Search Results

Keyword: ‘mmt’

A Few Words on David Graeber’s Guardian Article

April 22, 2013 Leave a comment

debt

David Graeber’s article in the Guardian, There’s no need for all this economic sadomasochism, is very disturbing because in it he adopts the argument of the MMT fascists. I want to state this clearly, although I am generally supportive of his activist work with Occupy, I think he is way off on this idea.

First he starts out by making the patently absurd argument that the euro-crisis is about morality, not profit:

“After all, as I and many others have long argued, austerity was never  really an economic policy: ultimately, it was always about morality. We are talking about a politics of crime and punishment,  sin and atonement.”

This, he knows, is not an accurate portrayal of austerity, but simply one that dovetails with his notions on debt in general. The aim of austerity has no more to do with morality than a tax on cigarettes has to do with discouraging smoking. The aim, in both cases, is to maximize fascist state control of economic life and maximization of profit through this control.

He then accuses Dutch and German voters of “fiscal sadism” because they don’t want their wages to bail out the holders of fascist state  debts in Greece and Spain. What sort of nonsense is this? They should simply lie down and allow the banks to rummage in their wallets? The resistance to bailing out the Greece fascist state has less to do with “fiscal sadism” than a desire not to bail out German banks. I think, it is important we do not lump German voters in with German banksters in this crisis. While it is true, “Politicians locate economic theories that provide flashy equations to justify the politics”, this has nothing at all  to do with the resistance of overwhelmingly working class voters to having their pocket picked by these politicians.

This conflation is bad enough, but then Graeber goes in to embrace the theoretical arguments of the fascistic Modern Money Theory (MMT) school. MMT is a ‘theory’ on the workings of so-called modern money, i.e., fascist state issued valueless counterfeit currency that began in use following the Great Depression. This counterfeited currency is employed by the state to manage economic activity within capitalist economies. It is the instrument by which the fascist state functions as national capitalist managing the national capital as direct exploiter of labor. It is impossible to employ this ‘theory’ in the interests of the vast majority of the society, who are being directly exploited by the state through the use of this currency.

Moreover, if MMT is correct, the problem faced in the euro-crisis exactly opposite of what it appears: there is not too much state debt, but too little. In modern money theory without sufficient debt, the excess capital sloshing around the system has no place to be profitably invested. To find a place for this fictitious capital, MMT argues, the fascist state must create an ever increasing quantity of debt instruments.

Which is to say, for German mercantilist policies to produce ever increasing quantities of excess capital, Greece must, at the same time, issue ever increasing quantities of bonds to absorb the German surpluses. Side by side with the German workers compelled to work long hours to produce otherwise unsellable exports, we get Greece workers working long hours to pay otherwise unrepayable public debts.

What sort of bullshit is this to adopt into Graeber’s anti-statist message?

The MMT argument is not particularly disturbing in itself. It merely carries the bourgeois economist’s argument to its absurd limits. What is disturbing, however, is the idea this “theory” is gaining any traction among antistatists. It is a completely fascistic theory that deserves only to be opposed wherever it rears its head.

Anti-statists have their own solution: wipe out all debts without exception and reduce hours of labor for the mass of society.

Anti-statists should not be trying to figure out how the states of Europe can carry even bigger loads of debt. Fuck the banksters — they can all go to hell and take their fascist mini-states with them.

How Did Antistatism Get Here?: A critique of David Graeber’s “Debt”

November 23, 2012 4 comments

In his book, “Debt: The First 5000 Years”, David Graeber levels the accusation against the Left, that it lacks imagination to see beyond present society. I think Graeber’s accusation is accurate and can be seen in his own antistatist (i.e., anti-political and anti-economic) argument. Contrary to Graeber’s argument that money has no essence, it is precisely because money has an essence that fascist state issued debt monies (treasuries) represent a world historical money-form: this debt-money implies money itself has become obsolete.

Read more…

Trillion Dollar Baby?

July 31, 2011 1 comment

There is a deep flaw in the $1 trillion coin scheme of the modern monetary theorists: and I think the flaw dooms modern monetary theory (MMT) entirely. For those who are unfamiliar with the $1 trillion coin scheme, this is a brief statement of the logic:

— Congress has provided the authority, in legislation passed during the 1990s, for the US Mint to create platinum proof coins with arbitrary fiat face value having no relationship to the value of the platinum used in these coins. The US code also provides for the Treasury periodically sweeping the Mint’s account at the Federal Reserve Bank for profits earned from coin seigniorage generally. These profits are then booked as miscellaneous receipts (revenue) to the Treasury and go into the TGA, closing the revenue gap between spending and tax revenues. Platinum coins with huge face values e.g. $2 Trillion, would close the revenue gap entirely, and technically end deficit spending, while still retaining the gap between tax revenues and spending. If used routinely to close the revenue gap, such jumbo coin seigniorage would reduce the national debt to zero, and remove it as an issue in US politics. In addition, the existence of jumbo coin seigniorage as an option, removes the tension between the mandated debt ceiling and the 14th Amendment. It is the countervailing factor I mentioned earlier, because it provides a way to spend Congressional appropriations without issuing further debt.

The post provides lots of additional links to the thinking of the small group of non-mainstream economists who support the idea and are actively trying to educate the public on its implications.

The implications of this scheme appear to be truly significant: if the reasoning outlined in their writings are correct, the theorists of the modern monetary school have shown, not just in theory, but as a simple practical operation, that the Fascist State effectively has nearly unlimited capacity to fund its operations without taxes or other sources of revenue, and without driving the nation deeper into debt.

While some on the Left will welcome this argument as a solution to funding social safety net programs in a time of increasingly fiscally conservative public opinion, those who are committed to an anti-statist program will immediately recognize the grave implications of this argument: MMTers are arguing that the state has almost unlimited money capacity to divert social resources to wholly unproductive uses, like wars of aggression and global dominance, through its monopoly over the issue of currency.

The MMTers, however, are trying to solve the wrong problem: they are trying to figure out how to finance the Fascist State at a time when there is growing concern about deficit spending. But, the problem of Fascist State deficits has nothing to do with financing state expenditures; rather, the expenditures themselves are driven by the need to stabilize a world economy suffering chronic global overproduction. And, those expenditures necessary for stabilizing interventions are entirely financed by capital itself out of the surplus value it squeezes from the working class.

Simply stated: the problem is not lack of means for Fascist State spending, it is lack of outlets for profitable investment — a surfeit of capital. Fascist State expenditures don’t inject “money-demand” into the economy, the spending removes excess capital from the economy. This excess capital is squandered, consumed unproductively on things like military build-ups, etc. It really does not matter what the capital is wasted on, so long as it does not increase wages or investment.

MMT provides an answer to Fascist State revenue by creating money ex nihilo, but this leaves the excess capital in circulation. Over-investment is not curtailed, but additional money-demand appears out of nowhere — this actually exacerbates the over-production.

The result: the excess money-demand causes inflation, while the over-production creates a deepening stagnation. Much like the Great Stagflation of the 1970s depression, you end up with excess money-demand side by side with excess capital, generating both rising prices and falling investment.

MMT only looks at the consumption side, while ignoring excess capital. And, superficially, this appears to makes sense, because there is no excess capital in an absolute sense — that is, there is need for more investment to satisfy human needs. There is poverty, and this poverty implies a shortage of all the things society needs to meet its basic needs. There is unemployment, and a mass of labor power made idle through no fault of its own.

The problem, however, is not the excess means of production, and means of consumption, nor even the surplus population of workers, but that this surfeit of means and labor power cannot function as capital — cannot be employed profitably, hence the excess is absolute only in relation to profitable investment opportunities.

My hypothesis suggests stagflation of the 1970s was suppressed by the Reagan deficits of the 1980s — which began the Great Moderation. The Reagan deficits added the missing component to money printing, by removing much of the excess capital and consuming it unproductively.

More significantly, my hypothesis suggests, and reinforces my belief, that, from the standpoint of the capitalist mode of production there is not too much debt, but too little. That, to “fix” the current crisis and depression, more, not less debt is necessary.

Moreover, this new debt must be in dollars, and can only take this form, because it is the only currency universally recognized as money. This hypothesis predicts, in other words, an oncoming global currency crisis and the eventual replacement of all currencies by the dollar.

If the Tea Party is successful in capping or significantly slowing federal deficit, and consumer debt does not significantly increase, the result will be a collapse in more or less rapid succession of existing currencies and a rescue attempt by the Federal Reserve. The Fed will have to begin purchasing non-dollar denominated assets in some new “Mother of all QEs”.

The key to realizing this problem with MMT was the acknowledgement by its theorists that some form of sterilization had to happen. Money had to be removed from the system even as it was being pumped in by government spending. They proposed a reverse QE program where the Fed would sell the assets it has already purchased in QE and QE2.

The problem with this is:

  1. these assets are limited, and,
  2. these assets were bought at prices well above mark to market.

The Fed could sell the assets, but it would have to take a massive haircut on them, and interest rates would rise, I think. Moreover, that would only solve the problem until 2013 or so.

There was always an inherent danger in quantitative easing that the Fed had to exit sooner or later and would take a loss on these assets. QE was a gamble that the value of the assets would recover with improving economic conditions, particularly home prices. The assets themselves are entirely fictitious — they are claims on profits which may never materialize. Without a genuine recovery of profits, these claims are worthless.

So, from the standpoint of the Fascist State and the need to prop up the existing relations of production, not only must the debt ceiling be raised, there can be no significant slowing of Washington deficits — and even these two are not enough. There is a crying need for dollar denominated debt over that which is currently being created by Washington. The more Washington debt creation is slowed, the more urgent dollar denominated debt creation elsewhere becomes.

The value of Billy’s humanity…

June 23, 2010 Leave a comment

A fascinating post at Billy Blog – a proponent of Modern Monetary Theory – on the issue of the drive toward austerity in Europe and the United States.

We quote a particularly interesting section: an imagined conversation between an economist and her poet husband.

“But the government cuts will cause more workers to lose their jobs”, he said, trying to relate the issue back to his value of humanity, “and then they are calling to cut the protections that we give the unemployed”.

“It is necessary to realign the budget parameters”, she said.

“Will the bond traders lose their jobs and lose their protection”, he said, and added “I read that the bankers are now making record profits”.

“No-one likes anyone losing their jobs”, she replied, “but what do you mean by “their protection?”

“Well didn’t you say the bonds that the government issues give the bond traders a risk-free asset?”, he said, “that is protection”.

And, continuing, he said, “And the government provided plenty of spending to save the jobs of the bankers”.

She replied, showing signs of being a bit disoriented by the lateral thinking that wasn’t in the textbooks, “The government has to issue debt”.

“No they don’t, they issue the currency”, he said (having just read a MMT blog), “So the bond traders will continue making record profits, using the funds that the workers saved, but want the workers who saved the funds in the first place to be unemployed and their unemployment benefits cut”.

“The governments have run out of money”, she retorted, now thoroughly disoriented.

“No they haven’t, they control the money”, he said.

“They would just cause inflation”, she said.

“But the financial news said that we have problem[s] of deflation. Isn’t that the opposite of inflation”, he said.

“The bond markets are just the canaries”, she said.

“Then they should be kept in cages”, he said, trying to be empathetic to the values his wife was displaying. Never for one moment would the poet want a free bird caged. He cared.

Conclusion

The agenda ahead is clear. The conservatives are pushing austerity for all they are worth because they see it as an effective vehicle to finish of[f] their “program”.

For three decades, the neo-liberals have been trying to undermine the welfare state and reduce the size of the public sector. They have had considerable success in this “program”. But they were not fully successful and important social protections still remain.

Now they have the opportunity to exploit this major economic crisis which their market-oriented policies created in the first place to complete their demolition [ … ] agenda.

Having proven beyond all counter-argument that the debased dollar is only fictitious money, and, moreover, only a weapon wielded by Wall Street to bludgeon the worker into submission – to threaten her with starvation should she not reduce her consumption beyond already intolerable limits – our simpleton proponents of MMT, whose stupidity apparently knows no bounds, and who treat the entire world of money as if it were as simple and stupid as they are – who, apparently, cannot conceive what lies plainly in their sight: that money is and has always been a weapon of class domination –  propose to use this weapon, which has only ever been used against the worker, on the worker’s behalf!