Modern Monetary Theory: the good, the bad and the ugly

This chapter discusses three themes related to Modern Monetary Theory (MMT). First, there is an appraisal of the difficult relationship between MMT authors and their critics, in particular those from the post-Keynesian school. The second section recalls the major contributions of MMT authors, notably their detailed analysis of the clearing and settlement system, as well as the large influence that MMT authors have had on public discourse, reigniting the interest for functional finance, and forcing mainstream authors as well as central bankers to respond to the main MMT claims. The third section discusses some of the more controversial views of MMT, such as the assumption that the government and the central bank can be consolidated as a single institution because their actions need to be coordinated, or the claim that a government cannot default if its debt is issued in the domestic currency, whatever the institutional set-up.