Question

what is your understafing about MMT? 350 words or less

Answer 1

Modern Monetary Theory (MMT) is a heterodox macroeconomic concept that says monetarily sovereign countries like the United States, the United Kingdom, Japan and Canada are not operationally limited by revenues when it comes to federal government expenditure. In other words, these governments do not need taxation or borrowing for spending because they are the monopoly issuers of the currency and can print as much as they need to.

Traditional thought suggests that such spending would be fiscal risky, because the debt would ballon and inflation would spike.

But according to MMT, a high government debt is not the precursor to the crisis we were led to believe it is, countries like the U.S. can manage much larger deficits without cause for concern, and in reality a small deficit or surplus can be extremely detrimental and cause a recession because deficit spending is what creates savings for people

According to MMT, when it comes to spending, the only constraint the government has is the availability of real resources, such as workers, building supplies etc. If government spending is too high in terms of available resources, inflation will rise unless decision-makers are cautious.