File this under the heading economics is not even a dismal science, because mainstream economics isn’t even science. Economics could actually be a rigorous discipline, if orthodoxy can be kicked out.
“ In contrast to its attitude to private debt, which it ignores, mainstream economics obsesses about government debt. But this volte-face doesn't besmirch its record of being 100% wrong.”
"The analysis in this chapter is entirely derived from accounting identities, and it is also completely consistent with the analysis of "Modern Monetary Theory" as laid out by Stephanie Kelton in The Deficit Myth (Kelton 2020). What this chapter adds to MMT is firstly a proof that MMT's analysis of government money creation is derived from a correct application of the rules of accounting, and is therefore better called "Modern Monetary Fact" as a result. "
🧵
"Secondly it enables an integrated analysis of both fiat and credit money creation, which the MMT movement itself has not as yet provided, while mainstream Neoclassical economics ignores credit completely."
It goes beyond that and doesn’t need game simulation (although it’s a great teaching tool).
#SteveKeen has modeled macro from accounting identities which follow closely empirical economic behavior and has debunked mainstreamers for 50 years (as others have).
The mainstream’s refusal has as much to do with an the established thinkers refusing to budge as it does the immense ideological interests of wealth that uses them to legitimize their dominance.
In other words, it take more than proof, which has been on offer for decades, but social mobilization to cast out the mainstream. This is why Keen seeks to rally academics from a broad range of fields to subject economists to academic review, especially on climate.
"A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die and a new generation grows up that is familiar with it ..."
Non Orthodox economists have contended with this for a half century and longer.
Keynes was wrong in this sense: government deficits are private deposits.
So there should be no surplus because government is deleting the credit potential of the economy; taxes deletes fiat currency and a surplus is a state shrinking private wealth.
That said, spending when the economy is bad is creating credit.
Applied MMT or at least Doug doesn't operate that way. It'd tell you how to position in the market wrt to the economic cycle and it only forecasts a few months out.
If I understand correctly, MMT and Keen by his math, would say that reducing the deficit removes money (credit) from the system, not a good thing if commerce is fading.*
Here, raising interest could be an option, but I'd say helicopter money into people's pockets.
note here I do not think growth should be necessary, because Bractaete system doesn't need, but we don't have it and monetary system needs interest and inflation to "work".