MacroVoices · Thursday, August 27, 2026
Daniel Lacalle, Chief Economist at Tress, argues that governments have surpassed crucial economic, fiscal, and inflationary limits, undermining the credibility of their debt as a store of value. He states that unchecked debt and currency issuance by governments can lead to economic stagnation, unsustainable deficits, and inflation, contrary to the belief that governments can always bring stability.
“Governments have surpassed all of the limits that give them credibility to maintain their debt as a reserve of value.”
“So, no, governments cannot issue all of the debt that they want and certainly cannot issue all the currency that they want.”
“And the limits that governments have in terms of issuing currency, i.e. issuing debt, are three. The first is the economic limit... The second one is the fiscal limit... And the third one is the inflationary limit, which was clearly exceeded in 2020, 2021.”
“So, just to summarize, governments have surpassed all of the limits that give them credibility to maintain their debt as a reserve of value, and those limits are the economic, the fiscal and the inflationary limit.”