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In principle as long as they have foreign reserves in excess of the gross foreign-currency liabilities of their domestic economy, they're okay. This, of course, requires them to gradually devalue their currency if and as they accumulate a current account deficit.

In practice, there may be the issue of liability dollarization. (That's part 2 of a 3-part series: part 1, part 3)

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Tue Sep 9th, 2014 at 10:40:33 AM EST
[ Parent ]
Ramanan's three part series on liability dollarization is excellent. I had suspected that there were substantial limits to the claims of MMT, but I also think that, in the current situation and for the USA, the recommendations for a job guarantee, etc. are valid.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Sep 9th, 2014 at 03:45:16 PM EST
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