23rd September 2026
Modern monetary theory, or MMT, is frequently attacked for supposedly saying that governments can print unlimited amounts of money, ignore inflation, abandon taxation, accumulate endless debt and destroy the value of their currency.
But is that actually what MMT says?.
In this video, I explain what modern monetary theory is and address most of the common criticisms made of it.
MMT starts with a simple observation: a government such as that of the UK, which issues its own currency, creates money when it spends. Taxation and government borrowing perform important economic functions, but they do not provide the pounds that the government needs before it can spend.
That does not mean there are no limits on government spending. The limits are real resources: people, skills, energy, materials, productive capacity and the things actually available to buy. Push demand beyond those limits and inflation can result.
That distinction between financial constraints and real resource constraints is at the heart of MMT.
I also look at taxation, government debt, exchange rates, inflation, Zimbabwe and Weimar Germany, and the claim that MMT is inherently left-wing and dismiss all of the nonsense talked about MMT when it comes to these issues.
MMT is not a political manifesto. It is an explanation of how money works. Understanding that changes the questions we should be asking about what governments can do.
Perhaps most importantly, though, I say this:
"You can no more do MMT than you can do gravity. MMT explains how money works. Gravity explains why we are stuck to this planet. You can either understand MMT, or you can misunderstand it, but you can’t do it because it is what is."