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MMT101.ORG @learnmmt101.bsky.social · 3h

17. After that I turn to Bill Mitchell, one of the founders of MMT. I look at how he measures capacity in the economy, why he says the answer differs from one sector to the next, and what policy choices follow from that approach. Read on: tinyurl.com/jdj64weu

tinyurl.com

Measuring Economic Capacity: The Data Is Neutral, but How We Interpret It Is Political

Why Modern Monetary Theory challenges conventional approaches to unemployment, inflation and economic capacity

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MMT101.ORG @learnmmt101.bsky.social · 3h

16. Partly because I want to show that there’s no shortage of data to study but also because I want to illustrate how the beliefs of those interpreting the data shape government policies. I will use unemployment data to make my point.

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MMT101.ORG @learnmmt101.bsky.social · 3h

15. and orthodox economists have for their own planning and policy purposes. With that in mind, in my next two sections I give a quick overview of who’s collecting that data, what is being collected and how it is being interpreted.

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MMT101.ORG @learnmmt101.bsky.social · 3h

14. Besides their belief that deficits are intrinsically bad (a belief MMTers don’t share), the assumption behind this question seems to be that MMTers will not have the same access to all of the inflation and capacity related data that current governments

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MMT101.ORG @learnmmt101.bsky.social · 3h

13. But orthodox economists have a follow up question, how will MMTers know when to stop spending: how can they predict when inflation is about to appear on the horizon if they blow through deficits as if they are of no consequence?

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MMT101.ORG @learnmmt101.bsky.social · 3h

12. It is only when resources are scarce that spending results in inflation. You can spend into a sector that has plenty of capacity for growth and inflation will not be the result. Constrain spending and you may just be constraining growth: wasting productive capacity.

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MMT101.ORG @learnmmt101.bsky.social · 3h

11. They are thinking ‘your spending is just going to cause inflation’. MMTers agree that controlling inflation is important but would remind them that there are two sides to that particular equation. And it’s the resources side that is more important.

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MMT101.ORG @learnmmt101.bsky.social · 3h

10. it’s about striking a balance between what is spent and what is brought in, because deficits are often treated as a cause of inflation. So when orthodox economists look at MMT, they see a school of thought that appears to be ignoring the financial ‘constraints’.

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MMT101.ORG @learnmmt101.bsky.social · 3h

9. (because the assumption is that even for currency-issuing governments like the UK and US, money is scarce and taxpayers pay for services). And – among other things (for example, the level of unemployment and what that means for wage levels) –

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MMT101.ORG @learnmmt101.bsky.social · 3h

8. And ultimately use a different ‘lens’ through which to understand the economy. For example, orthodox economists have more of a focus on finance rather than real resources. For them, to an extent, it’s about ‘what can we afford’

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MMT101.ORG @learnmmt101.bsky.social · 3h

7. and decide what policies are appropriate. That is true whether we are talking about orthodox economics or MMT. Orthodox economists and MMTers have different ways of measuring available capacity (for growth or inflation control) and different ways of explaining inflation.

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MMT101.ORG @learnmmt101.bsky.social · 3h

6. The data is one thing, how it’s interpreted is another. And how it is interpreted depends just as much on values and belief systems as the policy choices that follow. Those values and belief systems are embedded within the intellectual frameworks used to analyse the economy

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MMT101.ORG @learnmmt101.bsky.social · 3h

5. That is, what policies do we implement to either grow the economy (sustainably) or to prevent inflation? We might assume that at least the first of these questions is straightforward as all we have to do is look at the data. Unfortunately that is not the case.

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MMT101.ORG @learnmmt101.bsky.social · 3h

4. With real resources at the centre of our thinking the key questions become: How do we know how much capacity is in the economy (or, more specifically, in the different sectors)? And how do we respond to what we find?

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MMT101.ORG @learnmmt101.bsky.social · 3h

3. “Budgeting through an MMT lens would have us replace the artificial budget constraint that tells us to live within our financial means with inflation constraint that tells us to live within our biological and material means.” Kelton, Stephanie. The Deficit Myth

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MMT101.ORG @learnmmt101.bsky.social · 3h

2. currency-issuing governments like the US and UK cannot run out of something they issue themselves (their own currency), the focus must shift from finance to the management of scarce resources. As Stephanie Kelton puts it:

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MMT101.ORG @learnmmt101.bsky.social · 3h

1. Measuring Economic Capacity: The Data Is Neutral, but How We Interpret It Is Political Anyone familiar with Modern Monetary Theory (MMT) will know that, once we understand the basic truth that .

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MMT101.ORG @learnmmt101.bsky.social · 18h

New on MMT101: Measuring Economic Capacity: The Data Is Neutral, but How We Interpret It Is Political Why Modern Monetary Theory challenges conventional approaches to unemployment, inflation and economic capacity mmt101.substack.com/p/measuring-...

tinyurl.com

Measuring Economic Capacity: The Data Is Neutral, but How We Interpret It Is Political

Why Modern Monetary Theory challenges conventional approaches to unemployment, inflation and economic capacity

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MMT101.ORG @learnmmt101.bsky.social · 04/10/2026

New on MMT101: Don’t Panic, Mr Mainwaring! The Myth of the Bond Vigilantes Why the panic over government borrowing and rising bond yields rests on questionable assumptions tinyurl.com/yd6fwffs

tinyurl.com

Don’t Panic, Mr Mainwaring! The Myth of the Bond Vigilantes

Why the panic over government borrowing and rising bond yields rests on questionable assumptions

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MMT101.ORG @learnmmt101.bsky.social · 27/09/2026

New on MMT101: How Government Spending Actually Works and Why It's Different From What You Hear on TV A deep dive into the myths of national debt, the truth about taxes, and the real reason austerity happens tinyurl.com/ym8azc5u

tinyurl.com

How Government Spending Actually Works and Why It's Different From What You Hear on TV

A deep dive into the myths of national debt, the truth about taxes, and the real reason austerity happens

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MMT101.ORG @learnmmt101.bsky.social · 21/09/2026

5. They continue to act as if government issued currency is scarce. As are result we have currency issuing governments pursuing ‘balanced budget’ policies or worse still, striving to run a surplus (i.e, a policy that removes money form the non-government sector).

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MMT101.ORG @learnmmt101.bsky.social · 21/09/2026

4. When a politician utters the ‘how are we going to pay for it’ mantra I’ve yet to see an orthodox economist hold up their hand and say, ‘stop right there, it doesn’t actually work like that…’.

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MMT101.ORG @learnmmt101.bsky.social · 21/09/2026

3. [Granted they haven't 'got' the idea that its value is assigned to it because you have to pay your taxes in it, but you get my point.] And yet, the actual government policies that stem from their collective advice completely betray that understanding.

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MMT101.ORG @learnmmt101.bsky.social · 21/09/2026

2. Even Harvard's standard mainstream textbook openly teaches this underlying reality: "Money that has no intrinsic value is called fiat money because it is established as money by government decree, or fiat.” Macroeconomics by Gregory Mankiw

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MMT101.ORG @learnmmt101.bsky.social · 21/09/2026

1. There is a paradox at the heart of orthodox economics: if asked (and this may surprise you), most orthodox economists will tell you that ‘yes they agree that currency issuing governments are indeed different from households, in as much as they don’t need to earn or borrow before they can spend’.

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MMT101.ORG @learnmmt101.bsky.social · 20/09/2026

New on MMT101: A Balanced Budget Policy is Stupidity Writ Large Constraining government spending as a policy goal is misguided, illogical and can lead to economic instability I think you will like this one. :-) tinyurl.com/2wu7hfab

tinyurl.com

A Balanced Budget Policy is Stupidity Writ Large

Constraining government spending as a policy goal is misguided, illogical and can lead to economic instability

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MMT101.ORG @learnmmt101.bsky.social · 13/09/2026

3. Stabilisers are good - and automatic stabilisers are even better. Automatic stabilisers for the economy? Yes, that sounds like a good idea to me. In this week’s article I intend to examine what that phrase means and what Modern Monetary Theory (MMT) has to offer

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MMT101.ORG @learnmmt101.bsky.social · 13/09/2026

2. Who doesn’t like stabilisers? I suspect everyone who hears the word remembers either the first time they rode a bike with the stabilisers on it or, if they have a child, they remember their child’s first go on a bike.

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MMT101.ORG @learnmmt101.bsky.social · 13/09/2026

1. New on MMT101: Automatic Stabilisers for the Economy: What Are They and What Does MMT Bring to the Party Unemployment payments or the Job Guarantee: which one does the best job of stabilising the economy?

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MMT101.ORG @learnmmt101.bsky.social · 06/09/2026

8. constraint on government spending is inflation." The Deficit Myth (p. 9) – Stephanie Kelton "MMT emphasizes the difference between a sovereign currency issuer and a sovereign currency user." The ‘Kansas City’ Approach to Modern Money Theory – L. Randall Wray, 2020

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MMT101.ORG @learnmmt101.bsky.social · 06/09/2026

7. Second, what is its core message? On that point, I’m always happy to hear from Stephanie Kelton and L. Randall Wray, "MMT demonstrates that the federal government is not dependent on revenue from taxes or borrowing to finance its spending and that the most important

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MMT101.ORG @learnmmt101.bsky.social · 06/09/2026

6. The focus is on the use of money to provide the state with resources. MMT thereby describes how money is created and how it is removed from circulation." Modern Money Theory: A Simple Guide to the Monetary System p. 150 – Dirk Ehnts

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MMT101.ORG @learnmmt101.bsky.social · 06/09/2026

5. There is no single definition, however, for our purposes, I will defer to economist Dirk Ehnts for a description of its core area of study. "MMT is a theoretical lens through which we view the monetary system from the perspective of the state.

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MMT101.ORG @learnmmt101.bsky.social · 06/09/2026

4. These introductory notes give you some history of the development of MMT and a bit of context that explains why MMT focuses on these particular topics (i.e. the ones I listed below). First, it would be useful to answer the question, what is MMT?

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MMT101.ORG @learnmmt101.bsky.social · 06/09/2026

3. I will point to articles I've previously written about whatever I happen to be addressing. The main areas of study that MMT concerns itself with are listed below, but before we get to that, there are a few other things (five of them) I think are important to mention.

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MMT101.ORG @learnmmt101.bsky.social · 06/09/2026

2. and what topics are considered to be part of the discipline. I cover quite a lot of ground, but even so, it is impossible to address every topic in great detail in a single article: so, whenever appropriate,

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MMT101.ORG @learnmmt101.bsky.social · 06/09/2026

1. New on MMT101: A ‘Short’ Introduction to Modern Monetary Theory (MMT): What Is It & What Makes It Useful? In this week’s article my goal is to give you an introduction to MMT: how it started, who was involved, what it is, what’s unique about it,

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MMT101.ORG @learnmmt101.bsky.social · 31/08/2026

4. However, they sit at the very top of the liquidity tree because they are used to settle debts between banks and with the central bank.] Base money is also referred to as high-powered money or vertical money (the term used by MMT economists who contrast it with horizontal

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MMT101.ORG @learnmmt101.bsky.social · 31/08/2026

3. Physical currency in circulation (coins and notes), physical cash held by banks in their tills and vaults and central bank reserves. [Note, unlike physical cash, central bank reserves can’t be used directly to buy goods and services.

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MMT101.ORG @learnmmt101.bsky.social · 31/08/2026

2. where I explained that money is categorised by how ‘liquid’ it is. That is, how easily can we use it to buy things, to pay for services, or to settle debts. In part one I focused on the most liquid form of money, called base money (also known as M0), defined as:

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MMT101.ORG @learnmmt101.bsky.social · 31/08/2026

1. New on MMT101: Narrow money explained – and why orthodox economists and Modern Monetary Theory (MMT) economists look at it differently I started my exploration of the money supply in ‘The Money Supply and The Role of Central Bank Reserve Accounts - Part 1: Base Money’,

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MMT101.ORG @learnmmt101.bsky.social · 25/08/2026

4. And secondly I will demonstrate why understanding this simple idea makes the conventional view of ‘the dangers of our national debt’ sound both absurd and, a worst, criminally negligent. Let’s get started. tinyurl.com/c9t3ae6s

tinyurl.com

MMT Basics: Sectoral Balances - A Beginners Guide

Modern Monetary Theory – via Economist Wynne Godley – provides a beginner-friendly introduction to understanding deficits, surpluses and the ‘national' debt

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MMT101.ORG @learnmmt101.bsky.social · 25/08/2026

3. But don’t worry, this is not going to be a complex, data filled post: in fact, it only has two sections: Firstly, I will gently guide you through the basics ideas from simple analogy to real world application.

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MMT101.ORG @learnmmt101.bsky.social · 25/08/2026

2. If there were prizes going for the most opaque piece of economic jargon ‘sectoral balances’ would be my winner: without context the phrase means nothing. So, my aim in this article is to reveal its simplicity and in the process convince you of its power.

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MMT101.ORG @learnmmt101.bsky.social · 25/08/2026

1. The idea of sectoral balances is simple, yet many people find it difficult to get their head around it. I know that because I found it difficult myself when first encountering it. I think maybe I was thrown by the name.

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