Purpose – The purpose of this paper is to examine modern monetary policy as practiced and promoted by the officials of Central Banks, with the Federal Reserve Bank of the USA and the Bank of Japan in leading roles. Design/methodology/approach – Modern monetary policy is assessed for its rhetoric and its philosophies steeped in Keynesian traditions. The fallacies of relying on patently incorrect economic theory with specific critique on the assumption that saving is equal to investment (S=I) is exposed in the policy failures of themes such as quantitative easing, approaching the zero bound, wealth effects, the liquidity trap, forbearance lending and an unwavering belief in the power to inflate. An alternative credit theory is presented and discussed to explain the accumulation of monetary interventions in the modern banking environment. The credit theory is further expanded to evaluate an economy in distress as a result of an accumulation of monetary stimulations against a background of the philosophies of the Austrian school of economics. Findings – Three decisive monetary policy outcomes are identified and substantiated in the Austrian philosophy of laissez faire; the probable outcome of modern monetary policies in deflationary stasis; and the destructive outcome of extreme monetary and fiscal interventions resulting in a hyperinflationary depression and destruction of the money unit. Originality/value – The conceptual framework and content of the paper are mostly original and will contribute to the study of political and monetary economics.