Let them eat dancing electrons…
Whatever their other failings, yesterday’s Billy Blog’s post shows that the proponents of the Magic Money Theory understand the stupidity of Washington’s political economy. If, by slashing wages and shredding the social safety net, every nation is turned into an export platform, just who is supposed to consume all this superfluous output?
But there is another deception or ignorance that rarely gets attention. Economies around the remain close to recession at the moment. By introducing austerity packages which aim to reduce deficits the Flat Earthers (a.k.a deficit terrorists) are ensuring that the likelihood of a double-dip recession is increased. One consequence of this is that their policies are likely to increase the deficits and the public debt/GDP ratio as economic activity declines. They have some sort of religious belief that economic growth is going to come out of the bowels of despair.
Somehow, they think that the private businesses worrying about the lack of orders and timid about the future will suddenly appreciate the fact that the government is cutting incomes even further and in a fit of free market zealotry will suddenly start investing again in productive infrastructure even though they don’t have the warehouse space available to store the unsold production that would result.
The other scenario that the religious zealots pray for is a net exports led recovery – for everyone. Again, this fervence defies accounting. Not every country can run external surpluses. Further, to reconstruct an economy from one that has been running persistent current account deficits into a net exporting country with positive invisibles takes a long time because it involves fundamental structural change – major changes in industry composition and given the wage levels in Asia – major reductions in real wages in the advanced nations. It is simply not going to happen anytime soon.
But, never to be outdone by the stupidity of the Messiah’s economic team, Billy Mitchell maintains this idiocy should be avoided at all costs, by his own special brand of idiocy:
Deflation – the Japanese problem – arises when aggregate demand deficiency becomes chronic. The only real way out is with a substantial fiscal stimulus of the order that governments are eschewing.
In the face of overwhelming evidence that the root cause of deflation is the chronic insufficiency of demand for labor power – that this cause has more or less affected all of the industrial nations for some eighty years, and, in its most acute form, at least thirty of those eighty years – our simpleton Billy, and his pod of magicians, proposes to stimulate output still further by entering more dancing electron into the great computer terminal in the basement of the Federal Reserve.
That this implies their magical money is worthless, and, therefore, that the labor employed by this worthless money is also worthless, producing nothing of value, but only existing to stabilize the dollar demand for what would otherwise be a mass of superfluous goods, never enters into their dunce-cap adorned heads. For Billy, the very notion that worthless labor might be converted to shorter working time elicits the response that shorter hours must lead to mass poverty.
We are swimming in superfluous output yet working less will lead to povertyy??? How does this happen, Billy? We demand you explain how this happens!
For all of his imagined revolutionary insight into the nature of modern money, he has yet to discover its one outstanding feature, which has never been modernized: that money only serves to conceal actual economic relationships; and, in this case it conceals the existence of a mass of superfluous labor powers, which even now are expanding at a terrifying rate, and threaten capital with collapse.
Well, Billy: enjoy your silly fucking insight into the nature of dancing electrons, grab a bag of popcorn, and watch as capital collapses no matter how many electrons you cajole into dancing.