MMT vs. Austrian Economics

Austrians want to make microeconomics the foundation of macroeconomics. Sonenshein, Mantel and Debreu proved, mathematically that micro is unsuitable as a foundation of macro. Two plus two would have to equal five before Austrians could be true.

Microeconomics: Savings is a good idea.

Macroeconomics: If everyone net saves, and your spending is my income, then we get the Great Depression. 

One other Austrian myth: Money supplanted barter, and credit ultimately replaced money. The sequence here: barter, then money, then credit.

Archaeologists have discovered evidence of credit from ~3500 BCE, primarily marks on clay tablets for pay stubs, bar tabs and other obligations. Money (coins) arrived at ~800-600 BCE, literally millenia later. The correct sequence: credit, then money, and very, very rarely, barter.

David Graeber observes, in Debt: The First 5,000 Years, that there has never been economic money (not magical money) without a supervising authority like a temple, king, or state. Never!

States create markets like this: If the king wants to hire 1,000 soldiers, he has a logistical nightmare ahead. He has to pay, clothe, feed, train and supply the soldiers and their steeds. How does he do it? He pays them in the authorized currency--let's call it "crowns." Then he taxes the entire population in crowns. This is obviously a simple example, and real world markets are more complex, but you get the idea. The Austrian idea of markets originating with "free people" with "free exchanges" is not something supported by history. 
 

Why are things so expensive?

 

pic.twitter.com/DxQ6g4oY3x

— Thursday (@ennui365) April 7, 2026

The costs of war

 

China's high speed rail costs about $17-21 million per km to build.

China built over 1,000 km of high speed rail for the cost of US war on Iran so far https://t.co/CWy3p1Hfgp pic.twitter.com/A0i87Cvgrs

— Carl Zha (@CarlZha) March 16, 2026

From Every Country That Lost It All Passed Through This Moment First — The U.S. Government Has Been Converted Into a Single Family’s Financial Instrument

Economists Daron Acemoglu and James Robinson, whose work on why nations fail identified the transition from inclusive to extractive institutions as the single most reliable predictor of national economic deterioration, documented this sequence across centuries of comparative history before this administration took office. Extractive institutions are those designed to concentrate wealth and power in the hands of a narrow elite at the expense of the broader population. Every country that completed this transition took the same path: oversight capture first, financial extraction second, institutional hollowing third, and population bearing the biological cost last….

The critical variable in every case is not the volume of theft. Plenty of governments have sustained corruption without producing failed states. The critical variable is the deliberate destruction of the institutional layer between the extraction and the population.

 

Business as usual

 

Watching the discourse around the plane crash in Iran.

Everyone’s arguing over the aircraft , the recovery operation, the timeline, the flight path, the debris, the radar data…

Meanwhile, nobody stops to ask the most obvious question — whether the entire ridiculous story is… pic.twitter.com/bB3KMP1kw0

— Morgan (@MorganC000) April 5, 2026

Houston...meh!

Houston is often touted as the apotheosis of the "abundance" agenda, and is revered by anti-government libertarians. Why? Because it has the most minimal zoning possible, specifying only minimum lot sizes and road design. If you live in a single family home and want to open a bar in your living room (and the private subdivision restrictions don't forbid it), you can. It's a libertarian paradise!

One other observation: if you look at cities (and counties) with complex zoning restrictions--e.g., Sacramento City or County--you will see they look almost identical to Houston. Zoning, at least as practiced in parts of California, is completely ineffective, and regularly ignored, especially if someone politically influential wants a zoning change. (I've discussed this before here.) 

A new bit of information is that Houston's lack of zoning does not lead to prosperity or more affordable housing.

 

Notice that three Texas cities populate in this poverty ranking, but only two California cities appear.  The ranking is even more one-sided when one compares the availability of affordable rentals.

 

From replies to the Tweet that is the source of the above:

What's the percentage of the population that is classified as rent burdened?

 Alicia Gerardo: According to Rice University's Kinder Institute for Urban Research, about 51% of renters in Houston are rent-burdened, meaning they pay more than 30% of their income on housing. Additionally, more than 25% of renters spend half of their income on rent.

 Philip: Any info on the right graph as to what was considered affordable?

Alicia Gerardo: The National Low Income Housing Coalition's The Gap Report defines affordable housing as "Housing units with rent and utilities that do not exceed 30% of a given income threshold."nlihc.org  

The U.S. has a shortage of more than 7.2 million rental homes affordable and available to extremely low-income renter households. Find out more. #TheGap26

 Philip: Nice, thank you! I think what the “just build more housing!” crowd doesn’t get is that no amount of new housing is ever going to drive prices down to a price affordable to people making 30-40k a year, which is a gigantic chunk of people.

 

The Meaning of Home Ownership

 

perspective pic.twitter.com/CL11i4GLtP

— Financial Physics (@FinancialPhys) April 4, 2026

Matt Stoller's take on what it will take to solve current problems: What does a non-oligarch driven America look like?

From Twitter/X: The reason Democrats have no position on the war is because no one has a coherent view on what to do. It’s not on them. 

The U.S. is basically the bank account and army for global oligarchs. This positioning is not good for Americans and it’s not good for the world. But it’s also impossible to imagine an alternative. 

The foreign policy establishment sees their work as a hobby. The U.S. is so endlessly rich and heroic that it’s all a game. They don’t think that the realm of foreign affairs should be good for ordinary people; that’s a rhetorical afterthought. To them the deindustrialization and erosion of the middle class at the heart of the destabilization of the world is sad but necessary, if they bother to notice it at all. 

The left foreign policy world is not actually that different. They are libertarian and hostile to Americans, and they don’t care about economics. Foreign policy to them is a hobby of the rich, it’s just the U.S. is the central villain instead of central hero. They do not understand or care about deindustrialization as a result of Chinese overcapacity, which is a central and fundamental foreign policy challenge. To them that’s handwaving away as ‘economics’ and boring. Let’s just do ‘care’ work, they imagine, as if a nation that makes nothing and imports food can afford to have its young people do nothing but wipe the asses of the old. 

What does a non-oligarch driven America actually do? What does it look like? Well for starters we pull back dramatically from the rest of the world. No troops in Europe, maybe offer some defense weapons to East Asian nations. No presence in the Middle East. Cut Israel loose entirely. Total revamp of our bloated and incompetent military and its corrupt establishment. Fire most admirals and generals and put in a new generation capable of actually thinking. 

This change will require us to be a LOT more protectionist. We put up huge trade barriers so that we can rebuild our industries. We also impose capital controls and confiscate or tax assets held by foreigners. No foreign ownership of land. We are not your bank account, Mr. Saudi Prince or Chinese money launderer. 

Finally, we crush capitalism. Rebuild our farms and factories. No more driving our corporations for shareholders. Lots of public utility regulation or nationalization of assets. No more private equity. No more crypto or corporate gambling. If you want to make money, you do something useful. Otherwise it’s poverty or handcuffs. 

America needs to be run for its people, not for the Epstein Class or for weirdos who can’t go over the Iranian overthrow of the shah or for lefty hobbyists funded by Koch industries to deindustrialize what’s left of what we have.