MMT is not really a theory except in the same vein that gravity is also still a theory in scientific terms. It is the result of some major deep dives into our monetary system to place each function in its proper order and provide a more realistic description of the purpose of each. This was initiated when a successful bond trader noticed that almost all market reactions to currency spending failed to follow what one would expect if the standard concept of spending and taxation applied. His name is Warren Mosler and he ended up teaming with several macroeconomists in academia to provide a better way to describe our money and its function in the economy.
He wrote a book that is a very good place to start. The Seven Deadly Innocent Frauds of Economic Policy that is available in pdf here. He later followed that up with a more detailed paper and provided some historical context. That paper, Soft Currency Economics, is available here. A current collaborator of Warren’s was recruited when she challenged his theory, particularly at the point where he claimed that the government is entirely self-financing and neither needs nor uses “revenue” from any source to spend. Since much of his theory was anchored in this assertion, she took on the task of following a dollar from its point of entry into the private sector to its destruction upon its entering the government sector.
Her paper totally supported Warren and can be found here. This is a bit of a deeper dive into the details of economics than most can understand, so it is best saved for later in the learning process. However, it did support another economist from a much earlier time, Beardsley Ruml. Beardsley was the chairman of the New York Fed at one time and wrote his paper “Taxation For Revenue Is Obsolete” in ’45 after we left the gold standard domestically. That is a bit of an easier read, although still wonky, and can be found here.
The woman referred to here is Dr. Stephanie Kelton, currently a fellow at the Levy Institute where she teaches post grad macroeconomics. She has also done consulting work for the US Senate budget committee and is currently the econ advisor to Sen Bernie Sanders, as she was in ’16. She also occupies a board seat with the Sanders Foundation and consults worldwide. She has produced many videos of her lectures and interviews that are easily found on YouTube, but the easiest to understand is her “Angry Birds” video of a talk she gave while she was the econ Chairperson at the University of Missouri in Kansas City. This is likely the best introduction of MMT available to the novice non-economist who is interested in bigger pictures more than formulas and wonky math. That video is here.
