What is the Efficiency of the Modern Monetary Theory? (Speech Presentation Sample)
Speech notes on the Efficiency of the Modern Monetary Theorysource..
Title: What is the Efficiency of the Modern Monetary Theory?
General Purpose: To inform
Specific Purpose: To explain the efficiency of the Modern Monetary Theory
The modern monetary theory argues that countries can print their own currencies as much as they need and not run out. The modern monetary theory is a heterodox economic framework that states that countries with monetary sovereignty can borrow, tax and spend fiat money and are not constrained by money when it comes to spending CITATION Kin20 \l 1033 (King, 2020). The theory often relates with the supporters of expanding the fiscal policy that is financed by creating money. The modern monetary theory policy also guarantees federal jobs. Many economists are dismissive of the theory because it is a liquid trap and irrelevant. However, as long as there is no inflation, the modern monetary theory will work. The modern monetary theory is now a topic of major debate among economists.
* Modern Monetary Theory Efficiency
The modern monetary theory supports the view of fiscal policy, but offers a unique view on the role of government spending and zero-default risk on the local currency denominated government debt CITATION Shi19 \l 1033 (Shirai, 2019). The theory argues that the government cannot default on the currency denominated debt because the sovereign government is the only supplier of its currency. Therefore, the government needs to increase its public spending in the correspondent local currency. The modern monetary theory claims that expanding fiscal policy is sustainable until the emergence of inflationary risk, which can be controlled by increasing taxes CITATION Shi19 \l 1033 (Shirai, 2019). Taxes is treated as a tool of adjustment and not inflation. Tax may also be used to raise public demand for the currency.
Countries like Japan use the modern monetary theory, which proves that the theory works. Despite Japan having a high public debt, Japan’s economy is progressively recovering, and it has a high standard of living CITATION Ham19 \l 1033 (Hamada, 2019). Japan’s expansion of its fiscal policies have not led to a surge in inflation, and there is no need to increase consumption tax. The United States of America uses the traditional monetary theory, but Japan is at par with USA with a gross debt –debt-GDP of 240% CITATION Ham19 \l 1033 (Hamada, 2019). Japan is doing much better than Germany and France due to its economic recovery.
* MMT stabilizes deteriorating markets
* MMT increases public spending on healthcare, education and security
* MMT increases the government spending on infrastructure
* MMT enable the government to invest in undeveloped countries
* MMT improves the standards of living
* MMT may lead to inflation which needs to be kept low for the theory to work
* MMT may increase taxation to curb inflation
* MMT increased market volatility
Modern monetary theory