Fascinating to see how much of this has fallen into the economic debate, even though many of us probably don’t know where it came from. Read and share; this blog may enlighten many.
I haven’t done a post specifically about Modern Monetary Theory (MMT) for a while now, although that is the perspective from which I approach a lot of the issues I blog about. With that in mind, I thought I’d go back to basics and write a beginner’s guide to MMT as I see it. Any errors that follow will be mine alone. Please let me know if you spot one!
What is MMT?
Modern Monetary Theory (MMT) is a branch of the heterodox Post Keynesian school of economics. At a basic level it is comprised of the following ideas:
- Taxes drive money;
- Taxes and borrowing don’t pay for government spending;
- Countries like the UK cannot go bust;
- Functional finance;
- Sectoral balances;
- Endogenous money;
- Governments should pursue full employment;
- Focus on real resources, not money.
So what do all these things means? In turn then:
1. Taxes drive money
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