The hottest economic doctrine around says governments should stop worrying and learn to love their public debt. Japan has been more relaxed than most — but a looming tax hike suggests it may be about to blink.
Modern Monetary Theory, or MMT, posits that countries controlling their own currency can seek stronger economic growth via government spending, without risking default. The only limit on spending is inflation — a remote prospect in Tokyo, where steering clear of deflation is the priority and a 2 percent price target remains far out of reach.
It's a controversial idea that has detractors and admirers worldwide, and may even surface in next year's U.S. election campaign. Japan is often cited as evidence the theory is accurate. Now the country is having its own version of the MMT debate.