People ask whether modern monetary theory is “just theory”. I think that’s the wrong question. The real test is practical: does the UK actually operate as a modern money economy?
In this video, I walk through the plumbing: Parliament authorises spending, the Treasury instructs the Bank of England, payments are settled through reserves, and only later do taxes and gilts come into play. That sequence matters because it tells us something uncomfortable but vital: austerity is a political choice, not an economic necessity.
I also set out the real constraints: not “running out of money”, but real resources:
- labour,
- energy,
- materials,
- skills, and
- technology
and that inflation and climate limits should guide policy.
If we get the ordering right, we can finally have the debate we should have had all along: what do we need, do we have the capacity, and how do we manage inflation fairly?