MMTUK Policy Research Group

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If this morning's thread on how money works was useful, there is a lot more where that came from.

MMTUK is building the UK's first dedicated hub for accessible, evidence-based economics. All funded by our community.

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How Money Actually Works: Step-by-Step | MMTUK Once you understand that money is created by the state and that taxes create demand for it, the rest of how the economy works follows as a matter of pure logic.

(9/9) Here’s the step-by-step explainer: mmtuk.org/education/ar...

(8/9) Once you see how money is created, a lot of political clichés look different.

And you can ask better questions about jobs, public services, and investment.

(7/9) This doesn’t mean “deficits don’t matter” or “spend without limits”.

The real limits are resources (people, skills, energy, materials) and inflation.

(6/9) So for the UK Government the sequence is:

Spend → money exists in the private sector → tax deletes some of it.

This is the opposite of how you experience money: earn first → then spend.

(5/9) Third: taxes don’t work like a household bill.

Taxes remove pounds from the private sector. They help drive demand for the currency and manage access and distribution to wealth and resources.

(4/9) Second: In exactly the same way, government spending adds pounds into the economy.

When the UK government spends, it credits bank accounts. That increases private sector balances.

(3/9) This surprises people because we’re taught banks “lend out savings”.

In practice, banks create new deposits when they lend (within rules, capital requirements and the central bank’s rate).

(2/9) So: how does money actually get into the economy?

First: most money is created by banks.

When a bank makes a loan, it creates a deposit in the borrower’s account. New pounds appear as numbers on a balance sheet.

(1/9) Most UK political debate gets shut down by one question: “How will you pay for it?”

It sounds sensible but it assumes the UK gov must get pounds before it can spend.

That’s the wrong way to think about money. Here’s how money actually works: 👇️ 🧵#MMT

Register now for MMTUK's launch event.

Join MMT co-founder Professor Bill Mitchell and MMTUK Exec Director Patricia Pino as we launch our first policy proposal paper for a UK Job Guarantee.

📅 Wednesday 25th February, 7pm
📍 Friends Meeting House, Euston Road, London

mmtuk.org/news/bill-mi... #MMT

Thanks Eddy! 💪

Education | MMTUK Learn about Modern Monetary Theory with MMTUK's educational resources. Explore how money works, understand government spending, and get answers to common questions about MMT.

Where does the money come from when the UK government spends?

Not from your taxes. Not from borrowing. The answer is simpler than you think and it changes everything about how we think about public investment.

Our simple explainer page breaks it down: mmtuk.org/education #MMT

MMTUK Launch Event: A Job Guarantee for Britain The UK loses billions every year through unemployment and underemployment. Exposed to precarious work, stagnant wages, and collapsing public services, millions of people are told there is simply no…

Join us on Wed 25 Feb at 7pm for our UK Job Guarantee launch presentation & address by MMT co-founder Professor Bill Mitchell at a central London venue.

Our cornerstone policy strengthens economic & societal stability by guaranteeing decent work for all.

#MMT actionnetwork.org/events/mmtuk...

Home | MMTUK MMTUK is an independent research organisation producing evidence-based economic analysis informed by Modern Monetary Theory. Explore our articles, education resources and community.

MMTUK has launched

We're a new, independent research organisation bringing Modern Monetary Theory to UK policy debates.

Our first paper launches later this month: a fully-costed UK Job Guarantee proposal.

mmtuk.org #MMT #UKPolitics