Modern Monetary Theory (MMT) is often called Post-Keynesian Economics because of how it treats government deficits and spending. A well-known proponent of MMT is Stephanie Kelton.
MMT is a macroeconomic theory that challenges traditional views on government spending and fiscal policy. According to MMT, a government that issues its fiat currency can never run out of money and can, therefore, spend as much as it needs to meet its obligations. The only restriction on spending is inflation. Thus One of the key principles of MMT is that governments should focus on managing inflation rather than worrying about budget deficits. MMT argues that as long as there is unused economic capacity, such as unemployed labour and idle resources, government spending can stimulate economic growth without causing inflation.
MMT also emphasises the role of taxes in controlling inflation and ensuring the currency’s value. According to MMT, taxes create a demand for the currency and prevent excessive spending that could lead to inflation.
Critics of MMT argue that it inevitably leads to excessive government spending, inflation, and currency devaluation. They also question the practicality of implementing MMT in real-world economies.
My concern is that MMT uses economic growth to control the inflationary impact of using quantitative easing to manage deficit spending. To be sustainable, the necessary growth must be decoupled from resource consumption in some way. Growth that provides for the community’s needs is good, but growth based on consumerism will eventually exhaust the planet's resources. See Ecological Economics
Modern Monetary Theory presents a different perspective on fiscal policy and government spending, challenging conventional economic thinking and discussing alternative approaches to managing economies.
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Regarding this view of the origin of money. His definition of money evolving as a medium of exchange is in itself simplistic, but even if money did evolve as a medium of exchange. Governments can also introduce and use fiat currency as a basis for the tax system and centrally control the economy, stopping others from issuing exchange tokens, although local currencies do exist on a small scale. In other words, the development of fiat currency and the origin of exchange tokens in general can have their own story.
MMT is a theory of fiat currency specifically, so it is legitimate for theorists to use the origin of fiat currency as the basis of MMT.
The MMT explanantion of the origins and nature of money is chartalist.
MMT allows for high deficit levels to release money into the banking system, expanding the reserves and, therefore, allowing more money to be loaned (created). Flushing the economy in this way can be inflationary; 10% more dollars circulating effectively decreases the value of each dollar by 10%. MMT economists say that if there is enough ‘slack’ in the economy in the form of unused workers and resources, the extra money released by the deficit just causes 10% growth, which balances out the inflationary effect. The huge deficits countries allowed when supporting banks through the GFC could have been inflationary, but they weren’t possibly for this reason.