What is Modern Monetary Theory?
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What is Modern Monetary Theory?
Modern Monetary Theory (MMT) is an economic theory that challenges conventional views on government spending, deficits, and debt.
It argues as long as a country controls its own currency and monetary policy (like the United States with the U.S. dollar), it has greater flexibility in fiscal policy and can sustain higher levels of deficit spending without the same risks typically associated with government debt.
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Key principles and ideas of MMT include:
Currency Sovereignty:
MMT emphasizes a country with its own sovereign currency can create money at will.
This means that the government can fund its spending programs without the need to rely solely on tax revenue or borrowing.
Deficits Are Not Necessarily Harmful:
MMT contends running budget deficits is not inherently problematic as long as it does not lead to excessive inflation.
In fact, MMT proponents argue deficits can be used to achieve full employment and stimulate economic growth.
Government Debt and Interest Rates:
MMT challenges the idea government debt is burdensome and must be minimized.
It argues the central bank can control interest rates, and as long as inflation is in check, the level of government debt can be managed.
Job Guarantee:
MMT advocates for a job guarantee program, where the government acts as an "employer of last resort" to provide jobs to anyone willing and able to work.
This is seen as a tool to maintain full employment and stabilize the economy.
Inflation Control:
MMT places a strong emphasis on controlling inflation as the primary constraint on government spending.
It suggests taxes can be used to remove excess money from the economy to prevent inflation.
Sectoral Balances:
MMT looks at the relationships between the government sector, private sector, and foreign sector to understand how money flows and is created within an economy.
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It's important to note MMT is a relatively controversial theory, and economists and policymakers have varying opinions about its feasibility and potential risks.
Critics argue it oversimplifies economic complexities and underestimates the risks associated with high levels of government spending.
Supporters, on the other hand, believe it offers a more realistic framework for understanding how modern monetary systems work and how governments can address economic challenges.
The practical implementation of MMT principles remains a topic of debate in economic and policy circles.
(own comment):
promoted by AOC and Sanders, another socialist scheme to corrupt and bankrupt the U.S. to make way for socialism takeover
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