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MENTAL MODEL · M5040

Modern Monetary Theory, MMT

Modern Monetary Theory, MMT
BusinessHigh supportMacroeconomics
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Version 1.0.0 · Updated 2026-07-30

CORE DEFINITION

It holds that a country with sovereign currency cannot go bankrupt because it can print money to pay off debts. The primary purpose of taxation is not to raise fiscal revenue but to drive demand for currency and control inflation. As long as it does not trigger hyperinflation, deficits themselves are not a problem.

SCAFFOLDING EFFECT

psychology

Reduce cognitive load

Breaking the fiscal shackles. It challenges the housewife-style fiscal view of 'living within one's means'. When resources are idle (unemployment), the government should mobilize resources by printing money (deficits). This is the key to understanding the global flood of liquidity in the post-crisis era.

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A sovereign currency issuer cannot 'run out of money'; its fiscal constraint comes from real resources and inflation, not from tax revenue or borrowing capacity. The mechanism is 'currency as sovereign credit'.

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Source support: Explicit

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    zh.wikipedia.orghttps://zh.wikipedia.org/wiki/%E7%8E%B0%E4%BB%A3%E8%B4%A7%E5%B8%81%E7%90%86%E8%AE%BAZH · Explicit
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