It can't be repeated enough: Believing federal taxes are used to finance spending leads to fear-driven politics, misinformed policy, unnecessary austerity, rising inequality, economic stagnation, and poor inflation management. All based on a false household budget analogy.

Went down a rabbit hole and read Sraffa’s "Dr. Hayek on Money and Capital" (1932). Is Sraffa's piece the most damaging critique ever of Austrian capital theory? Did this single-handedly relegate Hayek's early framework to the outskirts of academic study?

Hey @ProfSteveKeen, picture him reading Godley & Lavoie, finding SFC software that models currency issuers vs users (know any? ;-)), and slowly realising the framework he wrote off as "less useful than a hemorrhoid" is exactly what he's now learning from. One can dream, right?

I have to trust Becker's optimisation problem is solved correctly. I just wonder why "rational child with perfect foresight" is treated as realistic (enough) while my skepticism is treated as ignorance of calculus. Gary S. Becker - "A Treatise on the Family" (1998)

He has come to a conclusion about MMT but is not familiar with post-Keynesian work and SFC models.

When "modern economics" meets ontology, it panics and calls it "mystical". These people are incurable.

I'm fine admitting I don't have mainstream macro PhD-level math, but my question isn't about math. If these models don't start from an equilibrium assumption as Heon claims, what anchors them? And if they do, why should these models be taken seriously?

Source: "Economic Theory and Underdeveloped Regions" - Gunnar Myrdal (1957)

Systems do not return to balance. They spiral. Here's Myrdal in 1957, around the same time Forrester was developing system dynamics, already describing the feedback loops that trap economies in underdevelopment.

Krugman, Summers, Furman... it's common to point to the TGA rule to "disprove" MMT. But they're mistaking operations for ontology. The TGA drains reserves. It doesn't finance spending. Treasury spending still requires the Fed to create reserves every time. https://t.co/L9DymWkugk

I can't think of a reason to disagree with Warren Mosler here (p. 5, Treasury Proposals). Stop issuing all securities. I've heard a handful of counter-arguments, but they're all shaped by the flawed mainstream view on the purpose of issuing securities. https://t.co/0HzDhF4LK1

This is not true. The government doesn't collect taxes to enable spending. In fact, the federal government doesn't spend tax dollars since it's the issuer of the currency. Taxes delete money, spending creates it. Deficits don't drain the economy; they add net financial assets.

Instead, Argentina is borrowing 5bn USD from US banks to cover an upcoming 4bn USD payment due on its dollar debt. In Minsky terms that’s not “stabilization”, it’s rolling over foreign debt in a speculative/Ponzi position.

I've gotten my hopes up too many times going back to his first four years but... I hope his days in office are numbered. This is sheer lunacy. Even some MAGA supporters must see it this way, no?

Austrians miss that endogenous money means there's no natural rate and no loanable-funds pool to distort.

grotesque

@BrianCAlbrecht @RebelEconProf I am begging you all to take your critics more seriously (and, especially, actually respond to the underlying published theories, instead of to people mouthing off on twitter). It is really just not the case that people proposing alternatives don't understand standard theory.

Involuntary unemployment is a policy decision.

Hyman Minsky's stages apply to equity too. If Burry's right, we're in the speculative phase... profits inflated by accounting, not cash flow. The Ponzi stage starts when depreciation catches up… around 2027.

@petrock @wbmosler That's a sharp observation. MMT sets the nominal anchor, the state defines the value of money through the prices it pays. post-Keynesian theory then explains how relative prices evolve around that anchor through markups, bargaining, and sectoral conflict. Together they form a

The books make sense, but I'm unclear on the cover motif. Moore came before Lee, who used the same design but with negative-space inversion. Is this a money endogeneity vs. exogeneity thing or something else/more? Pointless curiosity, but my spirit wants an answer.