The New Economics Perspectives web site has this very interesting article, Are There Spending Constraints On Governments Sovereign in Their Currencies?.
The discussion is about “Governments sovereign in their own currency.” In other words a government that borrows in terms of its own currency and only accepts payments in terms of its own currency.
The counter-narrative of Modern Monetary Theory (MMT) is that such a currency issuer can never involuntarily run out of money, though it can default voluntarily from an excess of stupidity. And because such nations can’t run out of money and can buy anything for sale in their own borders, including all labor resources, that means that their governments can spend what they need to spend to help solve the problems they encounter. They can afford job guarantees for anyone wanting full-time work at a living wage with a full package of fringe benefits, universal single-payer health insurance for all, a first class educational system, re-inventing their energy foundations, cleaning up their environments, re-creating their infrastructure, and doing anything else necessary to create good, democratic societies. For Governments sovereign in their own currencies, running out of money is never an issue. The real issues are resource constraints, political constraints, and constraints of poor decision making. But they are not fiscal in nature.
The fact that “such nations can’t run out of money and can buy anything for sale in their own borders” will be hard to accept for a lot of people. The reason they cannot accept it amounts, “well, it just can’t be true.”
If you follow the link to the article, you will see lot’s of explanations of why it can be true, but if you just firmly believe that it can’t, then what more is there to be said?
Such discussions remind me of one I had with my father shortly after I started studying physics at MIT. I told him that the crack of the whip is the sound of the tip breaking the sound barrier. He refused to believe that. His explanation was that nothing that is on the ground can break the sound barrier. Only things that can fly can break the sound barrier.
Under some prescribed circumstances, the speed of sound is 768 mph. If you can go faster than that, you break the sound barrier. It doesn’t make any difference whether or not you gain the speed because of friction against the ground or you are using one of Newton’s laws of motion in air.
My father could never accept that, because, well just because it was so obvious.