, much less its distortion by fiat funny money.

How can you tell when an MMTer or "progressive" is lying?

If he's making a statement.

Some guy name Chris Dillow claimed that Obama was criticizing “Randian Conservatives” in a speech.  Sorry, but there is no such thing as a “Randian Conservative”.

Then, the same numbskull claimed that EVEN Edmund Burke understood that present generations rely upon what is handed down from prior generations!  No man stands alone, which is what the “Randian Conservatives” think. Right.

And all that nonsense is allegedly derived  from the strict prohibition upon the initiation of force? 

Let's review.  First, here are no "Randian Conservatives".  Second, no libertarian or conservative believes that people do not constantly interact with and influence each other, especially family members.  Third, what Obama really meant by his "you didn't build that" statement was that because people generally have had help in creating their wealth, such wealth should be seized by Obama and the Assaultive Keynesian State.

With MMTers and "progressives", I can never tell where the dishonesty ends and the stupidity begins.  You too?