Modern monetary theory tells us that we shouldn’t worry about government debt – that governments can create money to spend to projects that will create full employment. Even if that is the case, what happens when the money you need isn’t in your currency? It’s a question Phil Dobbie puts to Prof Steve Keen in this week’s Debunking Economics podcast. You can’t create foreign currency, but you might well need it to pay for your government expenditure. So how does Modern monetary theory work in practice, for small countries that need foreign currencies to buy the imports they need to grow their economy?

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