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Modern Money

Learning the Modern Money system, macroeconomics, aka MMT


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Is MMT a Quantity Theory of Money (QTM)?

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1Is MMT a Quantity Theory of Money (QTM)? Empty Is MMT a Quantity Theory of Money (QTM)? Thu Jan 30, 2020 4:26 pm

Senexx


Admin

Is MMT a Quantity Theory of Money (QTM)?


In a very particular sense, yes MMT is a quantity theory of money. Said a little more precisely MMT is a quantity-theoretic model of changes in the price level.

The differences are:

(1) net financial assets of the non-government sector, rather than traditional monetary aggregates, are the MMTists preferred measure of “money,” and

(2) desired leveraging of the non-government sector is akin to what one might call “velocity.”

In MMT, the two of those together (net financial assets of the non-government sector relative to leveraging of existing income) set aggregate demand and ultimately changes in the price level, at least the changes that are demand-driven.

Further Reading
Scott Sumner Agrees that MMT Policy Proposals are not Inflationary
What is Inflation?
Is Government Debt like My Debt?

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