modern monetary theory

MMT Is A Social Agenda – Not A Financial Solution

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MMT IS A SOCIAL AGENDA

The subtitle of Stephanie Kelton’s book, The Deficit Myth, is “Modern Monetary Theory and the Birth of the People’s Economy”. The material in her book supports and encourages that theme and what it implies.

It isn’t that Ms. Kelton and others have not explained carefully how MMT can presumably work, both financially and economically; they have. The financial details have been enumerated and dissected adequately. However, the justification for implementation of MMT appears to be based on expectations of grander social programs, and how to pay for them.

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MMT And Gold

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ABOUT MMT AND GOLD 

According to MMT (Modern Monetary Theory), there are “four essential requirements that qualify a national currency as sovereign”.

Those four requirements include:

  • the National government chooses a money of account in which the currency is denominated;
  • the National government imposes obligations (taxes, fees, fines, tribute, tithes) denominated in the chosen money of account;
  • the National government issues a currency denominated in the money of account, and accepts that currency in payment of the imposed obligations; and
  • if the National government issues other obligations against itself, these are also denominated in the chosen money of account, and payable in the national government’s own currency.

We listed the above requirements and talked about ‘sovereign currencies’ in the article MMT – Variation On A Theme.

But, there is a fifth (important) requirement regarding MMT and a  National government which issues a sovereign currency. That requirement is stated quite clearly by L. Randall Wray, who is one of the leading spokespersons in behalf of MMT:

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MMT – Nothing New Here

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MMT – NOTHING NEW 

Overall, and after reading more extensively about it, including arguments both pro and con, I still do not see what is new or ‘modern’ about MMT. Whether it is, or is not, doesn’t matter. What matters is that it is getting a seemingly inordinate amount of attention and is a subject worthy of comment.

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Gold, MMT, Fiat Money Inflation In France

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“Modern Monetary Theory (MMT) is a heterodox macroeconomic framework that says monetarily sovereign countries like the U.S., U.K., Japan and Canada are not operationally constrained by revenues when it comes to federal government spending. In other words, such governments do not need taxes or borrowing for spending since they can print as much as they need and are the monopoly issuers of the currency.”  Investopedia

Of course governments are not ‘constrained’ by revenues. They have always been able to “print as much as they need”.

Modern Monetary Theory is not ‘modern’. Far from it. 

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