All of the prominent MMT economists whose work I have read and studied would express a far more nuanced view of deficits than the simplistic view seemingly embodied in the silly statement above. What the MMT economists have correctly pointed out is that deficits can be
both too high AND too low, depending on factors such as what level of savings is desired in the private sector, etc. This is far different from the nutty, over simple idea that deficits don't matter or any level of deficit for any length of time is fine, and that so far as I'm aware no economist holds to. .
There are still plenty of economists around whose knowledge outside their own specialty area has grown obsolescent over time because they haven't had the time to keep up to date with developments of minor concern to them. . Of course that doesn't stop them from expressing an opinion.
I find the "Investopedia" definition of MMT particularly egregious in its errors and over simplification. It gives a very misleading and incorrect picture of MMT. It also overstates somewhat Warren Moslers contributions.
I don't want to speak for the MMT economists who can speak for themselves, but I will give some idea of the nuances involved by quoting something the well-regarded mid 20th Century economist Abba Lerner wrote. (I consider Lerner to be one of the fathers of Modern Money Theory.)
Lerner wrote:
The first financial responsibility of government (since no body 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 current prices would buy all the goods that it is possible to produce.
An interesting corollary is that taxing is never to be undertaken merely because the government needs to make money payments ... Taxation should therefore be imposed only when it is desirable that the taxpayers shall have less money to spend.
--Lerner, Abba, Social Research, Vol. 10 pgs 38-51 (1943).
Lerner's second law of Functional Finance is that the government should only borrow when it is desirable that the public should have less money and more bonds. This is the origin of the MMT assertion that the purpose of taxes and bonds is not to finance spending. MMT economists regard taxes as a means of removing excessive private income, and bonds as an interest bearing alternative to money.
If the government finds that neither taxes nor additional bonds are needed , Lerner would have had the government print new money to meet its needs. This may be the origin of the rather crazy incorrect assertion that MMT economists believe that any time the government wants to spend it should simply create as much money as it wants. But as we see from what Lerner wrote, creation of new money is to be carefully balanced against the need for taxes and bonds and tempered by productivity. These are not at all simple concepts to fully digest and appreciate.
Lerner's ideas were developed further over the latter half of the Twentieth Century by Economists such as Hyman Minsky, Randall Wray, Bill Mitchell, Warren Mosler and many others.
In the 1990s as the EMU and ECB was being formed among the European countries, the MMT economists were prescient in their analysis of the flaws of the EMU. They predicted that the EMU, which is an incomplete Monetary Union, as there is no Euro Bond, would result in budget restraint within individual countries that lacking their own currency they would be powerless to gain relief from. They predicted the result would be a "disinflationary bias that [would lock] the whole of the EMU into a depression it is powerless to lift."* The present EMU is like a United States where there is a Fed, and a single currency, but no single sovereign bond, and each State has its own Treasury and fiscal policy. Is it surprising that the EMU finds itself in an economic malaise that it seems unable to extract itself from? I don't think so.
-- See, L. Randall Wray in "Understanding Moern Money", Pg. 92, Edgar Elgar (1998).
*Godley, Wynne, "Observer", August 31st, 1997, Business Section, pg. 2.
