Randomness (r_ness) wrote,

An observation on having your debt denominated in a currency you print

From Daniel Davies's D-squared Digest, April 20th:
A note on Modern Monetary Theory

Just to note that of course a theory should be tested against the real world, and that the real tests of a theory are in the extreme outcomes and corner cases.

I therefore note that, in respect of the Krugman/Galbraith/Baker/cast of thousands debate, that Zimbabwe exists as a country as well as a debating point, and that it does have domestic currency treasury bills, and that it is a perhaps startling fact that throughout the unorthodox policy measures of the last ten years, Zimbabwe has, in fact, never defaulted on its domestic currency sovereign obligations. So I score this one for MMT.
Tags: money
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