The politico-economic system of our supposed democracy is, in reality, a defense-in-depth of elite privilege. Layer upon layer of rhetorical cant and mathematical jargon shred any attack upon the fortress of money. Only by challenging the basic premises of conventional economics can we pull out the roots of the pernicious neoliberal dogma that is handing America over to a handful of billionaires and their global megacorporations.

But such challenges "will not be televised". Progressives can't get any traction within the increasingly corrupt establishment political system. To be admitted to Establishment venues, one must speak in a form of newspeak that denies the reality of leftwing arguments, that pre-judges the current political system to be the only game in town and neoliberalism to be the only economic system.

As Chomsky pointed out so clearly, these defenses can be summarized by the idea of "the conciseness filter", which is based on the idea of the "conventional wisdom"(CW). Chomsky points out that terms like "free market", "supply and demand curve", etc. are a shorthand that has been drilled into everyone by decades of repetition and indoctrination. So TPTB can make their points in shorthand that everyone understands. At the same time, terms like "market failure", "monopoly rent", or Minsky Moment are rarely mentioned and therefore have to be explained.

The unequal burden of conciseness, coupled with the ever decreasing sound bite window of the non-print media, makes it very hard for non-elite arguments to be disseminated. Lately its gotten even worse. The concept of CW has been reified into the absolutely phony "Overton Window", so that ideas can simply be dismissed without examination for the thought crime of "being outside the Overton Window". The OW is second-order shorthand - shorthand for all the other status quo shorthand tropes.

In what follows, I will lay out the layers of fraud and bamboozlement and offer soundbite dismissals for such scams. But, I must first quote a very good soundbite (SB) of my ideas, recently posted by Mark from Queens:

The obvious fraud of a presidential election between the two most hated, untrustworthy, lying multi-millionaire criminals should have been the most obvious and blatant evidence, that the whole idea of democracy through electoral politics is a complete fraud and charade. And the citizenry should be headlong down the path of laser-focus on the linchpin of Money In Politics, electoral fraud/disenfranchisement, gerrymandering, the stranglehold power of lobbyists over legislation, the corporate monopoly ownership of all sectors, out of control militarism and American imperialism, etc.

Instead we're on a bogus propaganda treadmill...

-comment by Mark from Queens in How insane are the Russiagate people?

Thanks Mark for teeing up every point I want to make.

LEVEL 1. Phony Politics
SBs: the candidate vending machine, the money primary.

We all recognize the phoniness of our politics. It is a vending machine that has two nearly identical offerings, and those offerings are placebos and poisons that have been selected by the money primary system. No money, no access, no media coverage. And if that's not sufficient, the choice is rigged at the outcome by crooked e-voting machines and massive vote suppression driven by the GOP. So, even if you pull the lever for placebo, the machine delivers poison.

After the shafting Bernie Sanders got, after Hillary skates on national security and influence peddling investigations, after two decades of voter suppression and rigged e-voting machines, after voting for change and getting the phony Obama and the ADHD elitist Trump, it should be quite clear that politics as currently constituted bears no relationship to genuine democracy. It is nothing but a rigged game played by the elites.

Our phony democracy increasingly avoids economic issues and geopolitics (such as: why, and for whose benefit, have we been blowing up the MENA for the last 20 years?). Instead, it incites fights over personalities and Identity Politics. The purpose of the corporate media is distraction, and the secondary purpose is suppression of any alternative ideas.

LEVEL 2. Phony Macro-Economics - DSGE
SB: Phlogiston, Aether, and Caloric, Post-real Economics (terms used by Paul Romer)

With the engineered destruction of leftwing political infrastructure over the last 30 years by the neoliberal Democratic establishment, issues of labor and economic inequality are off the table. The current political system is there to prevent a discussion of the complete phoniness and failure of the conventional economic model.

The DSGE (Dynamic Stochastic General Equillibrium) models now popular in macroeconomics are a sick joke. They have been openly mocked by several winners of the SR-PiES-i-moAN (The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel) or SR-PIES for short. Notice that even the shorthand name foisted on us (Nobel Prize in Economics) is another fraud that increases the prestige of the Friedmanite reactionaires who receive it.

Here is what Robert Solow, SR_PIES winner, had to say in 2010 Congressional testimony about the 2008 crash:

The DSGE model populates its simplified economy with exactly one single combined worker, owner, consumer, everything else who plans ahead carefully, lives forever; and one important consequence of this representative-agent assumption is that there are no conflicts of interest, no incompatible expectations, no deceptions. This all-purpose decision maker essentially runs the economy according to its own preferences—not directly, of course, the economy has to operate through generally well-behaved markets and prices...the basic story always treats the whole economy as if it were like a person trying consciously and rationally to do the best it can on behalf of the representative agent, given its circumstances. This cannot be an adequate description of a national economy, which is pretty conspicuously not pursuing a consistent goal.

The most obvious example is that the DSGE story has no real room for unemployment of the kind we see most of the time and especially now: unemployment that is pure waste. There are competent workers willing to work at the prevailing wage or even a bit.

The point that I am making is that the DSGE model has nothing useful to say about anti-recession policy because it has built into its essentially implausible assumption the conclusion that there is nothing for macroeconomic policy to do.

- Robert Solow, Testimony before U.S. House of Representatives, 2010.

If you think that was harsh, here is SR-PIES winner, Paul Romer, completely denying the credibility of macroeconomics in a widely cited 2016 paper:

For more than three decades, macroeconomics has gone backwards...Macroeconomic theorists dismiss mere facts by feigning an obtuse ignorance about such simple assertions as "tight monetary policy can cause a recession." Their models attribute fluctuations in aggregate variables to imaginary causal forces that are not influenced by the action that any person takes. A parallel with string theory from physics hints at a general failure mode of science that is triggered when respect for highly regarded leaders evolves into a deference to authority that displaces objective fact from its position as the ultimate determinant of scientific truth...

Several economists I know seem to have assimilated a norm that the post-real macroeconomists actively promote – that it is an extremely serious violation of some honor code for anyone to criticize openly a revered authority figure – and that neither facts that are false, nor predictions that are wrong, nor models that make no sense matter enough to worry about.

- Paul Romer, The Trouble With Macroeconomics, (2016)

There you have it from a SR-PIES winner: conventional economics is an unfalsifiable religion. They tell just-so stories after the fact and pretend that is science. They troll for two sigma statistical anomalies and publish them as truth. Despite their endless sneering denials, their model is nothing more than warmed over 19th century classical physics.

But the public never hears such criticism, even when it comes from the prize winners in the field. If the media won't report "the emperor has no clothes" comments by leading economic experts, what chance is there for honest, skeptical reporting on the political offspring of such theories: neoliberal economic policies, whose basic assumption is that government shall be destroyed, euphemistically "privatized"? No chance at all. Conventional economics, with its claims to understand the effect of economic activities and its simultaneous refusal to face the destruction that is being wreaked by those activities, dare not be debunked because it is needed as theoretical ammunition for the neoliberal war against democracy.

Bottom line for dealing with DSGE and macroeconomics - simply refuse to get into the mire of scholasticism that is conventional macroeconomics. When anyone says economics supports neoliberal policies, just whack them over the head with the assumptions of DSGE and the rebuttals from the SR-PIES winners (I just can not bring myself to say Nobel Prize winners, because that's a lie.)

LEVEL 3. Phony Macro-Economics, continued - "The Veil of Money"
SB: Do you really believe that banks play no active role in the economy? Do you really believe there is no such thing as credit, merely loans against collateral? What was Mark Zuckerberg's collateral for the Facebook IPO?

The reason economic theory matters is that it provides the moral (sic) justification used by banks and billionaires to deploy the collected surplus of our economy. It is control of credit that enables the banks to demand austerity from Greece, from Detroit, from Venezuela, and to demand usorious interest rates from Joe Sixpack's overdue credit card bill.

Bank credit reshapes the economic landscape

We see that the banks’ decision of how much money to create and who to give it to determines the economic destiny of the country and, indeed, quickly and literally reshapes the economic landscape, across a variety of spaces. Whether banks decide to fund mainly large-scale speculative ventures—such as by providing leverage to hedge and private equity funds based in London and the City’s offshore dependencies, or to fund many small and medium-sized enterprises (SMEs) engaged in energy efficiency or carbon reduction projects employing many low-skilled or semiskilled staff in the remoter parts of the country will not only determine whether there will be stable and sustainable noninflationary growth or instead a credit-driven boom–bust cycle that causes banking crises. These decisions about the extension of bank credit will also have diverging effects on the geographical distribution of economic activity, income, taxation, location of habitation, transport and traffic patterns, and so forth. Yet, surprisingly little research has been conducted by social scientists of any persuasion, including economists, on this issue.

R.A.Werner, Crises, the spatial distribution of economic activity, and the geography of banking (2013) http://journals.sagepub.com/doi/pdf/10.1068/a130106c

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Despite the obviousness of the major controlling role of banks, despite the obviousness of their ever increasing rakeoff of society's profits, DSGE makes finance disappear, along with the roles of credit, debt, and derivatives. The "veil of money" is an absolutely essential lie supporting the absolutely unrealistic DSGE theory. DSGE in turn supports financializing the economy and looting the real economy.

DSGE models are characterized by the “absence of an appropriate way of modeling financial markets” (Tovar 2008: 29). The reason is that in DSGEs, the monetary side of the economy is fully determined in the real sphere. Agents make decision about producing, consuming, and investing based on the available resources, preferences, and prices. Money is treated as an add-on to the real economy, a mere unit of account that allows for comparing the values of goods and services, facilitating individual optimal choice. Given the outcome of the optimization process, the financial sector is modeled as passively providing the means to execute the necessary transactions in labor, goods, and services. Therefore money must exist strictly in proportion to the sum value of all real-sector transactions—that is, to real-sector output.

This determinateness is a problem when it comes to understanding financial instability, which can arise only if financial liquidity is created in excess of real output, as discussed in more detail below. DSGE models so exclude the possibility of financial instability.

Even though the tacit assumptions are that financial flows (e.g., of profit and interest) exist, Godley and Shaikh (2002) demonstrate that explicating the financial flows implied by DGSE model outcomes would undermine key model properties such as optimization in real (not nominal) terms, and leads to anomalies, such as falling prices, when the money supply expands. Making finance explicit is disastrous for DSGE models, because financial variables then are shown to move in ways that are incompatible with the determinate equilibrium path of DSGE models.

That is why DSGE models cannot, in principle, incorporate the financial sector and credit creation. And in a model world where credit does not exist, a credit crisis cannot be anticipated. This was due not to bad luck or exceptional conditions, but to the very structure of macroeconomics’ core models: the price for model consistency on DGSE terms is that finance cannot be modeled and financial crisis cannot exist. Alan Greenspan professed to “shocked disbelief” while watching his “whole intellectual edifice collapse

Dirk Bezemer, Causes of Financial Instability: Don’t Forget Finance (2011).

A major cause of the 2008 crash was derivative leverage. That is another thing that DSGE simply ignores by handwaving about the veil of money, even when that handwaving is false on its face:

Derivatives...do not represent economic activity. The size of exposure or potential losses inherent in derivatives can be many multiples of the value of the underlying equity or debt claims....

Derivatives...separated the scale of the banks' balance sheets from the scale of real household and business activities in the economy. Under the neoclassical model, this cannot happen because lending to companies is limited by the amount they wish to borrow. However there is no corresponding boundary on the extent of transactions in derivatives, and most buying and selling of derivatives is carried out by large banks and hedge funds, not enterprises. Eventually, the size of the financial sector's balance sheet became monstrously unconnected from the activities of households and companies.

E. Phllips, The On-Going Price of Perceiving Money as a Veil (2017)

The facts that have to be ignored to swallow this "veil of money" codswallop are laughable:

In numerous nations that are banking centers, this theoretically nonexistent sector dwarfs the GDP of the country itself. Case in point, the proportion of the nonbank financial sector (a sub-component of the total finance sector) to GDP is 90% in the Netherlands, 370% in the UK, 260% in Singapore, and 210% in Switzerland.

E. Phllips, The On-Going Price of Perceiving Money as a Veil (2017)

Neoliberals do their best to hide the nature of debt and credit in the economy. Here is a telling little vignette about "fees" from Michael Hudson.

It’s only when you get into the modern era you stop reading about debt… and the economic models that are taught in the schools leave debt out of account. It’s as if the whole economy works on barter, not only without money, but without debt relationships. These simply are not built into the models and they’re not even built into the statistics...

what happens when the credit card companies make more money on penalties than they make in interest. When you miss a payment on your debt (this is before you go to prison) and you can’t pay the electric bill or a credit card bill, your rate goes up from 11 percent to 29 percent.

The answer they gave us was: “That’s not interest. We count that as a financial service, and financial services are an addition to GDP.” So all the added penalties that people pay for falling behind in their debts for arrears are counted as a growth in GDP – as economic growth!

Michael Hudson, Modern-Day Debtors’ Prisons and Debt in Antiquity

How to summarize macroeconomics? It is all a giant, self-serving humbug.

LEVEL 4: Phony micro-economics
SB: The barter economy is an ideological canard. Money was invented by government accountants.

The macroeconomic "veil of money" is itself built on yet another lie: "the barter economy". Here's a just-so story by a famous economist.

Inconvenient as barter obviously is, it represents a great step forward from a state of self-sufficiency in which every man had to be a jack-of-all-trades and master of none. … If we were to construct history along hypothetical, logical lines, we should naturally follow the age of barter by the age of commodity money.

- Paul Samuelson, Economics (1973)

But, this just-so story is complete historical bunkum.

Assyriological and anthropological research confirms that money and monetary interest were not created by individuals trucking and bartering crops and handicrafts or lending crops and animals with each other. Archaic economies operated on credit, creating money as means of paying debts, mainly to Mesopotamia’s palaces and temples. Interest emerged as the means of financing long-distance trade and advancing land to its cultivators or managers, administered mainly by palace officials.

Recognition of this palatial origin of money and interest is at odds with the drive by commercial bankers to depict their own control of money and credit as being natural and primordial. Ever since Roman law was written to favor creditors, history has been written to defend the view that private credit and the “sanctity” of debts being paid is natural. The resulting mythology to explain the origins of money and interest reflects public relations lobbying by bankers and other creditors.

Goodhart (1998) highlights the relevance to modern times of misinterpreting the history of money: It underlies creation of the euro. The eurozone was created without a central bank to monetize budget deficits for EU member governments. The anti-state ideology underlying the euro thus stands in opposition to the State Theory of money. Central bank credit is to be created only to bail out commercial banks for losses on their own credit creation and bad investments, not for governments to spend directly into the economy.

What makes today’s monetary system opposite from that of Bronze Age Mesopotamia is an ideology that recognizes no role for money and credit creation except to benefit creditors.

Michael Hudson:  Origins of Money and Interest: Palatial Credit, not Barter

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We have finally drilled our way to the bottom of the stack of lies. That took way longer than I expected. If you made it here, congratulations on your perseverance. If you are like me, when you see it all laid out, you may be stunned by the complete mendaciousness of the economics profession. There is no way all these lies are an accident. These sociopaths would make a Three Card Monte con-man blush.

Now that we understand conventional economics to be a burlesque of an honest economy, we can proceed to point out what the folks with all the money are doing. (For example, the EU racket cited by Hudson.) Because we know they certainly aren't the invisible, powerless, order takers that conventional economic theory makes them out to be.

Unfortunately, that will take another essay; and I'm too tired to do that right now.