MMT or Modern Monetary Theory is an approach to economic management developed since the 1990s by Professor Bill Mitchell, alongside American academics like Professor Randall Wray, Stephanie Kelton, and investment bankers and fund managers like Warren Mosler.
It builds on the ideas of a previous generation of economists, such as Hyman Minsky, Wynne Godley and Abba Lerner, whose interpretation of the work of the famous economist J.M.Keynes was very different from that which became dominant by the 1980s.
There are three core statements at the heart of modern monetary theory.
1) Monetary sovereign governments face no purely financial budget constraints.
2) All economies, and all governments, face real and ecological limits relating to what can be produced and consumed.
3) The government’s financial deficit is everybody else’s financial surplus.
“Deficits do matter, but not the way we’ve been taught to believe. We’ve been told that China is our banker and that Social Security and Medicare are pushing us into crisis. We’re told the U.S. could end up like Greece and that deficits will burden future generations. These are all myths.
Deficits can be used for good or evil. They can enrich a small segment of the population, driving income and wealth inequality to new heights, while leaving millions behind. They can fund unjust wars that destabilise the world and cost millions their lives. Or they can be used to sustain life and build a more just economy that works for the many and not just the few.“