Modern monetary theory and Japan

Modern theory (modern monetary theory, MMT) is a theory that has become popular in the United States (at the left wing of the Democratic Party) , which explains that it is possible to perpetually maintain full employment by implementing a fiscal policy that ensures full employment at any time and by financing fiscal deficits through money creation to prevent a rise in interest rates and fiscal solvency problems. The opponents to this policy obviously emphasise the risks associated with the massive monetary expansion it entails: inflation, financial instability (excessive debt, bubbles, etc.), currency crisis. In reality we have a laboratory showing the effects of modern monetary theory in Japan: over the past 20 years, full employment has been maintained in Japan through a very expansionary fiscal policy, and interest rates remain very low thanks to monetisation of public debt. What costs of this policy can we see in Japan? Not inflation, which remains low; No currency crisis, as the yen is stable and there is an external surplus; The private sector has deleveraged; No asset price bubbles have appeared. But it has to be admitted that the low level of inflation has been obtained by increased labour market flexibility and by a constant levy on wage-earners' purchasing power, which has also led to weak household demand and an external surplus. Without the drastic skewing of income distribution at the expense of employees, the implementation of modern monetary theory in Japan would probably have brought about high inflation. So the price to pay for avoiding inflation has been high .