SMM4 11: modern monetary theory, English Modern Monetary Theory, referred to as MMT, is a relatively extreme macroeconomic theory. To put it simply, MMT believes that the government should use fiscal policy to achieve full employment. The central bank prints money to finance the government's fiscal policy. When the economy reaches full employment, the main risk is inflation. This can be solved by raising taxes and issuing bonds, removing excess money from the system.

From a modern point of view, this "perfect" theory is very "Keynes", which is similar to Keynes' monetary policy. We know that Keynesianism focuses on short-term effects, and Keynes himself said that it makes no sense to look at the long run, and everyone will die in the long run. There must be a big problem with using a monetary policy that is suitable for the short term as a long-term policy. For example, if the government invests in the employment rate to achieve full employment, and at the same time creates a new supply, then where is the demand? Insufficient domestic demand can be exported, and if the global economy fails, the contraction in exports is bound to hit the domestic economy. In addition, economic development maintained by investment is not sustainable. One is that the snowball of debt will roll bigger and bigger. Once the investment is not continued, there may be a semi-suspense project. The other is that the prosperity of money creation is ultimately a mirror flower month. Once the tide recedes, it will be a very painful recession. This is the inevitable price of Keynesianism and MMT.

A permanent proposition in economics is the relationship between the market and the government. In essence, Keynesianism and MMT are both government interventionism, advocating that the government should play an important role in economic development, but in the eyes of market economists, Well-intentioned policies often have negative effects, and local governments with market failures do not necessarily fail. In short, you can't have both a fish and a bear's paw, as is the case with any monetary policy, depending on how policymakers choose.