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MODERN MONETARY THEORY: THE BASICS by L. Randall Wray
MMT reaches conclusions that are shocking to many who’ve been indoctrinated in the conventional wisdom. Most importantly, it challenges the orthodox views about government finance, monetary policy, the so-called Phillips Curve (inflation-unemployment) trade-off, the wisdom of fixed exchange rates, and the folly of striving for current account surpluses.
For most people, the greatest challenge to near-and-dear convictions is MMT’s claim that a sovereign government’s finances are nothing like those of households and firms. While we hear all the time the statement that “if I ran my household budget the way that the Federal Government runs its budget, I’d go broke”, followed by the claim “therefore, we need to get the government deficit under control”, MMT argues this is a false analogy. A sovereign, currency-issuing government is NOTHING like a currency-using household or firm. The sovereign government cannot become insolvent in its own currency; it can always make all payments as they come due in its own currency.
http://neweconomicperspectives.org/2014/06/modern-money-theory-basics.html
MMT reaches conclusions that are shocking to many who’ve been indoctrinated in the conventional wisdom. Most importantly, it challenges the orthodox views about government finance, monetary policy, the so-called Phillips Curve (inflation-unemployment) trade-off, the wisdom of fixed exchange rates, and the folly of striving for current account surpluses.
For most people, the greatest challenge to near-and-dear convictions is MMT’s claim that a sovereign government’s finances are nothing like those of households and firms. While we hear all the time the statement that “if I ran my household budget the way that the Federal Government runs its budget, I’d go broke”, followed by the claim “therefore, we need to get the government deficit under control”, MMT argues this is a false analogy. A sovereign, currency-issuing government is NOTHING like a currency-using household or firm. The sovereign government cannot become insolvent in its own currency; it can always make all payments as they come due in its own currency.
http://neweconomicperspectives.org/2014/06/modern-money-theory-basics.html
