# Modern Monetary Theory (MMT)

*Macro & Economy — Finicade finance glossary*

MMT argues a government issuing debt in its own currency cannot be forced to default, so the real constraint on spending is inflation, not the deficit.

MMT argues that a government issuing debt in its own currency cannot be forced to default, so the real constraint on spending is inflation rather than the deficit. The descriptive part is uncontroversial monetary plumbing. The contested part is the policy conclusion: critics argue that inflation is a far harsher and less controllable constraint than the theory's proposed tax-based restraints acknowledge, and far slower to legislate.

**Also known as:** MMT, modern monetary theory

**Related terms:** [Government Debt](https://finicade.com/glossary/government-debt), [Seigniorage](https://finicade.com/glossary/seigniorage), [Inflation](https://finicade.com/glossary/inflation), [Fiscal Policy](https://finicade.com/glossary/fiscal-policy), [Quantitative Easing](https://finicade.com/glossary/quantitative-easing)

Source: https://finicade.com/glossary/modern-monetary-theory