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Your entire argument here applies in the other direction as well. You do not need dietary saturated fats, and sugar has all sorts of uses biologically.

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That is only partly true: you don't need dietary saturated fats, but you do need essential fats (omega-3 and omega-6), which are polyunsaturated. However, sugar does not have all sorts of uses biologically; it has only one: as one (but not the only one) source of energy.

It isn't just a source, it is also a storage mechanism, both in the liver and in muscle tissue.

That sugar however is produced by the body itself.

Technically speaking, dietary requirement for sugar is 0. This doesn't mean it isn't useful to have some, but it definitely shouldn't be the basis of the food pyramid.

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