Just as the Holy Roman Empire was neither holy, nor Roman, nor an empire, modern monetary theory, or MMT, is neither modern, nor mostly about money, nor a theory. Yet these days it is a favorite punching bag for mainstream economists.

MMT, which has been gaining support among high-profile Democrats, turns conventional economic policy on its head. Instead of leaving macroeconomic management to the interest-rate-setting committee of the Federal Reserve, MMTers believe it is best handled by government spending and taxation. The...