Of course this is MMT

Peter A. McKay
3 min readFeb 8, 2022


So what if Modern Monetary Theory isn’t being perfectly implemented? America’s current economic policies are the closest we’ll get in real life.

Photo by Andre Taissin via Unsplash

This doesn’t always happen in newspaper journalism, but the headline on Jeanna Smialek’s latest story in the New York Times about economics professor Stephanie Kelton really does capture the jist of the copy nicely:

Is This What Winning Looks Like?

Kelton is the most well-known proponent of Modern Monetary Theory (MMT), which holds that government deficits don’t really matter, and the natural level of official interest rates should be zero for a country that can borrow in its own currency. Thus governments in such a position should spend freely on social programs or whatever else they want.

MMT has been around awhile — and isn’t well-regarded by the majority of economists — but it has effectively gotten a real-world tryout the last few years here in America during the COVID crisis. No one in Washington will admit outright to practicing MMT, mind you. But if you look at their actions during the pandemic, it all pretty much fits the bill: low interest rates (so far), big deficits, and heavy spending to stem the economic fallout of citizens staying at home to avoid the virus.

More recently, there have been signs inflation is going haywire in the US. For years, this is pretty much what MMT skeptics (ahem) have said would be the result of actually implementing MMT.

And this is where that somewhat arch New York Times headline comes into play. In herstory, Smialek pointedly addresses the question of whether recent inflation should discredit MMT.

The good professor says no, of course, and offers what sounds like a talking point we’re likely to hear more often over the next few months:

Ms. Kelton and her colleagues make clear that the pandemic relief packages did not follow one of M.M.T.’s key tenets — they did not try to account for resource constraints ahead of time. In an M.M.T. world, the Congressional Budget Office would have carefully analyzed possible inflation ahead of time, and lawmakers would have tried to offset any strain on available workers and widgets with stabilizing measures and tax increases.

That’s the best the MMTers can offer? Really? That Congress — a deeply and obviously flawed institution if ever there was one — didn’t implement their ideas perfectly enough?

News flash: Neither Congress nor any other government has ever implemented any economic theory with 100% perfection. If you really wan’t to nitpick, you could also say there’s never been a truly perfect implementation of Keynesian policy or Austrian School policy or Marxism either.

But so what? If your theory doesn’t work via the politicians that actually exist in real life, then what good is it, really? Likewise, if your theory gets implemented with even, say, 70–90% accuracy through a flawed process run by human beings, that’s about as explicit a test as it’s ever going to get.



Peter A. McKay

I publish the newsletter #Web3Weekly. Former Head of Content & Writer Development at Capsule Social. Other priors: WSJ, Washington Post, and Vice News.