Monetary dominance is primarily driven by the Federal Reserve's interest rates and the lending activities of the central bank and commercial banks. Fiscal dominance, on the other hand, is influenced by government decisions such as tax cuts and subsidies. When deficits are low and public debts are smaller, monetary dominance is prevailing. However, when public debts exceed 100% of GDP and deficits are consistently high, fiscal dominance starts to override the power of monetary forces.

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