The Tug-of-War Between Fiscal and Monetary Policy

The podcast discusses the conflicting approach between fiscal and monetary policy in the current economic environment. The Biden administration has implemented significant stimulative spending plans, leading to inflationary pressures. Meanwhile, the Federal Reserve aims to control inflation by rapidly raising interest rates. The outcome is uncertain, but it is reasonable to expect a scenario with the avoidance of a deep recession while interest rates remain elevated for an extended period. This has implications for investors, presenting both risks and opportunities in terms of corporate debt, distressed assets, and over-leveraged businesses.