What a difference a year makes. Last year, about this time, the topic of Modern Monetary Theory (MMT) was being widely discussed by the financial media, and largely disavowed by mainstream economists and government officials, including Treasury Secretary Mnuchin and Fed Chair Powell. Yet in a month we will effectively celebrate the one-year anniversary of the quasi-stealth adoption of Modern Monetary Theory, and it’s only going to get bigger in the months and quarters ahead, and the consequences for assets could be substantial over the longer term.

Given this looming anniversary, and in anticipation of MMT becoming a more common topic of conversation given the new administration, I wanted to take time today to review MMT and explain: (1) What MMT is, (2) Why it’s more familiar than you think, (3) If it’s really that bad and (4) What it means for assets.

What Is Modern Monetary Theory?