Welcome to the first diary of the Money and Public Purpose group blog on Daily Kos. We are a group of individuals who follow an economic school of thought called Modern Monetary Theory or MMT for short.
It's a relatively new "post-keynesian" (despite some of the ideas it's based on actually influenced Keynes's theories) economic school of thought that starts with basic facts like "government can create all the money it wants" and ends with a way we could have both stable prices(i.e. low inflation) and truly FULL employment in this country. So if that sounds like a really good thing to do, or you just want to learn new ways to demolish false conservative talking points, I highly encourage you to follow this group, Money and Public Purpose, as we do more diaries on Modern Monetary Theory.
Modern Monetary Theory is probably one of the worst named concepts since the “Healthy Forests Act“. The reason is because it’s neither modern, nor a theory, and is only tangentially about money.
Modern Monetary Theory or MMT isn’t a theory. It is a recognition of an unassailable fact. The U.S. federal government (along with most sovereign nations) does not need to collect taxes before it spends money. When it comes to taxing and spending by the federal government most people believe it works the way their high school civics teacher explained it to them: that the government levies a tax and then uses that tax money for roads, guns, schools, etc… However, this is not the case. The federal government, and only the federal government, can create money. Most people refer to this as “printing money” even though, in today’s world it’s more like numbers in a computer database. If congress wanted to, they could create 8 trillion dollars. They don’t of course. Instead they delegated money creation to the federal reserve. They did this for good reason, but we’ll come back to that. The important thing to understand is that congress is never constrained by tax revenue.
Modern Monetary Theory isn’t a new or “modern” concept. It has it’s intellectual roots in chartalism which has been around for nearly a 100 years. It predates both keynesian economics, and monetarist economics.
Modern Monetary Theory isn’t about money, so much as it is about fiscal policy in a floating, fiat money system. Put it all together and it should be called Your Great Granddad’s Fiscal Facts. Oh well, too late to rename it, I suppose.
While the idea of MMT isn’t as popular as Keynesian or monetarist economics, it is not one subscribed to by just crackpots either. It is embraced by modern economic professors, financiers, and even or or two well-known economists. It is also not confined to only American economists. The concept has grown enough that Paul Krugman even addressed(but not embraced) it in one of his New York Times columns.
I hope you'll follow the group. I can't guarantee you'll be fully convinced of MMT's merits, but I guarantee you'll learn more about government spending and new ways to demolish right-wing talking points. After a while maybe you'll become a subscriber to the "theory" too.