What is modern monetary theory? An economist explains how it could help Canada

MMT argues that a government with full monetary sovereignty like Canada's faces no hard financial limits on its spending. (Shutterstock)

Few words spark more anxiety in public debate than “national debt” and “government deficit.” National debt is the total amount of money the government owes, accumulated over years of running deficits. Government deficit is when the government spends more money than it collects in taxes and other revenues.

Dating back at least to the 1930s, the idea that government budgets should mimic household finances continues to dominate public discourse.