https://www.jacobinmag.com/2019/02/modern-monetary-theory-isnt-helping
This is a very interesting article. MMT has roots in Chartalism, which was a word coined by Georg Friedrich Knapp (1842-1926). Knapp argues that money derives its value from being designated as legal tender and by requiring taxes to be paid in the currency.
Adam Smith made a chartalist observation in The Wealth of Nations: "A prince, who should enact that a certain proportion of his taxes should be paid in a paper money of a certain kind, might thereby give a certain value to this paper money".
In Magic Money Theory, the government doesn't need taxes as a source of revenue: taxes might be useful to tinker with the income distribution, or discourage vices, or to fight inflation by draining purchasing power from the economy. But governments don’t really need the revenue — they can just print the money.
However, proponents of the Marvelous Magnificent Truth don't have a good answer for inflation. Weimar Germany may be an extreme case, but since it’s often brought up by critics of MMT — “won’t all that keystroking lead to inflation, like Argentina or Weimar?” — it’s one for which they need to have a good answer. Wray’s reluctance to face head-on the risks of printing money makes you wonder how confident he really is of his own theory.
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