Modern Monetary Theory (MMT)

Modern Monetary Theory (MMT) is an economic framework that challenges traditional views on government spending, debt, and inflation. According to MMT, sovereign governments that issue their own fiat currencies are not constrained by revenue when it comes to spending. This means that such governments can create and spend money freely to achieve economic goals, such as full employment and infrastructure development, without the immediate need to balance budgets or accumulate debt in the traditional sense. MMT proponents argue that the real limitation to government spending is inflation, not the size of the deficit or national debt.

The primary idea behind MMT is that a government with its own currency can never run out of money in the same way that a household or business can. Because the government controls the currency, it can always generate more to fund its programs. MMT suggests that instead of focusing on reducing deficits, governments should prioritize economic stability and public welfare, using money creation as a tool to achieve these goals. For example, MMT advocates for using government spending to address unemployment by funding job programs, which can stimulate economic activity without necessarily causing inflation.