Submitted by EB on 07/19/2011 11:38 -0400
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Republished with permission from EconomicPolicyJournal.com
The other day, a practitioner of Modern Monetary Theory (MMT), Robert Koerner, called for a sythesis between MMT and Austrian Economics. Robert Wenzel, at EPJ Central, provided an Austrian rebuttal here, which provoked an interesting discussion in the comments. Unfortunately, this appears to be part of a trend, in which the bogus constructs of MMT are passed off as somehow part of Austrian economics, which they are most definitely not. This post will demonstrate that MMT is simply a justification for the broken and irreparable status quo, but with a novel face.
Friend of EPJ, Robert Murphy, provides some background and criticism of its foundations,here*. To say that so-called MMTers come to some rather unconventional conclusions is understated, and something from which they do not run. For instance, Murphy writes, "if the federal government runs a budget surplus, then by simple accounting the private sector can't save."
However, at its heart, MMT appears to be based on accounting identities derived from national income accounting methods, which are themselves based upon imperfect abstractions. These are the same familiar equations [sadly] taught in nearly every economic intro course:
GDP = C + I + G + (X — M)
and
GDP = C + S + T
Austrian economist, Frank Shostack, tears
http://www.zerohedge.com/article/sorry-mmters-economy-doesnt-exist-and-gdp-bogus?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29
Realist - Everybody in America is soft, and hates conflict. The cure for this, both in politics and social life, is the same -- hardihood. Give them raw truth.
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