This paper argues that fiscal space is not given in absolute terms, as in the sound finance paradigm, but is relative to a country's macroeconomic conditions. We first identify the relativity of fiscal space in the endogenous finance ideas of John Maynard Keynes, drawing an analogy to the theory of special relativity by Albert Einstein. We then present the outline of a ‘general relativity’ theory of fiscal space based on the functional finance paradigm. Building on our theory we estimate a novel Monetary Sovereignty Index, which we use alongside UNCTAD's Productive Capacities Index, the unemployment rate, and the inflation rate, in a principal component analysis to compute a Fiscal Space Index (FSI) for 150 countries. We find that there is a wide variety of fiscal space across countries, and even within regions. Simple simulations for Malawi and the UK (countries on opposite sides of the fiscal space spectrum) show that the functional finance paradigm outperforms the sound finance paradigm for a range of macroeconomic variables, including the FSI. We end by discussing key political economy and geopolitical constraints and identify various reforms that would facilitate countries to fully use, as well as increase, their fiscal space.