What is Modern Monetary Theory?
Modern Monetary Theory (MMT) holds the national government of a large country that controls its own currency:
-can spend as much as it wants
-can create (“print”) all the money needed
-can raise taxes to control the inflation created
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Chat GPT:
Modern Monetary Theory (MMT) is an economic framework that emphasizes the ways in which a government that issues its own currency can manage the economy.
Here are some key points of MMT:
Monetary Sovereignty:
MMT applies to countries that control their own currency, like the U.S. with the dollar or Japan with the yen.
These countries can issue currency freely and are not constrained by gold or foreign currency reserves.
Government Spending:
MMT suggests such governments can never "run out of money" the way businesses or individuals can.
They can create more money to finance deficits.
Role of Taxes:
Taxes are not needed to fund spending but serve other purposes like controlling inflation, redistributing wealth, and incentivizing behaviors.
Inflation Management:
MMT holds the main risk of a large amount of government spending is inflation.
The theory suggests using taxes and government spending adjustments to control inflation.
Unemployment:
MMT proposes the use of government policies, such as a job guarantee program, to maintain full employment, arguing the government should ensure everyone who wants to work can find employment at a fair wage.
MMT challenges conventional views on fiscal policy, particularly around the need for balanced budgets, and provides a different approach to economic management.
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List of economists and politicians who support and promote Modern Monetary Theory.
ChatGPT:
Modern Monetary Theory (MMT) has been supported and promoted by many economists and politicians who view it as a viable alternative to traditional economic theories.
Here’s a list of some notable proponents:
Economists:
Stephanie Kelton
A prominent advocate of MMT, Kelton is a professor of economics and public policy.
She served as an advisor to Bernie Sanders and has written extensively on the topic, including her popular book "The Deficit Myth."
Warren Mosler
Considered one of the original developers of MMT, Mosler is an economist and hedge fund founder who has written several papers and books on the subject.
L. Randall Wray
A professor of economics at Bard College and a senior scholar at the Levy Economics Institute, Wray has published widely on MMT and is a leading thinker in the field.
Bill Mitchell
An Australian economist and a professor at the University of Newcastle, Mitchell has written numerous articles and books on MMT and is known for his blog that discusses various aspects of the theory.
Pavlina Tcherneva
Tcherneva has contributed significantly to the job guarantee aspect of MMT and is a professor at Bard College.
Politicians:
Bernie Sanders
The U.S. Senator from Vermont has been associated with MMT through his hiring of Stephanie Kelton as his chief economic advisor during his presidential campaigns.
Alexandria Ocasio-Cortez (AOC)
The U.S. Representative from New York has spoken favorably about MMT as a way to fund ambitious government programs like the Green New Deal.
Rashida Tlaib
The U.S. Representative from Michigan has also expressed support for MMT, particularly in discussions around public budgeting and social programs.
These people often discuss MMT in the context of its potential to support expansive fiscal policies aimed at social and economic reforms.
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In essence was President Joe Biden a proponent of Modern Monetary Theory?
ChatGPT said:
President Joe Biden's fiscal policies, particularly his support for substantial government spending without corresponding tax increases or spending cuts, align with some principles of Modern Monetary Theory (MMT).
Stephanie Kelton, a prominent advocate of MMT, argues Biden's approach of increasing the federal deficit through a $6 trillion budget proposal represents an implicit if not explicit adoption of MMT principles.
Some analyses suggest Biden embraced the MMT framework, indicated by his administration's substantial fiscal stimulus measures and relaxed attitude towards increasing national debt
While President Biden's administration has employed fiscal policies that resonate with some aspects of MMT, particularly in terms of deficit spending and monetary expansion, there isn't a clear indication Biden explicitly champions MMT as a guiding economic philosophy.
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What percent is the amount of federal government tax revenues of U.S. GDP?
ChatGPT:
As of 2025, the amount of U.S. federal government tax revenues as a percentage of the U.S. GDP is approximately 17%.
What percent is the amount of U.S. federal government spending of U.S. GDP?
ChatGPT:
As of 2025, the amount of U.S. federal government spending as a percentage of the U.S. GDP is approximately 25%.
As of 2025, the percentage of federal government spending relative to the U.S. Gross Domestic Product (GDP) is approximately 25%.
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A short video about Modern Monetary Theory:
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