The attacks on MMT continue full steam ahead. Janet Yellen (former Fed chair, but clueless on money and banking)—a centrist–has joined the fray. Jerry Epstein—on the official left–has ramped up his ridiculous claims, now associating MMT with “America First” and fascism (you knew that was coming—it has always been the refuge of critics who couldn’t come up with valid critiques).
Posted onMarch 20, 2019byDevin Smith|Comments Off on Billions From Deutsche Bank Despite Trump’s Bankruptcies, Defaults, and Financial Malfeasance
The latest developments about Trump’s relationship to Deutsche Bank could be the unraveling with Deutsche Bank and Trump facing a serious legal probe on bank fraud by the House Financial Services Committee chaired by Rep. Maxine Waters. NEP’s Bill Black appears on The Real News Network to discuss. You can view here with transcript.
By William K. Black
March 14, 2019 Bloomington, MN
Number 6 in a Series of Articles on MMT
Justin Wolfers is an economist who is disgracing the university I love, the University of Michigan. I had the great fortune to be born in Detroit and receive the first seven years of my higher education as an instate student at the University of Michigan. I was able to graduate with virtually no debt. Wolfers is also a native of Australia, which means he is familiar with kangaroos. That familiarity is ironic because Wolfers is devoting his time these days to serving as the chief apologist for a kangaroo court of orthodox economists that convened to declare Modern Monetary Theory (MMT) anathema.
Kangaroo courts are sham legal proceedings which are set-up in order to give the impression of a fair legal process. In fact, they offer no impartial justice as the verdict, invariably to the detriment of the accused, is decided in advance.
The orthodox economists’ kangaroo court met that definition. Here is what happened – and there is no factual dispute about it. MMT opponents ignorant of MMT scholarship drafted two strawman questions. (They were actually the same question, with unimportant changes in phraseology.) The willingness of people who never read MMT scholarship to be fervent opponents of MMT demonstrates the severity of the scandal. The kangaroo ‘poll’ drafters falsely claimed that MMT scholars would answer “yes” to both questions. Indeed, the deliberate implication was that a “yes” answer to both questions defined MMT’s core precepts. MMT scholars have repeatedly and unequivocally made clear for decades that the answer to both questions is “no.” MMT scholars have repeatedly and unequivocally over the last nine years explained to Paul Krugman, the falsity of his recurrent ascription of the same strawman used by the orthodox economists’ kangaroo court to MMT scholars. As I have demonstrated in prior articles in this series, Brad DeLong has documented Krugman’s repeated falsehoods, the repeated statements of MMT scholars refuting Krugman’s strawman claims, and the clear statements by MMT scholars as to what they actually believe, write, and teach.
MMT continues to inflame hysterical attacks. Who would have thought that it would take MMT to bring together everyone from the crazy right to the insular left to unite in common cause against an obscure theory of money and government finance? The attacks seem to be so concerted and coordinated that one starts to think there just might be a conspiracy behind them. But why?
Something extraordinary happened yesterday. Orthodox economists, frustrated by their inability to intimidate progressive elected officials, have launched a coordinated assault on MMT in hopes of making it politically dangerous for elected officials to embrace MMT. Yesterday brought three remarkable revelations about orthodox economists’ willingness to engage in naked intellectual dishonesty in their desperation to find something to discredit MMT.
The orthodox economic attack on MMT should be a ‘slam dunk’ – if orthodox economists were correct about MMT. There are two obvious ways to deliver the ‘slam dunk.’ First, orthodox economists preach that a theory’s predictive ability is the test of its validity. MMT scholars have been making predictions for decades, so orthodox economists should be able to produce a large number of falsified predictions by MMT scholars and declare victory. There is only one problem with this option – MMT scholars have an exceptionally fine predictive record and orthodox macro scholars have such a terrible predictive record that prominent economists deride “modern macro” as the “dark ages” (Paul Krugman) and a religion unsuccessfully posing as a pseudo-science (Paul Romer). .
Honest debaters do not create strawmen arguments about opposing theories and then claim victory by attacking their own strawmen.
When Krugman and a bevy of the “Very Serious People” (VSP) Krugman used to ridicule created and then attacked strawman MMT positions (e.g., using Roche’s rant), they were unintentionally revealing their knowledge that they did not believe they could dispute successfully MMT scholars’ real positions.
Honest orthodox economists and journalist do not spread “myths” they know to be “obvious falsehood[s]” in order to deny MMT insights the orthodox economists and journalist know to be “obviously true.” The second “tell” that the VSPs know they cannot win an honest debate is this deliberate strategy of deceiving the public and elected officials through the VSPs’ myths about nations with fully sovereign currencies.
My first article quoted the “Very Serious People’s” admissions that MMT is “obviously true” and that the VSPs spread “myths,” quasi-religious “superstition,” and “obvious falsehood[s]” to deceive the voters and elected officials to reject MMT. VSPs are openly admitting that the reason they lie is that they believe that the voters and elected officials would agree with MMT scholars’ if there were an honest debate. You do not lie to win a debate when the facts are on your side. Continue reading →
I urge readers to review Scott Fullwiler’s brief paper on the theoretical and predictive successes of MMT scholars on a topic of enormous theoretical and practical importance. You do not need economics training to understand it. Fullwiler reports the results of two “natural experiments.” In this context, this means an unplanned experiment. The twin experiments were:
What would happen if orthodox scholars tested the predictive strength of MMT?
How would Paul Krugman react to an orthodox scholar’s demonstration of the predictive accuracy of key MMT insights – if Krugman did not know that the orthodox scholar’s work was verifying key MMT predictions?
Fullwiler’s paper answers both questions. The orthodox scholar, unknowingly, confirmed the predictive strength of many of MMT’s most important insights. Krugman praised De Grauwe’s findings as “seminal.” Krugman had no idea he was praising the predictive successes of MMT scholars because Krugman had never read MMT scholars’ work. Fullwiler’s paper shows that a series of MMT scholars made De Grauwe’s point more than a decade before De Grauwe published his “seminal” contribution in an orthodox journal. Stephanie Kelton was one of the MMT scholars who demonstrated precedence, making Krugman’s use of the word “seminal” as a descriptor even more unintentionally humorous.
In recent days MMT has captured the attention of anyone who can fog a mirror—even those long thought dead. The critics are out in full force—from the crazy right to the insular left. A short list includes Doug Henwood, Jerry Epstein, Josh Mason, Paul Krugman, Larry Summers, Ken “Mr Spreadsheet” Rogoff, Bill Gates, Larry Fink, George Selgin, Noah Smith, and Fed Chairman Powell. After laboring for a quarter century in the wilderness, the developers of MMT are pilloried for unleashing a theory that is “crazy”, “disastrous”, “hyperinflationary”, “nonsense”, “garbage” and just plain “wrong”. Summers here; Rogoff here; Powell here; Krugman here;and here for Kelton Response
What all the critics have in common is that they have not bothered to read the MMT literature. Oh, it is just too much effort for the lazy critics! So they imagine what it must say, conjuring up the most ridiculous thing they can imagine, and then tear apart ideas so stupid that no one could possibly hold them.
The massive, coordinated assault on Modern Monetary Theory (MMT) scholars by the most elite forces of orthodoxy represents a watershed moment in economics, but we must not lose sight that the real attack is actually on progressives, particularly the newly elected progressive members of Congress plus Elizabeth Warren, and Bernie Sanders. Even that statement is incomplete, for it is the combination of the rise of these progressive elected officials, the 2020 presidential election (and nomination battle), and the exceptional embrace of progressive policies by the general public and Democratic Party candidates for the presidential nomination that prompted the coordinated and personalized assault of overwhelmingly neoliberal economists on MMT scholars. This first column in a series provides an overview of why the progressives’ embrace of MMT spurred the terrified assault on MMT by orthodox economists. That desperate assault reveals how much orthodox economists fear the voters’ increasing embrace of the progressive core policy issues on the environment, health care, and restoring the rule of law to the markets. Later articles in this series will flesh out that overview.
The polls showing enormous public support for the key progressive initiatives terrify the neoliberals. Sanders’ 2016 policy initiatives have transformed the Democratic Party candidates’ policy proposals for 2020. Imitation is the sincerest form of flattery. Warren’s policy proposals are having a similar effect. Polls show broad support for the Green New Deal, Medicare for All, a jobs guaranty program, a tax system that would reverse the current race to plutocracy, a campaign to reduce gun slaughter and massacres, the restoration of the rule of law (including antitrust laws) to business (particularly banking and Silicon Valley), and a meaningful minimum wage.
Posted onMarch 11, 2019byDevin Smith|Comments Off on Clinton-Era Official Says Left Should Lead Following Center-Right Failures
On The Real News Network, NEP’s Bill Black analyzes Assistant Secretary of Treasury Brad DeLong’s statement that neo-liberals should get out of the way and let the left lead since coalition with Republicans did not work. You can view here with transcript.