what is mmt

Modern Monetary Theory (MMT) is a macroeconomic theory that describes currency as a public monopoly and unemployment as evidence that a currency monopolist is overly restricting the supply of the financial assets needed. It is a heterodox theory that asserts that monetarily sovereign countries, such as the U.S., U.K., Japan, and Canada, which issue their own fiat currency, can create more money without consequence. MMT suggests that government deficits and national debt dont matter nearly as much as we think they do. The theory proposes that increased government spending in pursuit of various economic and social goals is socially desirable and can be funded by obviating the need for government to raise additional tax revenues or to compete for private capital by offering competitive interest rates on government bonds sold to private sector investors. MMT is used in policy debates to argue for such progressive legislation as universal healthcare and other public programs for which governments claim to not have enough money to fund. However, MMT has been criticized for its proposal that taxes can be used to reduce inflation, which some argue is flawed. While MMT is not new, it has recently received widespread attention.