New Economic Perspectives has the article Paying for Lunch – MMT Style, MMT being Modern Monetary Theory, and the paying for lunch has to do with the common aphorism, “There is no free lunch.” The article starts of with some criticisms of MMT before it gets to the definition below:

Many of the key ideas of Modern Monetary Theory go back to the years during and immediately following the Great Depression and the Second World War, when great thinkers and public servants applied bold, creative thinking and practical problem solving to the daunting economic and organizational challenges of their times, and helped their societies overcome systemic failure, triumph over threats and adversity, and achieve renewed optimism and growing prosperity. One of those thinkers was Abba Lerner, who developed the concept of functional finance, which he described this way in his paper “Functional Finance and the Federal Debt”:

The central idea is that government fiscal policy, its spending and taxing, its borrowing and repayment of loans, its issue of new money and withdrawal of money, shall be undertaken with an eye only to the results of these actions on the economy and not to any established traditional doctrine what is sound and what is unsound.

Lerner then articulated two “laws of functional finance”, which I think still very well capture the spirit of the MMT approach to economic policy.  The two laws are given as follows:

The first financial responsibility of the government (since nobody else can undertake that responsibility) is to keep the total rate of spending in the country on goods and services neither greater nor less than that rate which at the current prices would buy all the goods that it is possible to produce.

…

The second law of functional finance is that the government should borrow money only if it is desirable that the public should have less money and more government bonds, for these are the effects of government borrowing.

Read the rest of the article to get the full impact. It might blow your mind.