There is an excellent summary in one easy blog on TRUK of Modern Monetary Theory* (MMT), which should more properly be called Modern Monetary Practice or the Modern Monetary System (MMS).
As usual, below the article are the comments, many of which are highly critical, usually on the basis that if you are stupid enough to believe that you have discovered how the monetary system works and act accordingly you will engender the collapse of the system and economic disaster. This is another sort of ‘project fear’ but without any accompanying evidence. But as one marvellous commentator points out the opposite of MMT or MMS, is Neoliberal Monetary Hypothesis (NMH). It must be a hypothesis because there is no evidence and it is Neoliberal because it just so happens to work best for those supporting it.
Although personally, I cannot see a shred of evidence against the fact that MMS accurately describes how the monetary system works, suppose that in fact, it turns out that it is all wrong? True, that might engender some risks. Those risks would be more likely to fall on those who currently possess most of the money. Yet now the risks seem to fall on those of us who have least, who have, for example, to attend foodbanks, which didn’t even exist a decade ago. If this is where the NMHers have led us, surely most would consider it is a risk worth taking. And why should a monetary system, which is a human social construct, and not a plan handed down by the Almighty, be so difficult to fathom, and so opaque and dangerous? As it is a human construct, obfuscation is at least as likely as high complexity.
I see a comparison with those who opposed the translation of the Bible into the vernacular. It was likely to be highly disadvantageous to those who could understand Latin, and the clergy might, in due course, have to argue the toss with the flock rather than being sure that the flock would be unable to martial salient facts and would have to accept the truth as it was told to them. The opposers were right, of course, which is another reason to beware of those who argue so vociferously against MMS. They fear loss of their control. There is a further, later, comparison where those who do not accept the Church’s Truth are subject to eternal damnation. Or project fear as it is now called.
Meanwhile there is certainly incomplete understanding of the monetary system when everyone nods sagely to the idea that there is no magic money tree, whilst at the same time not disputing that money is a human creation.
Yet, should we not be thinking that if MMT/MMS does, by some remote chance, not describe how the money system works, then we should be altering it pretty quick so that it does? The permission is, after all, ours, and ours alone, to give.
If money is a human invention then its existence is as a social construct. Without society money would not exist. Therefore, by definition, it has a common purpose which entails making it work for all society. If that is not how it is working then money is not fulfilling its raison d’être.
The world came off the gold standard because it didn’t work. If ‘fiat’ money doesn’t work as those who elect the governments that create it, wish, then it has to be made to.
And that, I suggest, is why the NMHers are worried.The magic money tree is at risk of being revealed.
That would show that money can, and should be made to work much better and for everyone.
* Strictly, I suppose, the blog does not include the part of MMT that includes the Job Guarantee about which there is still discussion on its precise merits.