I see a lot of discussion of “MMT” by people who don’t seem to know what it is. Here’s Bloomberg:

European Central Bank President Mario Draghi said the Governing Council should be open to ideas such as Modern Monetary Theory, while noting they’re closer to fiscal policy and should be directed by governments.

Draghi was responding to a question from European lawmakers about helicopter money and the best ways to channel funds to the economy in a way that helps inequality. He mentioned MMT and a recent paper by former Federal Reserve Vice Chairman Stanley Fischer — the adviser on Draghi’s doctorate — which said central banks should put money “directly in the hands of public and private sector spenders.”

“These are objectively pretty new ideas,” Draghi said. “They have not been discussed by the Governing Council. We should look at them, but they have not been tested.”

He added that such actions rely on decisions on distribution, and that’s not something for monetary policy.

It seems like Draghi doesn’t know what MMT is. There no shame in that, I probably don’t either. But I do know one thing; MMT is not “helicopter drops” of money. The term “helicopter drops” is actually just a metaphor for combined monetary/fiscal expansion, an option that has been discussed by monetarists and Keynesians for decades. If you want to discuss helicopter drops (I don’t) then that’s fine, but please don’t call it “MMT”.

MMT is a theoretical model of the economy that has been widely ridiculed by economists on both the left and the right, and for very good reasons. Thus (AFAIK), under MMT the rate of inflation is determined by fiscal policy. If that were true, then central banks would be wasting their time in targeting inflation.

Inflation in the US has averaged 1.9% since 1990. If MMT were true, then it would have been fiscal policymakers that caused inflation to be close to 2%, and not close to 0% or 5% or 20%.

Fiscal policymakers?