Chartalism is a descriptive economic theory that details the
procedures and consequences of using government-issued tokens as
the unit of money, i.e., fiat money. The name derives from the
Latin charta, in the sense of a token or ticket. The modern
theoretical body of work on chartalism is known as Modern
Monetary Theory (MMT). MMT aims to describe and analyze modern
economies in which the national currency is fiat money,
established and created exclusively by the government. In MMT,
money enters circulation through government spending. Taxation
establishes the fiat money as currency, giving it value by
creating demand for it in the form of a private tax obligation
that must be met using the government's currency. An ongoing tax
obligation, in concert with private confidence and acceptance of
the currency, maintains its value. Because the government can
issue its own currency at will, MMT maintains that the level of
taxation relative to government spending (the government's
deficit spending or budget surplus)