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The models of New Keynesians r irrelevant 2 the economy we actually inhabit. They suffer from a Lump of Savings assumpt. Banks do not need 2 gather deposits 2 make loans - loans create deposits. BoE has vids but you will not find this in Krugman textbook.
#MMTNotMMM What we really have here is MMT calling out MMM: Mickey Mouse Macro. Some investment professionals & central bankers know this, because we have to deal with actual money and finance institutions, make decisions with real repercussions for clients. MMM is malpractice.
But MMM does provide lovely cover for, and rationalization of, the interests of private creditors, who lose out when inflation persists or accelerates more than they expected and were able to price into to their loan agreements and bond purchases.
Chart 1 from the SF Fed frbsf.org/education/publ… shows who these private creditors are, & you will notice majority is foreign owned. So MMM economists r basically defending/rationalizing the interests of for. wealthy families. Not a conspiracy - just the actual fact of the matter.
If u believe misrepresenting the actual ops of the banking system & framing the specific interests of foreign wealthy families as being the same as our nation's best interests...I have a wall u can finance near San Diego...+ an econ Phd 4 u from Princeton, Harvard, or Stanford.
It is no great secret that Pres. Reagan & the Rep. Party & the neoliberal wing of the Dem. Party (Rubin/Clinton) cooked up & pushed Trickle Down Economics, which lead to just the opposite - an upsurge in US wealth & income inequality. We got duped. It was Pissed Upon Economics.
What is less well recognized is that domestic US ownership of debt - including UST bonds - is highly concentrated in the wealthiest families. But the Fed knows this when they parse the Survey of Consumer Finances: federalreserve.gov/publications/f…
Last week charges were made in public that wealthy families use outright bribes 2 place their children in elite colleges & universities. Do u really think these same families do not open their checkbooks 2 endow chairs at economics departments in these same places?
Of course, there are subtler ways wealthy families influence the mainstream economic narrative. But if you follow the money, you may just discover who has bot and paid for the Mickey Mouse Macro the New Ks/Old Fs spew as Gospel. #MMTNoJoke
This is the rather large Cheshire Cat emerging from the bag in recent public disputes between MMT & MMM advocates. These are some of the distortions we get to liberate ourselves from, if we are willing to face what is going on here. & if we chose that, still much hard work ahead.
Because we allowed ourselves to be Dumbed Down with Trickle Down. We allowed our democratic decision making bodies to be captured and degraded by corporations and the wealth families that own them. We settled for numbing and distraction on Netflix, Facebook, opiods.
So what MMT vs MMM is really about: We can replace Trickle Down/Pissed Upon Economics with Level Up/Own Up Economics. We can recapture democratic decision making institutions and choose new policy priorities with full acknowledgement of the true constraints, not the faux ones.
But you r fooling yourself if you think this is going 2 be a cakewalk. Or if you think someone else is going to be able to do it all for you. See, that's the thing - you can't outsource democracy. It is high time to Man Up & Woman Up. Or let the hyenas howl over the carcass.
