Re-education is difficult. Most economists argue against Modern Monetary Theory (MMT). That said, we must define an economic system as one to serve humanity and not the other way around. Ultimately that is what MMT allows. Learn about it and disregard the critics.
If there is work to be done and there are able-bodied human beings wanting to do it and the only thing that prevents that work, whether it be research, filling potholes, or providing healthcare, because there is no money to do it, then the economic system is a failure. Modern Monetary Theory (MMT) solves that. Simplistic? No. But practical especially given that we know the systemic flaw of our system prevents much.
Economics is not a science. It is behavioral with some basic behavior-based math.
So what exactly is Modern Monetary Theory?
Modern Monetary Theory (MMT or Modern Money Theory, also known as Neo-Chartalism) is a macroeconomic theory which describes and analyses modern economies in which the national currency is fiat money, established and created by the government. The key insight of MMT is that “monetarily sovereign government is the monopoly supplier of its currency and can issue currency of any denomination in physical or non-physical forms. As such the government has an unlimited capacity to pay for the things it wishes to purchase and to fulfill promised future
payments,and has an unlimited ability to provide funds to the other sectors. Thus, insolvencyand bankruptcy of this government isnot possible. It can always pay”.
In sovereign financial systems, banks can create money but these “horizontal” transactions do not increase net financial assets as assets are offset by liabilities. “The balance sheet of the government does not include any domestic monetary instrument on its asset side; it owns no money. All monetary instruments issued by the government are on its liability side and are created and destroyed with spending and taxing/bond offerings, respectively.”
In addition to deficit spending, valuation effects e.g. growth in stock price can increase net financial assets. In MMT, “vertical” money (see below) enters circulation through government spending. Taxation and its legal tender power to discharge debt establish the fiat money as currency, giving it value by creating demand for it in the form of a private tax obligation that must be met. In addition, fines, fees
andlicenses create demand for the currency. This can be a currency issued by the government,or a foreign currency such as the euro. An ongoing tax obligation, in concert with private confidence and acceptance of the currency, maintains its value.
Because the government can issue its own currency at will, MMT maintains that the level of taxation relative to government spending (the government’s deficit spending or budget surplus) is
in realitya policy tool that regulates inflation and unemployment, and not a means of funding the government’s activities by itself. MMT synthesisesideas from the State Theory of Money of Georg Friedrich Knapp (also known as Chartalism) and Credit Theory of Money of Alfred Mitchell-Innes, the functional finance proposals of Abba Lerner, Hyman Minsky’s views on the banking system and Wynne Godley’s Sectoral balances approach. Knapp, writing in 1905, argued that “money is a creature of law” rather than a commodity. At the time of writing the Gold Standard was in existence, and Knapp contrasted his state theory of money with the view of “metallism”, where the value of a unit of currency depended on the quantity of precious metal it contained or could be exchanged for. He argued the state can create pure paper money and make it exchangeable by recognisingit as legal tender, with the criterion for the money of a state being “that which is accepted at the public pay offices”.
Source: Wikipedia.org article, adapted under https://creativecommons.org/licenses/… license.