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In the November/December 2021 issue of Intereconomics, Françoise Drumetz and Christian Pfister examine Modern Monetary Theory (MMT) and approach it from the policy consequences that would follow. This paper is a reply to Drumetz and Pfister. It restates the core of MMT and offers some suggestions for central banks. Theories are explanations of what we see, and MMT describes money creation and destruction. Hence, MMT cannot be and is not a political manifesto. In contrast to most other theories of money, MMT is falsifiable in its core statements, which are based on a balance sheet approach to macroeconomics. Since many central banks already educate the public about the creation of modern money through bank lending, it would be most welcome if they would do the same for the creation of modern money through government spending. Here, MMT and central bankers can find common ground to move forward and leave the theory of loanable funds and that of the money multiplier behind.

Das Jahr 2020 war geprägt von der COVID-19-Pandemie und ihren wirtschaftlichen Folgen. In Deutschland stiegen staatliches Defizit sowie die Schuldenquote infolge des Rückgangs der Wirtschaftsleistung auf geschätzt 5 % bzw. 75 % des BIP an. Um die wirtschaftliche Erholung von der Pandemie nicht durch die Rückkehr zu einem rigiden Sparkurs zu gefährden, ist es jetzt von besonderer Bedeutung, sich von falschen Vorstellungen bezüglich der Finanzierung sowie der Nachhaltigkeit staatlicher Ausgabenüberschüsse zu verabschieden. Nur so können die Weichen für eine Wirtschaftspolitik des 21. Jahrhunderts richtig gestellt werden.

The year 2020 was marked by the COVID-19 pandemic and its economic consequences. In Germany, government deficits as well as the debt ratio rose to an estimated 5 % and 75 % of GDP respectively as a result of the decline in economic output. In order not to jeopardise the post-pandemic economic recovery by returning to a rigid austerity policy, it is now of particular importance to abandon misconceptions regarding the financing as well as the sustainability of government expenditure surpluses. This is the only way to set the right course for an economic policy of the 21st century.