De quoi la MMT est-elle le nom ?

In the last few years in the U.S. and especially since the publication of Stephanie Kelton’s book, The Deficit Myth (Kelton [2020]) in Europe, the so-called Modern Monetary Theory (MMT) has been gaining prominence in the media and the public. This article looks into the theoretical underpinnings of the MMT and its policy recommendations. Georg Friedrich Knapp’s State Theory of Money (Knapp [1905]) and Abba Lerner’s works provide the two main theoretical underpinnings. Developments in economic literature in the past half-century are essentially not taken into account. Policy recommendations are predicated on a false account as far as monetary policy is concerned and narrowly focus on some dramatic proposals without considering the broader economic environment. They also echo policies undertaken by populist governments, notably in Latin America since WW2, and as such would create the same risks of sovereign defaults and runaway inflation. Overall, MMT is a more a political manifesto than an economic theory.