Modern Monetary Theory

MMT, an abbreviation of Modern Monetary Theory, and previously known as Mosler Economics, is a Chartalist economic school spearheaded by hedge fund manager and perennial independent political candidate Warren Mosler. This economic school argues that in modern, developed countries, taxes are the ultimate source of unemployment, and that unemployment can therefore be eliminated through decreasing taxes or increasing spending directed toward job growth. According to MMT, the control and availablility of real resources are the main determinants of inflation from government deficits.

MMT argues that governments who are the sole issuer of their currency cannot default on that currency, and that the national federal debt is just a record of public sector savings. MMT therefore dismisses that a growing US federal government debt is a threat to the solvency of the nation.

MMT also argues that participation in modern governments with market economies is a result of a violent imposition of taxation, and that without a violent threat of taxation, no one would want to work for the currency, and the value of the government's currency would go to 0. This is related to the reason that MMT believes a 'universal basic income' or similarly generous welfare programs would cause hyperinflation, because they believe it would remove the motivation to work for the currency and therefore value it.

Paul Krugman, a highly publicized Keynesian economist argues that MMT is not substantially different from Keynesian and therefore mainstream economic theory. MMT proponents argue that MMT has differing views from Keynesian and modern economics. MMT argues that mainstream economics ignores that the US government and similar governments determine inflation through price setting. Second, MMT states that the aforementioned federal governments never spend taxpayer revenue and always dispose of it, which they argue is different than mainstream theory. MMT also argues that mainstream economics overemphasizes the role of the federal reserve in it's ability to stimulate the economy in a non-inflationary manner.

Policy prescriptions from proponents

MMT argues that it is simply a description of the real world, and not a prescriptive theory. Publicized MMT proponents are close circles however and they often share policy recommendations, which they insist is their own personal opinion informed by MMT and not an "MMT opinion" per se. Mosler, the founder of the school, is notably against corporate taxation, believing that it punishes the economy and worker for little reason. Warren advocates for an elimination of the income tax. Most prominent MMT proponents primarily push a national transition jobs program which pays the minimum wage, to transition as much of the unemployed into wage work as possible.