Disclaimer: I am not an economist, but I took some classes in college. I have been reading and learning about MMT for several months.
What is Modern Monetary Theory?
MMT is a framework, or lens, on how to view the monetary operations of a government that controls its own fiat currency, like the US, or UK, or Japan, etc. It is a description of how things work in practice and a predictor of outcomes for certain behaviors. It is NOT a policy prescription, or a magic solution. It doesn't say what we should do, but it makes clear what the lies are, and makes some suggestions as to what's possible.
- A fiat currency itself is a simple public monopoly.
- The US government levies taxes payable in US dollars.
- The US dollars to pay those taxes or purchase US Treasury securities can only originate from the US government and its agents.
- The economy has to sell goods, services or assets to the US government (or borrow from the US government, which is functionally a financial asset sale) or it will not be able to pay its taxes or purchase US Treasury securities.
- Governments that control their own fiat currency can never become insolvent, because they can always print more of that currency.
- Government monetary operations are nothing like a household budget, and shouldn't be talked about like one.
- Currency enters the economy when it is spent or loaned by the government, and taxed out later.
- That currency is created by plussing up a number in a spreadsheet, it doesn't come from anywhere.
- Deficit spending increases the balance of savings accounts in the private sector and public agency funds.
- Governments set the value of their currency by the prices they are willing to pay to procure their resources, and the tax burdens they levy to create demand for that currency.
- Deficits are not "leaving a burden on our children" because they don't have to actually be paid off, and we could pay it off at any time by printing the money and editing the spreadsheet.
The Deficit Myth by Stephanie Kelton
Modern Monetary Theory and its Critics
The MMT Podcast