No, Governments With Monetary Sovereignty Cannot Issue All The Debt They Want – ValueWalk Premium
Monetary Sovereignty

No, Governments With Monetary Sovereignty Cannot Issue All The Debt They Want

Daniel Lacelle writes in this interesting piece “A country with monetary sovereignty can issue all the currency it needs” is a fallacy.


Q2 hedge fund letters, conference, scoops etc

Monetary sovereignty is not something government decides. Confidence and use of a fiat currency is not dictated by government nor does it give said government the power to do what it wants with monetary policies.There are 152 fiat currencies that have failed due to excess inflation. Their average lifespan was 24.6 years and the median lifespan was 7 years. In fact, 82 of these currencies lasted less than a decade and 15 of them lasted less than 1 year.

Monetary SovereigntyGovernments always see economic cycles as a problem of lack of demand that they need to “stimulate”. They see debt and asset bubbles as small “collateral damages” worth assuming in the quest for inflation. And crises become more frequent while debt soars & recoveries weaker.

The government benefits the first from new money creation, massively increases its imbalances and blames inflation on the last recipients of the new money created, savers and the private sector, so it “solves” the inflation created by government by taxing citizens again. Inflation is taxation without legislation, as Milton Friedman said.
First, the government policy makes a transfer of wealth from savers to the political sector, and then it increases taxes to the “solve” inflation it created. Double taxation .

which is exactly the case in India till we institutionalized inflation targeting. This did not leave wriggle room for the govt to find its way out of mountain of unproductive debt and the result is Muddle through economy

Article by Ritesh Jain, World Out Of Whack

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