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Are We Living in an MMT World? Not Yet

Sure, Congress wrote some giant checks during the pandemic. But the architects of Modern Monetary Theory say tolerance for deficits and spending is only part of their mission.

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Illustration: Gwendal Le Bec for Bloomberg Businessweek

In the pandemic, the U.S. government has spent money on a scale not seen since World War II—without worrying too much about how it would pay the bills. That looked to some people like the triumph of Modern Monetary Theory.

A newish school of thought that wants to rehabilitate budget deficits—and get policymakers thinking more boldly about what they could achieve with public money—MMT burst out of obscurity a few years ago. It’s now regularly name-checked by top officials and big-name academics, though disapprovingly more often than not. Yet when those same people set out their own ideas about the economy, they often sound a bit more MMTish than they used to. Wall Street, meanwhile, has put out plenty of reports arguing that governments are practicing some form of MMT, for better or (usually) worse.