Modern Monetary Theory (MMT)

If you are interested in Positive Money's ideas, it is likely that Modern Monetary Theory (MMT) will also be of interest. MMT and Positive Money are often seen as incompatible. On a personal level, I consider there are far more things that unite us than divide us.

 

Fundamentally, MMT and Positive Money both advocate sovereign money creation, but have different emphases and opinions on surrounding and related issues. It is crucial that MMT and Positive Money find common ground, for if the opposition is divided the status quo is assured!

 

MMT is a lens through which you can view the economic system. It can be used to advocate both left-wing and right-wing policies. It is simply a group of facts which, when viewed as a whole, give a non-mainstream interpretation of the monetary system and the economic system as a whole.

 

MMT fundamentally believes that the creation of money by government via the Bank of England (sovereign money creation) should be undertaken until full employment of all resources is reached. At this point, continuing to create money would be inflationary and hence undesirable.

 

Positive Money believe that the power to create money should be vested in the hands of the Bank of England, and then politicians can then decide how this sovereign money can be spent in a way that results in the government's macroeconomic objectives (e.g. 2% inflation) being achieved.

 

Whilst arguments may arise over the consequences and policy prescriptions that should be followed, it is clear that the fundamental beliefs of Positive Money and MMT are not incompatible.

 

MMT related videos and podcasts


Short explainer (6 mins) on the basics of MMT.


Randy Wray lecture on MMT. Although long (75 mins lecture + 30 mins Q&A), it is a great overview of MMT from one of the founders.


Stephanie Kelton's summer 2018 talk at the British Library as part of Mariana Mazzucato's wider programme of talks. (86 mins)


Great practical and theoretical interview with Stephanie Kelton on Left Out podcast (75 mins)