Modern Monetary Theory

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Modern Monetary Theory or Modern Money Theory (MMT) is a heterodox[1] macroeconomic theory that describes the nature of money[2] within a fiat, floating exchange rate system.[3] MMT synthesizes ideas from the state theory of money of Georg Friedrich Knapp (also known as chartalism) and the credit theory of money of Alfred Mitchell-Innes, the functional finance proposals of Abba Lerner, Hyman Minsky's views on the banking system[4] and Wynne Godley's sectoral balances approach.[5] Economists Warren Mosler, L. Randall Wray, Stephanie Kelton,[6] Bill Mitchell and Pavlina R. Tcherneva are largely responsible for reviving the idea of chartalism as an explanation of money creation.

MMT frames government spending and taxation differently to most orthodox frameworks. MMT states that the government is the monopoly issuer of its currency and therefore must spend currency into existence before any tax revenue can be collected.[1] The government spends currency into existence and taxpayers use that currency to pay their obligations to the state.[2] This means that taxes cannot fund public spending in a nominal monetary flow sense,[3] as the government cannot collect money back in taxes until after it is has been issued into the economy. In this kind of monetary system, the government is never constrained in its ability to pay,[3] rather the limits are the real resources available for purchase in the state's currency.[3]

MMT argues that the primary risk once the economy reaches full employment is demand-pull inflation, which acts as the only constraint on spending. MMT also argues that inflation pressures can be mitigated by increasing taxes on everyone, to reduce the spending capacity of the private sector, releasing real resources such that the state can employ them at current prices in a non-inflationary way.[2]:150[7][8]

The primary demand and inflation management approach advocated by most MMT economists is the Job Guarantee employer of last resort (ELR) programme.[9] This provides a spend-side automatic fiscal stabilisation mechanism and establishes a nominal price anchor, utilising a buffer stock of employed labour. This is in contrast to the orthodox monetary dominance approach to demand management which involves adjusting interest rates and utilising a pool of unemployed labour as a buffer against inflationary pressures following a belief in a Phillip's curve trade off between the two.

MMT is opposed to the mainstream neoclassical macroeconomic frameworks and has been criticized heavily by many mainstream economists.[10][11][12][13] MMT is also strongly opposed by members of the Austrian school of economics.[14] MMT's applicability varies across countries depending on degree of monetary sovereignty, with contrasting implications for the United States versus Eurozone members or countries with currency substitution.[15]

## Contents

* 1 Tenets
* 2 History
* 3 Theoretical approach
* 3.1 Vertical transactions
* 4 Interaction between government and the banking sector
* 4.1 Government bonds and interest rate maintenance
* 5 Horizontal transactions
* 6 Foreign sector
* 6.1 Imports and exports
* 6.2 Foreign sector and government
* 7 Policy implications
* 8 Comparison with mainstream Keynesian economics
* 9 International applications and limitations
* 9.1 Monetary sovereignty spectrum
* 9.2 International policy debates
* 10 Criticism
* 10.1 Empirical evidence challenges
* 11 See also
* 12 References
* 13 Further reading
* 14 External links

## Tenets

MMT's main tenets are that a government that issues its own fiat money:

1. Creates money with any and all government spending[16]
2. Effectively destroys money via taxation[16]
3. Cannot be forced to default on debt denominated in its own currency[2]
4. Is limited politically in its money creation only by demand-pull inflation, which accelerates once the real resources (labour, capital and natural resources) of the economy are utilised at full employment
5. Should strengthen automatic stabilisers to control demand-pull inflation,[17] rather than relying upon discretionary tax changes
6. Has the option to issue bonds as a monetary policy device or savings device for the private sector. Bonds cannot act as a means of funding public spending. The government can set whatever price for bonds it decides.[16]
7. Uses taxation to provide the fiscal space to spend without causing inflation and also to drive demand for the currency.

Tenets three to five of MMT do not conflict with mainstream economics understanding of how money creation and inflation works. However, MMT economists disagree with mainstream economics about the sixth tenet: the impact of government deficits on interest rates.[16][18][5][19][20]

## History

MMT synthesizes ideas from the state theory of money of Georg Friedrich Knapp (also known as chartalism) and the credit theory of money of Alfred Mitchell-Innes, the functional finance proposals of Abba Lerner, Hyman Minsky's views on the banking system[4] and Wynne Godley's sectoral balances approach.[5]

Knapp wrote in 1905 that "money is a creature of law", rather than a commodity.[21] Knapp contrasted his state theory of money with the Gold Standard view of "metallism", where the value of a unit of currency depends on the quantity of precious metal it contains or for which it may be exchanged. He said that the state can create pure paper money and make it exchangeable by recognizing it as legal tender, with the criterion for the money of a state being "that which is accepted at the public pay offices".[21]

The prevailing view of money was that it had evolved from systems of barter to become a medium of exchange because it represented a durable commodity which had some use value,[22] but proponents of MMT such as Randall Wray and Mathew Forstater said that more general statements appearing to support a chartalist view of tax-driven paper money appear in the earlier writings of many classical economists,[23] including Adam Smith, Jean-Baptiste Say, J. S. Mill, Karl Marx, and William Stanley Jevons.[24]

Alfred Mitchell-Innes wrote in 1914 that money exists not as a medium of exchange but as a standard of deferred payment, with government money being debt the government may reclaim through taxation.[25] Innes said:

> Whenever a tax is imposed, each taxpayer becomes responsible for the redemption of a small part of the debt which the government has contracted by its issues of money, whether coins, certificates, notes, drafts on the treasury, or by whatever name this money is called. He has to acquire his portion of the debt from some holder of a coin or certificate or other form of government money, and present it to the Treasury in liquidation of his legal debt. He has to redeem or cancel that portion of the debt ... The redemption of government debt by taxation is the basic law of coinage and of any issue of government 'money' in whatever form.

— Alfred Mitchell-Innes, "The Credit Theory of Money", The Banking Law Journal

Knapp and "chartalism" are referenced by John Maynard Keynes in the opening pages of his 1930 Treatise on Money[26] and appear to have influenced Keynesian ideas on the role of the state in the economy.[23]

By 1947, when Abba Lerner wrote his article "Money as a Creature of the State", economists had largely abandoned the idea that the value of money was closely linked to gold.[27] Lerner said that responsibility for avoiding inflation and depressions lay with the state because of its ability to create or tax away money.[27]

Hyman Minsky seemed to favor a chartalist approach to understanding money creation in his Stabilizing an Unstable Economy,[4] while Basil Moore, in his book Horizontalists and Verticalists,[28] lists the differences between bank money and state money.

In 1996, Wynne Godley wrote an article on his sectoral balances approach, which MMT draws from.[5]

Economists Warren Mosler, L. Randall Wray, Stephanie Kelton,[6] Bill Mitchell and Pavlina R. Tcherneva are largely responsible for reviving the idea of chartalism as an explanation of money creation; Wray refers to this revived formulation as neo-chartalism.[29]

Rodger Malcolm Mitchell's book Free Money (1996)[30] describes in layman's terms the essence of chartalism.

Pavlina R. Tcherneva has developed the first mathematical framework for MMT[31] and has largely focused on developing the idea of the job guarantee.

Bill Mitchell, professor of economics and Director of the Centre of Full Employment and Equity (CoFEE) at the University of Newcastle in Australia, coined the term 'modern monetary theory'.[32] In their 2008 book Full Employment Abandoned, Mitchell and Joan Muysken use the term to explain monetary systems in which national governments have a monopoly on issuing fiat currency and where a floating exchange rate frees monetary policy from the need to protect foreign exchange reserves.[33]

Some contemporary proponents, such as Wray, place MMT within post-Keynesian economics, while MMT has been proposed as an alternative or complementary theory to monetary circuit theory, both being forms of endogenous money, i.e., money created within the economy, as by government deficit spending or bank lending, rather than from outside, perhaps with gold. In the complementary view, MMT explains the "vertical" (government-to-private and vice versa) interactions, while circuit theory is a model of the "horizontal" (private-to-private) interactions.[34][35]

By 2013, MMT had attracted a popular following through academic blogs and other websites.[36]

In 2019, MMT became a major topic of debate after U.S. Representative Alexandria Ocasio-Cortez said in January that the theory should be a larger part of the conversation.[37] In February 2019, Macroeconomics became the first academic textbook based on the theory, published by Bill Mitchell, Randall Wray, and Martin Watts.[7][38] MMT became increasingly used by chief economists and Wall Street executives for economic forecasts and investment strategies. The theory was also intensely debated by lawmakers in Japan, which was planning to raise taxes after years of deficit spending.[39][40]

In June 2020, Stephanie Kelton's MMT book The Deficit Myth became a New York Times bestseller.[41]

## Theoretical approach

In sovereign financial systems, banks can create money, but these "horizontal" transactions do not increase net financial assets because assets are offset by liabilities. According to MMT advocates, "The balance sheet of the government does not include any domestic monetary instrument on its asset side; it owns no money. All monetary instruments issued by the government are on its liability side and are created and destroyed with spending and taxing or bond offerings."[42] In MMT, "vertical money" enters circulation through government spending. Taxation and its legal tender enable power to discharge debt and establish fiat money as currency, giving it value by creating demand for it in the form of a private tax obligation. In addition, fines, fees, and licenses create demand for the currency. This currency can be issued by the domestic government or by using a foreign, accepted currency.[3][43] An ongoing tax obligation, in concert with private confidence and acceptance of the currency, underpins the value of the currency. Because the government can issue its own currency at will, MMT maintains that the level of taxation relative to government spending (the government's deficit spending or budget surplus) is in reality a policy tool that regulates inflation and unemployment, and not a means of funding the government's activities by itself. The approach of MMT typically reverses theories of governmental austerity. The policy implications of the two are likewise typically opposed.[44]

### Vertical transactions

Illustration of the saving identity with the three sectors, the computation of the surplus or deficit balances for each and the flows between them[45]

MMT labels a transaction between a government entity (public sector) and a non-government entity (private sector) as a "vertical transaction". The government sector includes the treasury and central bank. The non-government sector includes domestic and foreign private individuals and firms (including the private banking system) and foreign buyers and sellers of the currency.[38]

## Interaction between government and the banking sector

MMT is based on an account of the "operational realities" of interactions between the government and its central bank, and the commercial banking sector, with proponents like Scott Fullwiler arguing that understanding reserve accounting is critical to understanding monetary policy options.[46]

A sovereign government typically has an operating account with the country's central bank. From this account, the government can spend and also receive taxes and other inflows.[34] Each commercial bank also has an account with the central bank, by means of which it manages its reserves (that is, money for clearing and settling interbank transactions).[47]

When a government spends money, its central bank debits its Treasury's operating account and credits the reserve accounts of the commercial banks. The commercial bank of the final recipient will then credit up this recipient's deposit account by issuing bank money. This spending increases the total reserve deposits in the commercial bank sector. Taxation works in reverse: taxpayers have their bank deposit accounts debited, along with their bank's reserve account being debited to pay the government; thus, deposits in the commercial banking sector fall.[16]

### Government bonds and interest rate maintenance

Virtually all central banks set an interest rate target, and most now establish administered rates to anchor the short-term overnight interest rate at their target. These administered rates include interest paid directly on reserve balances held by commercial banks, a discount rate charged to banks for borrowing reserves directly from the central bank, and an Overnight Reverse Repurchase (ON RRP) facility rate paid to banks for temporarily forgoing reserves in exchange for Treasury securities.[48] The latter facility is a type of open market operation to help ensure interest rates remain at a target level. According to MMT, the issuing of government bonds is best understood as an operation to adjust the composition and maturity of government liabilities held by the non-government sector rather than a requirement to finance government expenditure.[46]

## Horizontal transactions

MMT economists describe any transactions within the private sector as "horizontal" transactions, including the expansion of the broad money supply through the extension of credit by banks.

MMT economists regard the concept of the money multiplier, where a bank is completely constrained in lending through the deposits it holds and its capital requirement, as misleading.[49][50] Rather than being a practical limitation on lending, the cost of borrowing funds from the interbank market (or the central bank) represents a profitability consideration when the private bank lends in excess of its reserve or capital requirements (see interaction between government and the banking sector). Effects on employment are used as evidence that a currency monopolist is overly restricting the supply of the financial assets needed to pay taxes and satisfy savings desires.[51][42]

According to MMT, bank credit should be regarded as a "leverage" of the monetary base and should not be regarded as increasing the net financial assets held by an economy: only the government or central bank is able to issue high-powered money with no corresponding asset and increase the net financial wealth of the non-government sector.[52] Stephanie Kelton said that bank money is generally accepted in settlement of debt and taxes because of state guarantees, but that state-issued high-powered money sits atop a "hierarchy of money".[53]

## Foreign sector

### Imports and exports

MMT proponents such as Warren Mosler say that trade deficits are sustainable and beneficial to the standard of living in the short term.[54] Imports are an economic benefit to the importing nation because they provide the nation with real goods. Exports, however, are an economic cost to the exporting nation because it is losing real goods that it could have consumed.[55] Currency transferred to foreign ownership, however, represents a future claim over goods of that nation.[56]

Cheap imports may also cause the failure of local firms providing similar goods at higher prices, and hence unemployment, but MMT proponents label that consideration as a subjective value-based one, rather than an economic-based one: It is up to a nation to decide whether it values the benefit of cheaper imports more than it values employment in a particular industry.[55]

### Foreign sector and government

MMT says that as long as demand exists for the issuer's currency, whether the bond holder is foreign or not, governments can never be insolvent when the debt obligations are in their own currency; this is because the government is not constrained in creating its own fiat currency (although the bond holder may affect the exchange rate by converting to local currency).[57]

MMT does agree with mainstream economics that debt in a foreign currency is a fiscal risk to governments, because the indebted government cannot create foreign currency. In this case, the only way the government can repay its foreign debt is to ensure that its currency is continually in high demand by foreigners over the period that it wishes to repay its debt; an exchange rate collapse would potentially multiply the debt many times over asymptotically, making it impossible to repay. In that case, the government can default, or attempt to shift to an export-led strategy or raise interest rates to attract foreign investment in the currency. Either one negatively affects the economy.[58]

## Policy implications

Economist Stephanie Kelton explained several points made by MMT in March 2019:[59][60]

* Under MMT, fiscal policy (i.e., government taxing and spending decisions) is the primary means of achieving full employment, establishing the budget deficit at the level necessary to reach that goal. In mainstream economics, monetary policy (i.e., Central Bank adjustment of interest rates and its balance sheet) is the primary mechanism, assuming there is some interest rate low enough to achieve full employment. Kelton said that "cutting interest rates is ineffective in a slump" because businesses, expecting weak profits and few customers, will not invest even at very low interest rates.
* Government interest expenses are proportional to interest rates, so raising rates is a form of stimulus (it increases the budget deficit and injects money into the private sector, other things being equal); cutting rates is a form of austerity.
* Achieving full employment can be administered via a centrally-funded job guarantee, which acts as an automatic stabilizer. When private sector jobs are plentiful, the government spending on guaranteed jobs is lower, and vice versa.
* Under MMT, expansionary fiscal policy, i.e., money creation to fund purchases, can increase bank reserves, which can lower interest rates. In mainstream economics, expansionary fiscal policy, i.e., debt issuance and spending, can result in higher interest rates, crowding out economic activity.

Economist John T. Harvey explained several of the premises of MMT and their policy implications in March 2019:[61]

* The private sector treats labor as a cost to be minimized, so it cannot be expected to achieve full employment without government creating jobs, too, such as through a job guarantee.
* The public sector's deficit is the private sector's surplus and vice versa, by accounting identity, which increased private sector debt during the Clinton-era budget surpluses.
* Creating money activates idle resources, mainly labor. Not doing so is immoral.
* Demand can be insensitive to interest rate changes, so a key mainstream assumption, that lower interest rates lead to higher demand, is questionable.
* There is a "free lunch" in creating money to fund government expenditure to achieve full employment. Unemployment is a burden; full employment is not.
* Creating money alone does not cause inflation; spending it when the economy is at full employment can.

MMT says that "borrowing" is a misnomer when applied to a sovereign government's fiscal operations, because the government is merely accepting its own IOUs, and nobody can borrow back their own debt instruments.[62] Sovereign government goes into debt by issuing its own liabilities that are financial wealth to the private sector. "Private debt is debt, but government debt is financial wealth to the private sector."[63]

In this theory, sovereign government is not financially constrained in its ability to spend; the government can afford to buy anything that is for sale in currency that it issues; there may, however, be political constraints, like a debt ceiling law. The only constraint is that excessive spending by any sector of the economy, whether households, firms, or public, could cause inflationary pressures.

MMT economists advocate a government-funded job guarantee scheme to eliminate involuntary unemployment. Proponents say that this activity can be consistent with price stability because it targets unemployment directly rather than attempting to increase private sector job creation indirectly through a much larger economic stimulus, and maintains a "buffer stock" of labor that can readily switch to the private sector when jobs become available. A job guarantee program could also be considered an automatic stabilizer to the economy, expanding when private sector activity cools down and shrinking in size when private sector activity heats up.[64]

MMT economists also say quantitative easing (QE) is unlikely to have the effects that its advocates hope for.[65] Under MMT, QE – the purchasing of government debt by central banks – is simply an asset swap, exchanging interest-bearing dollars for non-interest-bearing dollars. The net result of this procedure is not to inject new investment into the real economy, but instead to drive up asset prices, shifting money from government bonds into other assets such as equities, which enhances economic inequality. The Bank of England's analysis of QE confirms that it has disproportionately benefited the wealthiest.[66]

MMT economists say that inflation can be better controlled (than by setting interest rates) with new or increased taxes to remove extra money from the economy.[8] These tax increases would be on everyone, not just billionaires, since the majority of spending is by average Americans.[8]

## Comparison with mainstream Keynesian economics

MMT can be compared and contrasted with mainstream Keynesian economics in a variety of ways:[7][59][60]

Topic  | Mainstream Keynesian  | MMT

|
|

Funding government spending  | Views government spending as constrained by revenue from taxation and borrowing;[67] emphasizes fiscal sustainability and debt-to-GDP ratios as key policy constraints.[68] | Emphasizes that governments fund spending by crediting bank accounts.
Purpose of taxation  | Purposes include: fund government operations, redistribute income, stabilize business cycles through automatic stabilizers, and correct market failures.[69] Taxation seen as necessary to finance spending without excessive borrowing.[70] | Primarily to drive up demand for currency. Secondary uses of taxation include lowering inflation, reducing income inequality, and discouraging bad behavior.[71]
Central bank mandates  | Most central banks globally have single price stability mandates;[72] the US dual mandate is somewhat unusual.[73] | Interest rate setting varies - Japan maintained rates near zero while others let the exchange rate float.[74]
Achieving full employment  | The US main strategy is monetary policy.[75] Active labor market policies are used in Europe,[76] while China used state-managed employment creation.[77] | Main strategy uses fiscal policy; running a budget deficit large enough to achieve full employment through a job guarantee.
Inflation control  | Driven by monetary policy; central bank sets interest rates consistent with a stable price level, sometimes setting a target inflation rate.[75] Countries with a high degree of exchange rate pass-through have more difficulty controlling inflation.[78] | Driven by fiscal policy; government increases taxes on everyone to remove money from private sector.[8] A job guarantee also provides a NAIBER, which acts as an inflation control mechanism.
Exchange rate considerations  | Flexible rates allow monetary policy independence and inflation targeting; fixed rates require fiscal discipline and adequate reserves.[79] Currency pegs are common for oil exporting countries.[80] | Floating exchange rates are essential for full monetary sovereignty. Fixed rates and currency unions undermine MMT propositions by constraining policy space.[81]
External sector constraints  | Current account deficits require financing through capital inflows;[82] external debt, particularly in foreign currency, creates vulnerability.[83] | Trade deficits are viewed as beneficial in the short-term.[84] Import-dependent countries may face supply-side inflation constraints.[85]
Financial market development  | Without deep and liquid financial markets monetary policy transmission is limited.[86] Developing countries may lack sufficient market depth for effective policy transmission.[87] | Government bond issuance viewed as a monetary operation option rather than a financing requirement.[88] The central bank can provide the government with money without issuing debt.[89]
Budget deficit impact on interest rates  | At full employment, higher budget deficit can crowd out investment.  | Deficit spending can drive down interest rates, encouraging investment and thus "crowding in" economic activity.[90]
Automatic stabilizers  | US stabilizers include unemployment insurance and food stamps, which increase budget deficits in a downturn.[91] European countries have more generous universal programs;[92] developing countries find it hard to finance automatic stabilizers.[93] | In addition to the other stabilizers, a job guarantee would increase deficits in a downturn.[64] Job guarantee proposals would need informal economy considerations in developing countries.[94]
Institutional requirements  | Requires rule of law and central bank independence for effective implementation.[95] Parliamentary vs presidential systems affect budgetary powers.[96] | Requires effective tax collection, central bank-treasury coordination, and capacity for employment programs.[97] May be easier to implement in countries with a strong state and weaker financial markets.[98]
Historical experiences  | Policy approaches are shaped by national experiences: Germany's inflation aversion (Weimar Republic);[99] Japan's deflation concerns (1990s stagnation);[100] emerging markets' fiscal discipline (1997 Asian Financial Crisis);[101] transition economies' institution building (post-Soviet experience).[102] | Limited historical examples of full implementation. Japan's experience with persistent low rates and high debt-to-GDP ratios cited as partial validation.[103] Critics point to episodes of hyperinflation (Germany 1920s, Zimbabwe 2000s, Venezuela 2010s) as cautionary examples.[104]

## International applications and limitations

### Monetary sovereignty spectrum

MMT economists recognize that monetary sovereignty exists on a spectrum rather than as a binary condition:[15]

Full monetary sovereignty: Countries like the US, Japan, the UK, Australia, and Canada that issue their own floating currencies can implement MMT prescriptions most fully.[105] Japan's experience with low interest rates and high debt-to-GDP ratios is cited by MMT economists.[106]

Limited monetary sovereignty: Eurozone members share a common currency but lack individual monetary control.[107] MMT economists argue that Eurozone countries face fiscal constraints similar to US states.[108]

Constrained monetary sovereignty: Countries with high foreign currency debt or a history of currency crises like Argentina[109] have constrained monetary sovereignty.[110]

### International policy debates

Japan: Policymakers have debated MMT principles including the sustainability of high government debt levels,[111] the effectiveness of monetary policy at the "zero lower bound,"[112] and consumption taxes.[113]

European Union: MMT’s relevance to Eurozone fiscal policy and COVID-19 response has been debated,[114] along with ordoliberal vs southern European state financing.[115]

Developing countries: Import dependencies and foreign currency constraints have limited MMT applicability.[116] India debated policy space[117] and China infrastructure investment.[118]

## Criticism

See also: Finance:Fiscal theory of the price level

A 2019 survey of leading economists by the University of Chicago Booth's Initiative on Global Markets showed a unanimous rejection of assertions attributed by the survey to MMT: "Countries that borrow in their own currency should not worry about government deficits because they can always create money to finance their debt" and "Countries that borrow in their own currency can finance as much real government spending as they want by creating money".[119][120] Directly responding to the survey, MMT economist William K. Black said "MMT scholars do not make or support either claim."[121] Multiple MMT academics regard the attribution of these claims as a smear.[122]

Freiwirtschaft economist Felix Fuders (de) argues that the growth imperative created by modern monetary theory has harmful environmental, mental, and social consequences.[123] Fuders concluded that it is impossible to meaningfully address the problem of unsustainable growth or fulfill the sustainable development goals proposed by the United Nations without completely overhauling the monetary system in favor of demurrage currency.[124]

The post-Keynesian economist Thomas Palley has stated that MMT is largely a restatement of elementary Keynesian economics, but prone to "over-simplistic analysis" and understating the risks of its policy implications.[125] Palley has disagreed with proponents of MMT who have asserted that standard Keynesian analysis does not fully capture the accounting identities and financial restraints on a government that can issue its own money. He said that these insights are well captured by standard Keynesian stock-flow consistent IS-LM models, and have been well understood by Keynesian economists for decades. He claimed MMT "assumes away the problem of fiscal–monetary conflict" – that is, that the governmental body that creates the spending budget (e.g. the legislature) may refuse to cooperate with the governmental body that controls the money supply (e.g., the central bank).[126] He stated the policies proposed by MMT proponents would cause serious financial instability in an open economy with flexible exchange rates, while using fixed exchange rates would restore hard financial constraints on the government and "undermines MMT's main claim about sovereign money freeing governments from standard market disciplines and financial constraints". Furthermore, Palley has asserted that MMT lacks a plausible theory of inflation, particularly in the context of full employment in the employer of last resort policy first proposed by Hyman Minsky and advocated by Bill Mitchell and other MMT theorists; of a lack of appreciation of the financial instability that could be caused by permanently zero interest rates; and of overstating the importance of government-created money. Palley concludes that MMT provides no new insights about monetary theory, while making unsubstantiated claims about macroeconomic policy, and that MMT has only received attention recently due to it being a "policy polemic for depressed times".[126]

Marc Lavoie has said that whilst the neochartalist argument is "essentially correct", many of its counter-intuitive claims depend on a "confusing" and "fictitious" consolidation of government and central banking operations,[20] which is what Palley calls "the problem of fiscal–monetary conflict".[126]

Paul Krugman, a New Keynesian economist and recipient of the Nobel Prize in Economics, asserted that MMT goes too far in its support for government budget deficits and ignores the inflationary implications of maintaining budget deficits when the economy is growing.[127] Krugman accused MMT devotees as engaging in "calvinball" – a game from the comic strip Calvin and Hobbes in which the players change the rules at whim.[6] Austrian School economist Robert P. Murphy stated that MMT is "dead wrong" and that "the MMT worldview doesn't live up to its promises".[128] He said that MMT saying cutting government deficits erodes private saving is true "only for the portion of private saving that is not invested" and says that the national accounting identities used to explain this aspect of MMT could equally be used to support arguments that government deficits "crowd out" private sector investment.[128]

The chartalist view of money itself, and the MMT emphasis on the importance of taxes in driving money, is also a source of criticism.[20] In 2015, three MMT economists, Scott Fullwiler, Stephanie Kelton, and L. Randall Wray, addressed what they saw as the main criticisms being made.[5]

### Empirical evidence challenges

Historical cases of hyperinflation include Weimar Republic,[129] Zimbabwe,[130] Venezuela,[131] and others.

In 1946, Japan faced a catastrophic economic situation. Its industrial and agricultural capacity had been largely destroyed in the war, creating severe supply-side constraints. Amid this devastation, unemployment was high at 13 million, consisting largely of demobilized soldiers and repatriated citizens.[132] In these conditions of a collapsed productive capacity, government spending was followed by hyperinflation, which emergency measures like raising property taxes and confiscating savings with a bail-in were unable to control.[133]

## See also

* Everything bubble
* Friedman's k-percent rule - money supply should be increased at a fixed percentage
* Debt based monetary system[broken anchor] - monetary system where commercial banks create the new money as debt
* Monetary sovereignty
* Money creation

## References

1. ↑ 1.0 1.1

* Chohan, Usman W. (6 April 2020). "Modern Monetary Theory (MMT): A General Introduction". CASS Working Papers on Economics & National Affairs (Social Science Research Network). EC017UC (2020).
* Edwards, Sebastian (2019). "Modern monetary theory: Cautionary tales from Latin America.". Cato Journal 39 (3): 529. doi:10.36009/CJ.39.3.3.
* Kosaka, Norihiko (6 August 2019). "The Heterodox Modern Monetary Theory and Its Challenges for Japan". Nippon. https://www.nippon.com/en/in-depth/d00499/the-heterodox-modern-monetary-theory-and-its-challenges-for-japan.html.
* Raposo, Ines Goncalves (11 June 2019). "On Modern Monetary Theory". Bruegel. https://www.bruegel.org/2019/02/on-modern-monetary-theory/.

2. ↑ 2.0 2.1 2.2 2.3 Wray, L. Randall (2015). Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems. Houndmills, Basingstoke, Hampshire New York, NY: Palgrave Macmillan. pp. 12–13, 137–141, 160–161,199–206, 248–266. ISBN 978-1-137-53990-8.
3. ↑ 3.0 3.1 3.2 3.3 3.4 "Soft Currency Economics" (in en-US). https://moslereconomics.com/mandatory-readings/soft-currency-economics/.
4. ↑ 4.0 4.1 4.2 Minsky, Hyman: Stabilizing an Unstable Economy, McGraw-Hill, 2008 (originally published 1986), ISBN 978-0-07-159299-4
5. ↑ 5.0 5.1 5.2 5.3 5.4 Fullwiler, Scott; Kelton, Stephanie; Wray, L. Randall (January 2012), "Modern Money Theory: A Response to Critics", Working Paper Series: Modern Monetary Theory – A Debate, Amherst, Massachusetts: Political Economy Research Institute, pp. 17–26, http://www.peri.umass.edu/fileadmin/pdf/working_papers/working_papers_251-300/WP279.pdf, retrieved 7 May 2015
6. ↑ 6.0 6.1 6.2 "Is modern monetary theory nutty or essential?". The Economist. 2019-03-12. ISSN 0013-0613. https://www.economist.com/finance-and-economics/2019/03/12/is-modern-monetary-theory-nutty-or-essential.
7. ↑ 7.0 7.1 7.2 Coy, Peter; Dmitrieva, Katia; Boesler, Matthew (21 March 2019). "Warren Buffett Hates It. AOC Is for It. A Beginner's Guide to Modern Monetary Theory". Bloomberg Businessweek. https://www.bloomberg.com/news/features/2019-03-21/modern-monetary-theory-beginner-s-guide.
8. ↑ 8.0 8.1 8.2 8.3 Mackintosh, James (2021-11-21). "Modern Monetary Theory Isn't the Future. It's Here Now.". Wall Street Journal. https://www.wsj.com/articles/modern-monetary-theory-isnt-the-future-its-here-now-11637446538. "But MMT prescribes that if tax rises are needed to slow demand, billionaires wouldn't be the target: The rest of us would. "It makes more sense to have a broad-based tax that would reduce demand across the broader economy, especially people who have a propensity to spend of 98%, which is the majority of Americans," Mr. [Randall] Wray said. Other MMT ideas have infiltrated their way into the heart of the establishment, but the idea that the government should raise taxes on ordinary Americans, let alone that it should do so to control inflation, is exceptionally unlikely to be accepted."
9. ↑ Tcherneva, Pavlina (5 June 2020) (in English). The Case for a Job Guarantee (1st ed.). Polity. ISBN 978-1509542109.
10. ↑ Krugmann, Paul (25 February 2019). "Running on MMT (wonkish)". The New York Times. https://www.nytimes.com/2019/02/25/opinion/running-on-mmt-wonkish.html.
11. ↑ Mankiw, N. Gregory (2020). "A Skeptic's Guide to Modern Monetary Theory". AEA Papers and Proceedings 110: 141–44. doi:10.1257/pandp.20201102. ISSN 2574-0768. https://www.aeaweb.org/articles?id=10.1257/pandp.20201102.
12. ↑ Cohen, Patricia (2019-04-05). "Modern Monetary Theory Finds an Embrace in an Unexpected Place: Wall Street". The New York Times. https://www.nytimes.com/2019/04/05/business/economy/mmt-wall-street.html. "To many mainstream economists, though, M.M.T. is a confused mishmash that proponents use to support their political objectives, whether big government programs like "Medicare for all" and the Green New Deal or smaller taxes. ... From this perspective, M.M.T. is a version of free-lunchonomics, leaving the next generation to pay for this generation's profligacy. Although several prominent mainstream economists have recently revised their thinking about the risks of large government debt, they continue to reject other tenets of M.M.T. At some point, they insist, if the government just creates money to pay the bills, hyperinflation will kick in."
13. ↑ Smialek, Jeanna (2019-02-06). "Is This What Winning Looks Like?". The New York Times. https://www.nytimes.com/2022/02/06/business/economy/modern-monetary-theory-stephanie-kelton.html. "The theory picked up some fervent followers but limited popular acceptance, charitably, and outright derision, uncharitably. Mainstream economists panned it as overly simplistic. Many were confused about what it was arguing. "I have heard pretty extreme claims attributed to that framework and I don't know whether that's fair or not," Jerome H. Powell, the Fed chair, said in 2019. "The idea that deficits don't matter for countries that can borrow in their own currency is just wrong.""
14. ↑ Carney, John (2011-12-27). "Modern Monetary Theory and Austrian Economics". https://www.cnbc.com/2011/12/27/modern-monetary-theory-and-austrian-economics.html.
15. ↑ 15.0 15.1 Espinosa, Eduardo Garzón (2024-03-05) (in en). Modern Monetary Theory: A Comprehensive and Constructive Criticism. Taylor & Francis. ISBN 978-1-003-86028-0. https://books.google.com/books?id=n1XqEAAAQBAJ&dq=MMT+monetary+sovereignty+spectrum&pg=PT26.
16. ↑ 16.0 16.1 16.2 16.3 16.4 Bell, Stephanie (2000). "Do Taxes and Bonds Finance Government Spending?". Journal of Economic Issues 34 (3): 603–620. doi:10.1080/00213624.2000.11506296. ISSN 0021-3624. https://www.jstor.org/stable/4227588. Alt URL
17. ↑ Fullwiler, Scott; Grey, Rohan; Tankus, Nathan (1 March 2019). "An MMT response on what causes inflation". The Financial Times Ltd. https://ftalphaville.ft.com/2019/03/01/1551434402000/An-MMT-response-on-what-causes-inflation/.
18. ↑ Sharpe, Timothy P. (2013-10-13). "A Modern Money Perspective on Financial Crowding-out" (in en). Review of Political Economy 25 (4): 586–606. doi:10.1080/09538259.2013.837325. ISSN 0953-8259. http://www.tandfonline.com/doi/abs/10.1080/09538259.2013.837325.
19. ↑ Fullwiler, Scott T. (2016) "The Debt Ratio and Sustainable Macroeconomic Policy", World Economic Review 7:12–42
20. ↑ 20.0 20.1 20.2 Marc Lavoie. "The monetary and fiscal nexus of neo-chartalism". http://www.boeckler.de/pdf/v_2011_10_27_lavoie.pdf.
21. ↑ 21.0 21.1 Knapp, George Friedrich (1905), Staatliche Theorie des Geldes, Verlag von Duncker & Humblot
22. ↑ Marx, Karl (1867). "1: Commodities – Section 1: The Two Factors of a Commodity: Use-Value and Value (The Substance of Value and the Magnitude of Value)". Capital. I. http://www.efm.bris.ac.uk/het/marx/cap1/chap01. "The utility of a thing makes it a use value."
23. ↑ 23.0 23.1 Wray, L. Randall (2000), The Neo-Chartalist Approach to Money, UMKC Center for Full Employment and Price Stability, http://www.cfeps.org/pubs/wp/wp10.html, retrieved 5 October 2009
24. ↑ Forstater, Mathew (2004), Tax-Driven Money: Additional Evidence from the History of Thought, Economic History, and Economic Policy, pp. 3, https://tools.bard.edu/wwwmedia/resources/files/1238/WP 35 - Tax-Driven Money - Forstater.pdf, retrieved 9 February 2024
25. ↑ Mitchell-Innes, Alfred (1914). "The Credit Theory of Money". The Banking Law Journal 31. https://www.community-exchange.org/docs/The Credit Theoriy of Money.htm.
26. ↑ Keynes, John Maynard (1930). A Treatise on Money. pp. 4, 6
27. ↑ 27.0 27.1 Lerner, Abba P. (May 1947). "Money as a Creature of the State". The American Economic Review 37 (2).
28. ↑ Moore, Basil J.: Horizontalists and Verticalists: The Macroeconomics of Credit Money, Cambridge University Press, 1988, ISBN 978-0-521-35079-2
29. ↑ "Marginal revolutionaries". The Economist. 31 December 2011. https://www.economist.com/briefing/2011/12/31/marginal-revolutionaries. "... neo-chartalism, sometimes called 'Modern Monetary Theory' ...".
30. ↑ Mitchell, Rodger Malcolm: Free Money – Plan for Prosperity, PGM International, Inc., paperback 2005, ISBN 978-0-9658323-1-1
31. ↑ Tcherneva, Pavlina R.. "Monopoly Money: The State as a Price Setter". https://modernmoneynetwork.org/sites/default/files/biblio/Pavlina_2007.pdf.
32. ↑ Matthews, Dylan (18 February 2012). "Modern Monetary Theory is an unconventional take on economic strategy". The Washington Post (Washington, DC). https://www.washingtonpost.com/business/modern-monetary-theory-is-an-unconventional-take-on-economic-strategy/2012/02/15/gIQAR8uPMR_story.html.
33. ↑ Mitchell, William; Muysken, Joan (2008). Full Employment Abandoned: Shifting Sands and Policy Failures. Northampton, Massachusetts: Edward Elgar Publishing. p. 17. ISBN 978-1-85898-507-7. https://books.google.com/books?id=caEl9oAI4XoC&q=modern monetary theory. Retrieved November 18, 2020.
34. ↑ 34.0 34.1 Bill Mitchell (2 March 2009). "Deficit Spending 101 – Part 3"
35. ↑ Bill Mitchell (28 September 2009). "In the spirit of debate...my reply"
36. ↑ Lowrey, Annie (July 4, 2013). "Warren Mosler, a Deficit Lover With a Following". The New York Times. https://www.nytimes.com/2013/07/05/business/economy/warren-mosler-a-deficit-lover-with-a-following.html.
37. ↑ Matthews, Dylan (April 16, 2019). "Modern Monetary Theory, explained". Vox. https://www.vox.com/future-perfect/2019/4/16/18251646/modern-monetary-theory-new-moment-explained.
38. ↑ 38.0 38.1 Mitchell, William (2019). Macroeconomics. London: Red Globe. pp. 84–87. ISBN 978-1-137-61066-9. OCLC 967762036.
39. ↑ Cohen, Patricia (April 5, 2019). "Modern Monetary Theory Finds an Embrace in an Unexpected Place: Wall Street". The New York Times. https://www.nytimes.com/2019/04/05/business/economy/mmt-wall-street.html.
40. ↑ Dooley, Ben (June 5, 2019). "Modern Monetary Theory's Reluctant Poster Child: Japan". The New York Times. https://www.nytimes.com/2019/06/05/business/modern-monetary-theorys-reluctant-poster-child-japan.html.
41. ↑ "Stephanie Kelton Cracks Best Seller List" (in en-US). 2020-06-26. https://news.stonybrook.edu/homespotlight/stephanie-kelton-cracks-best-seller-list/.
42. ↑ 42.0 42.1 Tymoigne, Éric; Wray, L. Randall (November 2013). "Modern Money Theory 101: A Reply to Critics". Levy Economics Institute of Bard College. Working Paper No. 778.
43. ↑ Tcherneva Pavlina R. "Chartalism and the tax-driven approach to money", in A Handbook of Alternative Monetary Economics, edited by Philip Arestis & Malcolm C. Sawyer, Elgar Publishing (2007), ISBN 978-1-84376-915-6
44. ↑ Singh, Devin P.; Thompson, Randal Joy; Curran, Kathleen A. (2021-09-29) (in en). Reimagining Leadership on the Commons: Shifting the Paradigm for a More Ethical, Equitable, and Just World. Emerald Group Publishing. ISBN 978-1-83909-526-9. https://books.google.com/books?id=7pdCEAAAQBAJ&dq=MMT+taxation+spending+inflation+unemployment+austerity+policy&pg=PT342.
45. ↑ "An Update to the Economic Outlook: 2018 to 2028". Congressional Budget Office. Retrieved November 12, 2018.
46. ↑ 46.0 46.1 Fullwiler, Scott T. (2010). "Modern Monetary Theory - A Primer on the Operational Realities of the Monetary System". SSRN 1723198.
47. ↑ Meulendyke, Ann-Marie (1998). ﻿U.S. Monetary Policy and Financial Markets﻿ (Report). Federal Reserve Bank of New York. https://files.stlouisfed.org/files/htdocs/aggreg/meulendyke.pdf.
48. ↑ Ihrig, Jane (August 2020). "The Fed's New Monetary Policy Tools". https://research.stlouisfed.org/publications/page1-econ/2020/08/03/the-feds-new-monetary-policy-tools.
49. ↑ Wray, L Randall: Money and Credit in Capitalist Economies: The Endogenous Money Approach, Edward Elgar Publishing, 1990 ISBN 1-85278-356-7 pp.149,179
50. ↑ Lavoie, Marc: Introduction to Post-Keynesian Economics, Palgrave MacMillan, 2006 ISBN 9780230626300 pp.60–73
51. ↑ Warren Mosler, ME/MMT: The Currency as a Public Monopoly , IT: Uni BG.
52. ↑ "Money multiplier and other myths" Bill Mitchell, 21 April 2009
53. ↑ Kelton, Stephanie (Bell) (2001), "The Role of the State and the Hierarchy of Money", Cambridge Journal of Economics 25 (25): 149–163, doi:10.1093/CJE/25.2.149, https://pdfs.semanticscholar.org/dd8e/7f68625863a1053e298f3ff14f0c33e93152.pdf
54. ↑ Mosler, Warren (2010). Seven Deadly Innocent Frauds. Valance. pp. 60–62. ISBN 978-0-692-00959-8. http://moslereconomics.com/wp-content/powerpoints/7DIF.pdf.
55. ↑ 55.0 55.1 "Do current account deficits matter?" Bill Mitchell, 22 June 2010
56. ↑ Mitchell, William; Fazi, Thomas (2017-09-20) (in en). Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World. Pluto Books. ISBN 978-1-78680-149-4. https://books.google.com/books?id=CEJnEQAAQBAJ&dq="current+account+deficit"+"foreign+sector"+"currency+of+issue"&pg=PT205.
57. ↑ "Modern monetary theory and inflation – Part 1" Bill Mitchell, 7 July 2010
58. ↑ "There is no financial crisis so deep that cannot be dealt with by public spending – still!" Bill Mitchell, 11 October 2010
59. ↑ 59.0 59.1 Kelton, Stephanie (1 March 2019). "Paul Krugman Asked Me About Modern Monetary Theory. Here Are 4 Answers.". https://www.bloomberg.com/opinion/articles/2019-03-01/paul-krugman-s-four-questions-about-mmt?.
60. ↑ 60.0 60.1 Kelton, Stephanie (4 March 2019). "The Clock Runs Down on Mainstream Keynesianism". https://www.bloomberg.com/opinion/articles/2019-03-04/krugman-s-macroeconomics-is-no-match-for-mmt?.
61. ↑ Harvey, John T.. "MMT: Sense Or Nonsense?". https://www.forbes.com/sites/johntharvey/2019/03/05/mmt-sense-or-nonsense/.
62. ↑ "Q:Why Does Government Issue Bonds? Randall Wray: Sovereign government really can't borrow, because what it is doing is accepting back its own IOUs. If you have given your IOU to your neighbor because you borrowed some sugar, could you borrow it back? No, you can't borrow back your own IOUs.". 23 November 2009. https://www.youtube.com/watch?v=4J0j5VwnD7I.
63. ↑ Yeva Nersisyan & L. Randall Wray, "Does Excessive Sovereign Debt Really Hurt Growth? A Critique of This Time Is Different, by Reinhart and Rogoff," Levy Economics Institute (June, 2010), p. 15.
64. ↑ 64.0 64.1 L. Randal Wray, "Job Guarantee," New Economic Perspectives (23 August 2009).
65. ↑ "Quantitative Easing" (in en-GB). https://gimms.org.uk/fact-sheets/quantitative-easing/.
66. ↑ "Bank of England Working Paper Considers Monetary Policy's Effect on Inequality". 2018-04-06. https://positivemoney.org/2018/04/bank-england-working-paper-considers-monetary-policys-effect-inequality/.
67. ↑ Wickens, Mike (2011) (in en). Macroeconomic Theory: A Dynamic General Equilibrium Approach (Second ed.). Princeton University Press. ISBN 978-0-691-15286-8. https://books.google.com/books?id=-HgSRbHEja8C&dq=government+spending+constrained+taxation+borrowing&pg=PA90.
68. ↑ Douady, Raphaël; Goulet, Clément; Pradier, Pierre-Charles (2017-08-29) (in en). Financial Regulation in the EU: From Resilience to Growth. Springer. ISBN 978-3-319-44287-7. https://books.google.com/books?id=0EszDwAAQBAJ&dq=constraint+fiscal+sustainability+debt-to-GDP&pg=PA45.
69. ↑ Salanie, Bernard (2011-11-10) (in en). The Economics of Taxation, second edition. MIT Press. ISBN 978-0-262-01634-6. https://books.google.com/books?id=UYb6AQAAQBAJ&dq=taxation+redistribute+income+automatic+stabilizers+correct+market+failures&pg=PA8.
70. ↑ Hillman, Arye L. (2019-01-10) (in en). Public Finance and Public Policy: A Political Economy Perspective on the Responsibilities and Limitations of Government. Cambridge University Press. ISBN 978-1-107-13631-1. https://books.google.com/books?id=unWIDwAAQBAJ&dq=taxation+necessary+spending+borrowing+public+finance&pg=PA69.
71. ↑ Wray, L. Randall (15 May 2014). "WHAT ARE TAXES FOR? THE MMT APPROACH". https://neweconomicperspectives.org/2014/05/taxes-mmt-approach.html.
72. ↑ Jakob, de Haan (2022-08-12) (in en). Advanced Introduction to Central Banks and Monetary Policy. Edward Elgar Publishing. ISBN 978-1-83910-487-9. https://books.google.com/books?id=nKKCEAAAQBAJ&dq=most+central+banks+single+price+stability+mandate&pg=PA2007.
73. ↑ Souza, Lúcio Vinhas de (2024-07-02) (in en). A Century of Global Economic Crises: Monetary Policy in Search of An Anchor. Springer Nature. ISBN 978-3-031-53460-7. https://books.google.com/books?id=mOEREQAAQBAJ&dq=central+bank+dual+mandate+north+america&pg=PA36.
74. ↑ Wray, L. Randall (2022-09-05) (in en). Making Money Work for Us: How MMT Can Save America. John Wiley & Sons. ISBN 978-1-5095-5427-0. https://books.google.com/books?id=53eHEAAAQBAJ&dq=MMT+interest+rate+setting+exchange+rate+management&pg=PT88.
75. ↑ 75.0 75.1 "FRB Richmond-Aaron Steelman-The Federal Reserves Dual Mandate: The Evolution of an Idea"-December 2011
76. ↑ Schmid, Gunther (2016-09-16) (in en). Labor Market Institutions in Europe: A Socioeconomic Evaluation of Performance: A Socioeconomic Evaluation of Performance. Routledge. ISBN 978-1-315-48331-3. https://books.google.com/books?id=A74YDQAAQBAJ&dq=full+employment+European+active+labor+market+policies&pg=PT85.
77. ↑ Hsu, Carolyn L. (2007-09-03) (in en). Creating Market Socialism: How Ordinary People Are Shaping Class and Status in China. Duke University Press. ISBN 978-0-8223-9042-8. https://books.google.com/books?id=Yj9N58NTG2sC&dq=China+state+directed+employment+creation&pg=PA18.
78. ↑ Cobham, David; Eitrheim, Øyvind; Gerlach, Stefan; Qvigstad, Jan F. (2010-09-16) (in en). Twenty Years of Inflation Targeting: Lessons Learned and Future Prospects. Cambridge University Press. ISBN 978-1-139-49125-9. https://books.google.com/books?id=FuQTVpQBKSAC&dq=exchange+rate+pass-through+inflation+control&pg=PA119.
79. ↑ Reinert, Kenneth A. (2020-08-27) (in en). An Introduction to International Economics. Cambridge University Press. ISBN 978-1-108-47005-6. https://books.google.com/books?id=MEjzDwAAQBAJ&dq=flexible+exchange+rates+independence&pg=PA412.
80. ↑ Haseeb, Khair El-Din; Makdisi, Samir (2014-10-30) (in en). Arab Monetary Integration (RLE Economy of Middle East): Issues and Prerequisites. Routledge. ISBN 978-1-317-59480-2. https://books.google.com/books?id=QhohBQAAQBAJ&dq=currency+pegs+common+oil+exporter&pg=PT121.
81. ↑ Pressman, Steven; Smithin, John (2022-11-30) (in en). Debates in Monetary Macroeconomics: Tackling Some Unsettled Questions. Springer Nature. ISBN 978-3-031-11240-9. https://books.google.com/books?id=0QafEAAAQBAJ&dq=MMT+floating+exchange+rates+monetary+sovereignty&pg=PA194.
82. ↑ Nidhiprabha, Bhanupong (2018-09-21) (in en). Macroeconomic Policy for Emerging Markets: Lessons from Thailand. Routledge. ISBN 978-1-317-23813-3. https://books.google.com/books?id=waxvDwAAQBAJ&dq=current+account+"deficit"+"capital+inflows"&pg=PT247.
83. ↑ Arestis, Philip; Sawyer, Malcolm C. (2006) (in en). A Handbook of Alternative Monetary Economics. Edward Elgar Publishing. ISBN 978-1-84720-280-2. https://books.google.com/books?id=TPa22fYkDSsC&dq=external+debt+vulnerability+foreign+currency&pg=PA406.
84. ↑ Wray, L. Randall (2015-09-22) (in en). Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems. Springer. ISBN 978-1-137-53992-2. https://books.google.com/books?id=pqGkCgAAQBAJ&dq=MMT+trade+deficit+short+term+benefit&pg=PT459.
85. ↑ Cinar, Can (2025-08-06) (in en). Populism and Modern Monetary Theory: Exploring the Rise of Milei in Argentina. Taylor & Francis. ISBN 978-1-040-41695-2. https://books.google.com/books?id=LD1nEQAAQBAJ&dq=MMT+"import-dependent"+inflation&pg=PT136.
86. ↑ Hammond, Gill; Kanbur, S. M. Ravi; Prasad, Eswar (2009-01-01) (in en). Monetary Policy Frameworks for Emerging Markets. Edward Elgar Publishing. ISBN 978-1-84844-919-0. https://books.google.com/books?id=gqsW-jGLo_MC&dq=deep+liquid+bond+markets+efficient+monetary+policy+transmission&pg=PA7.
87. ↑ Andoh, Samuel K. (2014-10-15) (in en). Essentials of Money, Banking and Financial Institutions: With Applications to the Developing World. Bloomsbury Publishing PLC. ISBN 978-0-7391-8954-2. https://books.google.com/books?id=0h4vBQAAQBAJ&dq=developing+countries+market+depth+transmission&pg=PA207.
88. ↑ Nersisyan, Yeva; Wray, L. R. (2024-08-06) (in en). The Elgar Companion to Modern Money Theory. Edward Elgar Publishing. ISBN 978-1-78897-224-6. https://books.google.com/books?id=LT8aEQAAQBAJ&dq=MMT+bond+monetary+vs+financing&pg=PA109.
89. ↑ Nölke, Andreas (2022-05-10) (in en). Post-Corona Capitalism: The Alternatives Ahead. Policy Press. ISBN 978-1-5292-1943-2. https://books.google.com/books?id=IiVuEAAAQBAJ&dq=MMT+central+bank+liquidity+direct&pg=PA54.
90. ↑ Kelton, Stephanie (21 February 2019). "Modern Monetary Theory Is Not a Recipe for Doom". Bloomberg. https://www.bloomberg.com/opinion/articles/2019-02-21/modern-monetary-theory-is-not-a-recipe-for-doom.
91. ↑ Merrifield, John; Poulson, Barry W. (2017-09-28) (in en). Restoring America's Fiscal Constitution. Bloomsbury Publishing PLC. ISBN 978-1-4985-5354-4. https://books.google.com/books?id=3q42DwAAQBAJ&dq=US+automatic+stabilizers+unemployment+insurance+food+stamps&pg=PA7.
92. ↑ Slomp, Hans (2011-09-26) (in en). Europe, A Political Profile: An American Companion to European Politics [2 volumes]. Bloomsbury Publishing USA. ISBN 978-0-313-39182-8. https://books.google.com/books?id=tkPPEAAAQBAJ&dq=European+generous+universal+programs&pg=PA205.
93. ↑ Jha, Raghbendra (2023-01-13) (in en). Macroeconomics for Development: Prognosis and Prospects. Edward Elgar Publishing. ISBN 978-1-78897-786-9. https://books.google.com/books?id=Me-nEAAAQBAJ&dq=developing+countries+automatic+stabilizers&pg=PA66.
94. ↑ Murray, Michael J.; Forstater, Mathew (2017-01-25) (in en). The Job Guarantee and Modern Money Theory: Realizing Keynes's Labor Standard. Springer. ISBN 978-3-319-46442-8. https://books.google.com/books?id=9boHDgAAQBAJ&dq="job+guarantee"+informal&pg=PA81.
95. ↑ Yağcı, Mustafa (2020-09-03) (in en). The Political Economy of Central Banking in Emerging Economies. Routledge. ISBN 978-1-000-16477-0. https://books.google.com/books?id=LyfxDwAAQBAJ&dq=institutions+rule+of+law+independent+central+banks+statistical&pg=PA2011.
96. ↑ Allen, Richard; Hemming, Richard; Potter, B. (2013-08-15) (in en). The International Handbook of Public Financial Management. Springer. ISBN 978-1-137-31530-4. https://books.google.com/books?id=MTohAQAAQBAJ&dq="parliamentary"+"presidential"+systems+fiscal-monetary+coordination&pg=PT183.
97. ↑ Wray, L. Randall (2015-09-22) (in en). Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems. Springer. ISBN 978-1-137-53992-2. https://books.google.com/books?id=YVxaCwAAQBAJ&dq=MMT+tax+collection+central+bank+treasury+coordination&pg=PA2.
98. ↑ Pauly, Ralf (2021-04-30) (in en). Economic Instability and Stabilization Policy: On the Path from Crises to State Directed Economies. Springer Nature. ISBN 978-3-658-33626-4. https://books.google.com/books?id=b0IsEAAAQBAJ&dq=MMT+strong+state+weak+financial+market&pg=PA77.
99. ↑ Hirsch, Moshe (2015-11-05) (in en). Invitation to the Sociology of International Law. Oxford University Press. ISBN 978-0-19-151247-6. https://books.google.com/books?id=1NXNCgAAQBAJ&dq=Germany+inflation+aversion+Weimar+Republic&pg=PA64.
100. ↑ Cho, Dongchul; Ito, Takatoshi; Mason, Andrew (2018) (in en). Economic Stagnation in Japan: Exploring the Causes and Remedies of Japanization. Edward Elgar Publishing. ISBN 978-1-78811-044-0. https://books.google.com/books?id=PR1HDwAAQBAJ&dq=Japan+deflation+concern+1990s+stagnation&pg=PA2.
101. ↑ Chaulia, Sreeram (2014-03-21) (in en). Politics of the Global Economic Crisis: Regulation, Responsibility and Radicalism. Routledge. ISBN 978-1-317-65366-0. https://books.google.com/books?id=ZfcjAwAAQBAJ&dq=emerging+market+fiscal+discipline+1997+Asian+Financial+Crisis&pg=PT24.
102. ↑ Kindley, Randall W.; Good, David F. (2019-07-11) (in en). The Challenge Of Globalization And Institution Building: Lessons From Small European States. Routledge. ISBN 978-1-000-31516-5. https://books.google.com/books?id=UAiiDwAAQBAJ&dq=transition+economies+institution+building+Soviet&pg=PT108.
103. ↑ Wray, L. R.; Armstrong, Phil; Holland, Sara; Jackson-Prior, Claire; Plumridge, Prue; Wilson, Neil (2023-01-10) (in en). Modern Monetary Theory: Key Insights, Leading Thinkers. Edward Elgar Publishing. ISBN 978-1-80220-809-2. https://books.google.com/books?id=UO-nEAAAQBAJ&dq=MMT+often+Japan+low+interest+rates+high+debt-to-GDP&pg=PA204.
104. ↑ Banerjee, Asis Kumar (2023-03-13) (in en). Economic Slowdown in India: An Introductory Analysis. Taylor & Francis. ISBN 978-1-000-84664-5. https://books.google.com/books?id=kQ-pEAAAQBAJ&dq=MMT+hyperinflation+Germany+Zimbabwe+Venezuela&pg=PA137.
105. ↑ Kelton, Stephanie (2020-06-09) (in en). The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy. PublicAffairs. ISBN 978-1-5417-3620-7. https://books.google.com/books?id=JcWWDwAAQBAJ&dq=MMT+US,+Japan,+UK,+Canada&pg=PT1.
106. ↑ Wray, L. R.; Armstrong, Phil; Holland, Sara; Jackson-Prior, Claire; Plumridge, Prue; Wilson, Neil (2023-01-10) (in en). Modern Monetary Theory: Key Insights, Leading Thinkers. Edward Elgar Publishing. ISBN 978-1-80220-809-2. https://books.google.com/books?id=UO-nEAAAQBAJ&dq=MMT+often+Japan+low+interest+rates+high+debt-to-GDP&pg=PA204.
107. ↑ Sweeney, Simon (2023-12-22) (in en). European Union in the Global Context. Taylor & Francis. ISBN 978-1-315-29435-3. https://books.google.com/books?id=x0_oEAAAQBAJ&pg=RA4-PT119.
108. ↑ Espinosa, Eduardo Garzón (2024-03-05) (in en). Modern Monetary Theory: A Comprehensive and Constructive Criticism. Taylor & Francis. ISBN 978-1-003-86028-0. https://books.google.com/books?id=n1XqEAAAQBAJ&dq=Kelton+Greece+state&pg=PT38.
109. ↑ Cinar, Can (2025-08-06) (in en). Populism and Modern Monetary Theory: Exploring the Rise of Milei in Argentina. Taylor & Francis. ISBN 978-1-040-41695-2. https://books.google.com/books?id=LD1nEQAAQBAJ&dq=MMT+foreign+currency+debt+Argentina&pg=PT159.
110. ↑ Chitonge, Horman (2025-04-08) (in en). Reclaiming Economic Sovereignty in Africa: A Natural Resource-based Industrialisation Perspective. Anthem Press. ISBN 978-1-83999-334-3. https://books.google.com/books?id=DIFGEQAAQBAJ&pg=PT20.
111. ↑ Dejuán, Óscar; Paños, Eladio Febrero; Gonzalez, Jorge Uxo (2013-08-21) (in en). Post-Keynesian Views of the Crisis and its Remedies. Routledge. ISBN 978-1-134-05222-6. https://books.google.com/books?id=EbF_AAAAQBAJ&dq=MMT+"Japan"+high+debt+sustainability&pg=PA2002.
112. ↑ Sakai, Yoshikiyo (2024-04-09) (in en). Deflation and Fiscal Deficits: Three Questions About Japanese Economic Policy. Springer Nature. ISBN 978-981-97-0415-6. https://books.google.com/books?id=HMQAEQAAQBAJ&dq=MMT+Japan+zero+lower+bound&pg=PA71.
113. ↑ Koo, Richard C. (2022-08-01) (in en). Pursued Economy: Understanding and Overcoming the Challenging New Realities for Advanced Economies. John Wiley & Sons. ISBN 978-1-119-98427-6. https://books.google.com/books?id=_mB6EAAAQBAJ&dq=MMT+Japan+"consumption+tax"&pg=PA279.
114. ↑ Vidaković, Neven; Lovrinović, Ivan (2021-07-17) (in en). Macroeconomic Responses to the COVID-19 Pandemic: Policies from Southeast Europe. Springer Nature. ISBN 978-3-030-75444-0. https://books.google.com/books?id=PwE5EAAAQBAJ&pg=PA310.
115. ↑ Meyer, Dirk (2022-09-01) (in en). European Union and Monetary Union in Permanent Crisis II: Scenarios for the future of the euro. Springer Nature. ISBN 978-3-658-38646-7. https://books.google.com/books?id=kvGGEAAAQBAJ&pg=PA115.
116. ↑ Wray, L. R.; Armstrong, Phil; Holland, Sara; Jackson-Prior, Claire; Plumridge, Prue; Wilson, Neil (2023-01-10) (in en). Modern Monetary Theory: Key Insights, Leading Thinkers. Edward Elgar Publishing. ISBN 978-1-80220-809-2. https://books.google.com/books?id=UO-nEAAAQBAJ&dq=MMT+import+foreign+currency&pg=PA76.
117. ↑ Sivramkrishna, Sashi (2019-02-08) (in en). Maximum Government, Maximum Governance: Reframing India's Macroeconomic Discourse. Routledge. ISBN 978-0-429-52393-9. https://books.google.com/books?id=PGsPEAAAQBAJ&dq=MMT+fiscal+space+"India"&pg=PA118.
118. ↑ Ehnts, Dirk (2024-04-05) (in en). Modern Money Theory: A Simple Guide to the Monetary System. Springer Nature. ISBN 978-3-031-53537-6. https://books.google.com/books?id=aWf_EAAAQBAJ&dq=MMT+China+infrastructure+monetary&pg=PA96.
119. ↑ "Modern Monetary Theory | IGM Forum" (in en-US). http://www.igmchicago.org/surveys/modern-monetary-theory.
120. ↑ Bryan, Bob (14 March 2019). "A new survey shows that zero top US economists agreed with the basic principles of an economic theory supported by Alexandria Ocasio-Cortez". https://www.businessinsider.com/economist-survey-alexandria-ocasio-cortez-modern-monetary-theory-2019-3.
121. ↑ Black, William K. (14 March 2019). "The Day Orthodox Economists Lost Their Minds and Integrity". https://neweconomicperspectives.org/2019/03/the-day-orthodox-economists-lost-their-minds-and-integrity.html.
122. ↑ Mitchell, Bill (2019-03-19). "Fake surveys and Groupthink in the economics profession". http://bilbo.economicoutlook.net/blog/?p=41823.
123. ↑ Sidman, Josh (25 March 2024). "Silvio Gesell: Beyond Capitalism vs Socialism" Class #5 (Video). Henry George School of Economics. Retrieved 30 April 2025.
124. ↑ Fuders, Felix (April 2023). How to Fulfill the UN Sustainability Goals: Rethinking the Role and Concept of Money in the Light of Sustainability. Cham, Switzerland: Springer Nature Switzerland AG. doi:10.1007/978-3-031-37768-6. ISBN 978-3-031-37767-9. https://link.springer.com/book/10.1007/978-3-031-37768-6. Retrieved 30 April 2025.
125. ↑ Thomas Palley, Money, fiscal policy, and interest rates: A critique of Modern Monetary Theory, http://www.thomaspalley.com/docs/articles/macro_theory/mmt.pdf
126. ↑ 126.0 126.1 126.2 Thomas Palley (February 2014). "Modern money theory (MMT): the emperor still has no clothes". http://www.thomaspalley.com/docs/articles/macro_theory/mmt_response_to_wray.pdf.
127. ↑ Paul Krugman (2011-03-25). "Deficits and the Printing Press (Somewhat Wonkish)". The New York Times. https://krugman.blogs.nytimes.com/2011/03/25/deficits-and-the-printing-press-somewhat-wonkish/.
128. ↑ 128.0 128.1 Robert P. Murphy (2011-05-09). "The Upside-Down World of MMT". Ludwig von Mises Institute. https://mises.org/daily/5260/The-UpsideDown-World-of-MMT.
129. ↑ Leeson, R. (2010-02-03) (in en). David Laidler's Contributions to Economics. Springer. ISBN 978-0-230-24841-0. https://books.google.com/books?id=gR1-DAAAQBAJ&dq="Modern+Monetary+Theory"+Weimar+Germany&pg=PA67.
130. ↑ Stracca, Livio (2025-07-10) (in en). Redefining the Monetary Standard in the Digital Age: Digital Innovations and the Future of Monetary Policy. Springer Nature. ISBN 978-3-031-89840-2. https://books.google.com/books?id=S3puEQAAQBAJ&dq=Zimbabwe+"Modern+Monetary+Theory"&pg=PA32.
131. ↑ Qadri, Hussain Mohi-ud-Din; Bhatti, M. Ishaq (2021-08-11) (in en). Contemporary Issues in Islamic Social Finance. Routledge. ISBN 978-1-000-42616-8. https://books.google.com/books?id=yF5CEAAAQBAJ&dq="Modern+Monetary+Theory"+Venezuela&pg=PA82.
132. ↑ Bird, Allan (2005-10-18) (in en). Encyclopedia of Japanese Business and Management. Routledge. ISBN 978-1-134-65761-2. https://books.google.com/books?id=MTZAOa1u3XoC&dq=Japan+unemployment+1946&pg=PT636.
133. ↑ Yamaguchi, Kaoru; Yamaguchi, Yokei (2025-02-25) (in en). Public Money: The Systems Solution to End National Debt, Banking Crisis, Built-In Inequality, Inflation and Control by CBDC. Springer Nature. ISBN 978-981-97-6564-5. https://books.google.com/books?id=UfBJEQAAQBAJ&dq=Hyperinflation+demand-pull+mmt&pg=PA322.

This article incorporates text by Yasuhito Tanaka available under the CC BY 4.0 license.

## Further reading

Library resources about
Modern Monetary Theory

* * *

* Resources in your library
* Resources in other libraries

* Mitchell, Bill; Wray, L. Randall; Watts, Martin J. (February 2019), Macroeconomics, London: Macmillan Publishers, ISBN 978-1-137-61066-9, https://books.google.com/books?id=kTxBMQAACAAJ
* Innes, A. Mitchell (1913), "What is Money?", The Banking Law Journal, http://www.moslereconomics.com/mandatory-readings/what-is-money/, retrieved 28 January 2009
* Lerner, Abba P. (1947), "Money as a Creature of the State", American Economic Review
* Wray, L. Randall (2000), The Neo-Chartalist Approach to Money, UMKC Center for Full Employment and Price Stability, http://www.cfeps.org/pubs/wp/wp10.html, retrieved 5 October 2009
* Wray, L. Randall (2001), The Endogenous Money Approach, UMKC Center for Full Employment and Price Stability, http://www.cfeps.org/pubs/wp/wp17.html, retrieved 5 October 2009
* Febrero, Eladio (2009), "Three difficulties with neo-chartalism", Journal of Post Keynesian Economics 31 (3): 523–541, doi:10.2753/PKE0160-3477310308, http://www.ucm.es/info/ec/ecocri/cas/Febrero.pdf
* Mitchell, Bill (2009), The fundamental principles of modern monetary economics . Introduction to modern (as of 2009) Chartalism. in "It's Hard Being a Bear (Part Six)? Good Alternative Theory?" (PDF)
* Olk, Christopher; Schneider, Colleen; Hickel, Jason (December 2023). "How to pay for saving the world: Modern Monetary Theory for a degrowth transition". Ecological Economics 214. doi:10.1016/j.ecolecon.2023.107968. Bibcode: 2023EcoEc.21407968O.
* Wray, L. Randall (December 2010), Money, Levy Economics Institute of Bard College, http://www.levyinstitute.org/files/download.php?file=wp_647.pdf&pubid=1344
* Mosler, Warren (March 2014), ME/MMT: The Currency as a Public Monopoly, University of Bergamo, http://www00.unibg.it/dati/corsi/910003/64338-Warren Mosler Bergamo paper March 10.pdf, retrieved 24 January 2019
* Wray, L. Randall (2015). Modern Money Theory : A Primer on Macroeconomics for Sovereign Monetary Systems. Houndmills, Basingstoke, Hampshire New York, NY: Palgrave Macmillan. pp. 137–141, 199–206. ISBN 978-1-137-53990-8.
* Kelton, Stephanie (2020), The Deficit Myth, John Murray, ISBN 978-1-529-35252-8
* Tcherneva, Pavlina (2020), The Case for a Job Guarantee, Polity, ISBN 978-1-509-54210-9

## External links

* January 2012: Modern Monetary Theory: A Debate (Brett Fiebiger critiques and Scott Fullwiler, Stephanie Kelton, L. Randall Wray respond; Political Economy Research Institute, Amherst, MA)
* June 2012: Knut Wicksell and origins of modern monetary theory (Lars Pålsson Syll)
* September 2020: Degrowth and MMT: A thought Experiment (Jason Hickel)
* The Modern Money Network is currently headquartered at Columbia University in the city of New York.
* October 2023: Finding The Money on IMDb is a documentary film about an underdog group of MMT economists on a mission to instigate a paradigm shift by flipping our understanding of the national debt, and the nature of money, upside down.

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