When President Nixon took the US Dollar (USD) off the gold standard in 1975, the only thing backing it became the confidence our government and the rest of the world has in it and the US economy.
The dollar is still the major reserve currency in the world, so its support is very good. Modern Monetary Theory states that a country that prints its own currency can never be unable to pay its debts, can never have a national debt or deficit, and need not have a balanced budget.
There are many economic theories, but this seems the most logical to me, some well-known economists, and even some governors of the Federal Reserve System Banks. In college we called this ‘a piercing glimpse into the obvious,’ or in more modern terms, a no-brainer.
You and I must have balanced budgets and should not run deficit spending, e.g. credit card debt, except with great care. We should have reasonable savings, especially preparing for retirement. The Federal Government, according to MMT, can’t save except by supporting infrastructure and research. This, of course, goes contrary to everything we hear on the media and from politicians, especially those of the GOP. Republican budget rhetoric is poppycock according to MMT. Of course, the government should not put more USD into circulation than are needed; but it should finance a better social safety network and upgrade our infrastructure.
Even democrats and the President talk of balancing the budget, because that is what the public believes. There is a small group of folks, some retired LANL people, who are trying to promote understanding of MMT around New Mexico.
States must run a balanced budget according to most of their constitutions; also, states do not print their own currency. MMT is also called a Fiat Money System, and it is similar to the relatively new concept of the Bit Coin.