Fallacies Plague Modern Monetary Theory on Sovereignty

Sovereignty isn't decided by governments, which are incentivized to overspend

A money changer counts Turkish lira banknotes at a currency exchange office in Istanbul, on Aug. 2, 2018. Reuters/Murad Sezer

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.”