Modern Monetary Theory: The model's limits in theory and practice

Modern Monetary Theory (MMT) is currently being applied in OECD countries: fiscal deficits are those that are deemed necessary whatever their size, and they are monetised by central banks to prevent crowding-out effects (rising interest rates). In theory, the limit of this policy is reached when inflation appears, and the fiscal deficit must then be reduced, but this is not a problem since inflation appears when the economy has returned to full employment and not before. But in practice, money creation leads to a rise in asset prices, not to a rise in goods and services prices. If fiscal and monetary expansion must be stopped when asset price inflation emerges, the question is whether this occurs - as in the case of goods price inflation - when the economy has returned to full employment, or much earlier. If asset price inflation appears before the return to full employment, then using Modern Monetary Theory is a problem. Yet this is the case, as asset prices accelerate well before the return to full employmen t .