What is the meaning of modern monetary theory?

Modern Monetary Theory states that if a government borrows in its own currency it will never be able to default on its liabilities as it can easily print more money and repay its debt. People who support the modern theory say that governments should enhance their social spending via policies like universal basic income and other types of social welfare programmes and not spend time thinking about their fiscal deficit. On the contrary, the people who criticize the monetary theory state that the adoption of this theory will lead to greater price inflation which means an increase in the burden of indirect taxes on the citizens.

Published: June 6, 2019 | Modified:June 6, 2019

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