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This article lays out a "beginner's guide to MMT". I know we're tired of MMT but here is a great resource for people to use to understand MMT before criticizing them (if you think there are criticisms to be made).

RI:

A good place to start is with a simple description that you can carry in your pocket: MMT proposes that a country with its own currency, such as the U.S., doesn’t have to worry about accumulating too much debt because it can always print more money to pay interest. So the only constraint on spending is inflation, which can break out if the public and private sectors spend too much at the same time. As long as there are enough workers and equipment to meet growing demand without igniting inflation, the government can spend what it needs to maintain employment and achieve goals such as halting climate change.

There is so much to unpack in the first paragraph (following the first through throat clearing paragraphs). So many assumptions that aren't written out to fully vet and see if they're reasonable assumptions (perhaps because we lack a model?).

MMT proposes that a country with its own currency, such as the U.S., doesn’t have to worry about accumulating too much debt because it can always print more money to pay interest.

"Doesn't have to worry". What does this mean? What, in MMT's minds, are the relevant tradeoffs, the relevant welfare considerations, of having high deficits? This is not clear, aside from the inflation consideration.

Debt is raised from capital markets from investors. The government auctions bonds and takes money out of capital markets. That means government debt "crowds out" private investment. Is this something we don't need to worry about?

So the only constraint on spending is inflation, which can break out if the public and private sectors spend too much at the same time.

This isn't really a "constraint", but rather a policy consideration. They're proposing a dual mandate, more-or-less. This illuminates one of the tradeoffs they think matter.

You can't R1 normative positions, but this is still an important thing to understand.

As long as there are enough workers and equipment to meet growing demand without igniting inflation, the government can spend what it needs to maintain employment and achieve goals

This, I think, is where we can unpack the MMT model, which is badeconomics. It is badeconomics because it assumes that money is non-neutral.

This is my parsimonious model:

https://imgur.com/tKHI3uX

Seignorage financed deficit spending increases aggregate demand. The objective of government policy is to regulate aggregate demand such that AD2 = AS at Y*, as the free market (Y = Laissez-faire) will be perpetually below potential. Y* is potential output, which is where full employment exists. Inflation (higher price level) occurs here because too much money is chasing too few goods.

Deficit spending increasing aggregate demand is normal in AD/AS comparative statics. However, what is different here is the implicit belief behind seignorage: money printing doesn't cause inflation. Money neutrality states that printing money cannot move around real resources (shifting AD to where AD = Y*) in the long run, it only increases nominal prices.

MMT would be correct if money neutrality was wrong. However, strong theory as well as strong evidence in the international cross-section suggests that money neutrality is an accurate description of reality. This makes MMT wrong, and makes it badeconomics.

On March 13 the University of Chicago Booth School of Business published a survey of prominent economists that misrepresented MMT that way, leaving out its understanding that too-big deficits can cause excessive inflation. The surveyed professors roundly disagreed with MMT as described. MMTers cried foul.

Going back to my parsimonious model, it relies on question 2 of the survey: "Countries that borrow in their own currency can finance as much real government spending as they want by creating money." This is the heart of MMT, not "deficits don't matter". While there are many great responses to this question, Darrell Duffie wrote the best response:

If this were true, each such country could finance the purchase of all of the world's output, which is obviously impossible.

Real government spending cannot be financed through seignorage forever; it manifests itself in higher inflation not increased material wealth.

If MMT can show that money printing does not lead to higher inflation, then MMT would have a leg to stand on.

Going back a bit:

the government can spend what it needs to maintain employment

Another argument made by MMTers is that a lassiez-faire economy will not employ everyone who wants a job. They argue that a "natural unemployment rate" (defined as the unemployment rate at which there exists only frictional unemployment caused by things like job search) isn't real. If the government doesn't step in to employ people, then there will be a persistent gap between potential and actual output, which means we'll be persistently poorer as a society. I don't think that MMTers have a grasp on how economists think about labor markets; that being said I have a rudimentary understanding of labor markets and won't go further here.

MMT rejects the modern consensus that economies should be steered primarily by the raising and lowering of interest rates. MMTers believe that the natural rate of interest in a world of fiat money is zero and that pegging it higher is a giveaway to the investor class.

There is no definition of the natural interest rate provided. It would be helpful if MMTers wrote down what they mean by the natural rate. I will use "natural rate" to mean "the rate of interest which arises when loanable funds/capital markets clear". The natural interest rate is an equilibrium price. Going back, MMT argues that money is non-neutral. If money is non-neutral the government can peg interest rates to zero. We know - both empirically and through super intuitive theory - that money is non-neutral. Friedman (1968) goes over why you can't peg interest rates at zero as higher rates manifest themselves through the Fisher Effect. High interest rates tends to coincide with high inflation (Mishkin 1992).

Why is it the case that MMTers think that we should peg the interest rate at zero? Do they see that returns to capital investment is pure rents? "The investor class" is a vague and ambiguous concept; if you own a savings account, then the interest rate impacts your savings account returns - does this make you the equivalent of some evil fat cat Wall Street person?

They say tweaking interest rates is ineffectual because businesses make investment decisions based on prospects for growth, not the cost of money.

This is mindboggling bad economic theory. Firms will execute projects where the marginal benefit equals the marginal cost. The Net Present Value (benefit) of a project is increasing in cash flows ("prospects for growth") and decreasing in the discount (interest) rate. Furthermore, this argument displays a lack of thinking on the margin. Lastly, interest rates are not the price (cost) of money. The price of money is 1/Price Level. The interest rate is the price of loanable funds/capital.

MMTers argue that economies should be guided by fiscal policy—government spending and taxation. They want a nation’s central bank to do the bidding of its treasury. So when the treasury needs money, the central bank accommodates it with a keystroke—creating base money from thin air by crediting the treasury’s checking account. The new textbook says that today, governments “tend to run unduly restrictive fiscal policy stances so as not to contradict the monetary policy stance.”

As I've said before, MMT is not a new paradigm of macroeconomic thought. It is a collection of Old Keynesian policy prescriptions, and here is a prime example of that plain and simple. In reality governments spend and the Fed reacts (conventional economic thought). The actions are near simultaneous so it looks as if the fiscal authority is subservient to the Fed but this isn't true. An example is the Tax Cut and Jobs Act that Trump and Republicans passed recently. The fiscal authority instituted a large deficit financed tax cut, and the Fed reacted by raising rates.

MMT challenges a core principle of conventional economics, which is that an increase in budget deficits will tend to raise interest rates, all else equal.

There are a few ways to connect increased deficits and increased interest rates. The one channel is where capital markets charge higher interest rates at bond auctions when the government (which represents the demand side of the market) wants to buy a lot of capital (sell a lot of bonds). Cet. par., higher demand means higher prices and interest rates are the price of capital/loanable funds (see above). Alternatively, higher deficits cause higher demand and the Fed reacts to increased demand by raising rates to keep inflation on target (assuming more deficit spending puts us on a trajectory to higher inflation anyway).

In MMT’s ideal world there would still be taxes, but their main purpose, aside from lessening inequality, would be as “offsets” to keep inflation under control. Taxes would drain just enough money from consumers and businesses so total spending in the economy won’t be excessive.

Notably missing from this suggestion is an analysis of optimal taxes. Apparently incentives or deadweight loss doesn't matter here, as taxes would be levied only to lower spending.

MMTers hold that inflation isn’t primarily the result of excessively strong growth. They blame much of it on businesses’ excessive pricing power. So before trying to choke off growth to kill inflation, they would try to break up monopolies and stop banks from making too many loans.

This is also bad economics. Inflation is by definition an increase in the price level. Monopoly power should show up in relative prices (the prices you get out of your supply/demand graphs either in perfect competition, monopoly, etc). Breaking up monopolies would lower relative prices (an admirable goal!) but would not lower inflation which is a rise in nominal prices.

Mainstream economists argue that the correct parts of MMT aren’t new and the new parts aren’t correct. But MMTers point out that the establishment hasn’t covered itself in glory in recent years—largely failing to foresee the global financial crisis a decade ago, for instance.

It is astounding that MMTers are pulling the "economists didn't see the financial crisis coming" card. Neither did MMTers! This is nothing but an appeal to the populists that give you a soap box. I don't think I need to point that this doesn't prove MMT is correct, nor does it show that macroeconomics is wrong.

Overall, this article displays bad economic thinking on a few levels. However, we can cut to the core of MMT by thinking about money neutrality and whether or not seignorage can finance real government spending. If long-run money neutrality is incorrect (and that a laissez-faire economy can't achieve full employment) then MMT observations about the real world are correct and policy makers should shift their thinking. I do not think that this is the case as both theory and evidence suggest otherwise. I await an MMT model and a regression to estimate.