Modern Money Theory -- must read! (1/16/15)

I've discussed MMT previously, but have seldom come across as succinct and complete an explanation of Modern Money Theory as this. Here's an excerpt:

Given all this, the radicals in MMT circles are coming to see government borrowing, and the frighteningly large numbers it produces in the public accounts, as an outdated practice that should be dispensed with entirely in favour of pure deficits and direct central bank crediting of treasury accounts:

The chief remaining role of public borrowing in our time is to bamboozle the public, and to obscure the true nature and effects of government fiscal and monetary operations under a bewildering maze of bookkeeping ink and financial legerdemain. Eliminating public borrowing, and replacing it with operations that are simpler, more direct and more transparent, would advance the cause of informed democratic debate over public spending and taxation. Above all, the change would eliminate needless obscurity and confusion and help us all understand exactly whose bread is being buttered by the budgetary decisions made by politicians. (Kervick, 2012)

The overwhelming conclusion of modern monetary theory is that there is no inherent financial limit to the spending of a monetarily sovereign government. Of course, such spending has consequences in the real economy, impacting inflation, interest rates, capital formation, and so on, and sustained over-spending beyond full employment and real production capacity is a certain path to hyperinflation. But MMT follows Keynes in regarding ‘true inflation’ as being reached in ‘the situation where additional spending must cause inflation because the elasticity of output has fallen to zero when all resources are fully employed’ (Tymoigne and Wray, 2013, 18). Today, with 48 million people unemployed across the OECD and so much capital lying idle, we are very far indeed from such a situation (OECD, 2014, 11).
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I encourage you to read the whole thing by clicking the link. It's a little long, but describes essential technology to get out of living in a plutocracy, and the misguided allegiance to the banking sector that continues to plague us.