Victor Rangel

Team E

Modern Monetary Theory (MMT) has won the center of the economic debate with the

proposed proposals for major social and environmental welfare projects in the USA. For the

government as a sober creator of the national currency as a means of official payment, budget

deficits do not matter because you can always create the amount of currency necessary to

finance your expenses.

It is not disputed that the issuer of a country's fiat currency does not face financial

restrictions and that a deficit in the public sector has its counterpart in the financial surplus of

other sectors of the economy. There is an agreement, also in economic theory, that an economy

faces restrictions for its expansion due to the limits of its production capacity given the scarcity

of factors of production. Money, in the perspective of the Modern Monetary Theory, does not

appear spontaneously in the market (MENGER, 1892) and does not serve mainly as a means of

payment, but it is a creation of the State and its first function is to serve as a debt payer. The

origin of this idea is found in the so-called “capitalism”. The most important ideas of MMT that

give strength to politicians are that:

 The government is unrestricted and that, therefore, deficits do not matter.

 Restrictions on the real economy can be overcome if the government identifies

sectors where there is idleness.

 The natural rate of unemployment is lower than is believed and the government

must employ this surplus of workers.

My team can come up with a reaction/response based on data we gathered so far about

the Costa Rica government's actual approaches to unemployment in the COVID-19 Pandemic &

Economic Crises. We will use the paragraphs above as a basis to instigate, incent and improve

suggested programs in our final paper/presentation.