Which isn’t a theory, in reality, but a description of how a fiat money system works in the real world. Many also discuss the policy implications as well, with solutions to today’s very broken monetary systems worldwide.
MMT applies to any nation that can issues it’s own currency. It does NOT apply to states in a federation, such as the United States, or to nations in a single currency union, such as the European Union Eurozone.
The fundamental concept is that there are issuers of currency and users of currency, and they are on opposite sides of the national balance sheet. When a government (issuer) spends money, it is received by the private sector (users). Users of currency, such as households, must budget. They must get money before they can spend it. Issuers of currency create the currency. It’s a standard function of government. Issuers *must create and spend the money* before it can tax it or borrow it. Obviously, if it doesn’t there is no money to borrow or tax. It can never run out of what only it creates.
This is a difficult concept for most people. Normally we must acquire money before we can buy anything. For governments though, like balance sheets, the progression should be thought differently.
What do we, the public, wish to accomplish with the resources we have? If we want to build a bridge, we can issue the amount of money required to mobilize the project without worrying about “having enough money.”
There is much more, and this section contains links, quotes and charts explaining MMT.