-- this post authored by Michael U. Krause, Thomas A. Lubik, and Karl Rhodes During the past 25 years, low-interest rates and highly expansionary monetary policy with little apparent inflation have created the illusion that a government can simply print money to fund exorbitant deficit spending with no repercussions. This core tenet of so-called "modern monetary theory" ignores the fact that deficit spending is constrained in the long run by a government's ability to satisfy creditors. Promoters of modern monetary theory (MMT) - including a growing number of pundits and policymakers - are toying with the idea that "deficits don't matter." They are tempted to believe that a government can merge fiscal and monetary policy and simply print currency to pay for its expenditures indefinitely without economic costs or constraints. This core tenet of MMT, which has permeated the public debate, worries economists of all stripes - not just "mainstream" economists, but also traditional Keynesians and heterodox economists.[1]