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Fallacies Plague Modern Monetary Theory on Sovereignty

Fallacies Plague Modern Monetary Theory on Sovereignty
A money changer counts Turkish lira banknotes at a currency exchange office in Istanbul, on Aug. 2, 2018. Reuters/Murad Sezer
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In this era when there are many undocumented and misguided views on monetary policy, there is one that’s really infuriating: modern monetary theory science fiction.

One of its main principles is based on a fallacy: “A country with monetary sovereignty can issue all the debt it needs without default risk.”

Daniel Lacalle
Daniel Lacalle
Author
Daniel Lacalle, Ph.D., is chief economist at hedge fund Tressis and author of the bestselling books “Freedom or Equality” (2020), “Escape from the Central Bank Trap” (2017), “The Energy World Is Flat”​ (2015), and “Life in the Financial Markets.”
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