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Fiscal dominance: The force that is undercutting the Fed’s inflation fight
Deficit and debt blowout are creating a stimulus that overwhelms the effects of monetary tightening to hold down inflation.
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The US economy affects all others, given its size and the importance of its interest-rate regime.
PHOTO: REUTERS
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There are some mysteries related to the US economy, which affect all others, given its size and the importance of its interest rate regime.
For instance, why, after two years of the fastest interest rate hiking cycle in history, is the US economy nowhere near a recession, despite warning signs along the way, such as an inverted yield curve (a usually accurate predictor), lacklustre leading indicators and problems in the commercial real estate sector?
