Hanno Lustig on Fiscal Dominance, Inflation, and the Effects of Long-term Interest Rate Decline
Macro Musings with David Beckworth
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Fiscal Dominance in the US
The bond market in the us doesn't seem to anticipate a fiscal dominance regime where defed is forced to accommodate fiscal policy by bjust molotizing deficits. The federal reserve has also, through its quantitative easing programe and its large cilastic purchases, had a major impact on yields. We've seen interest trates go from minus one to 80 basis points in just two weeks. Not unprecedented, but it's certainly unusual for such a dramatic move at this stage of an economic cycle.
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