As debt-service costs surge, deficits pressure the Fed in ways that threaten long-term price stability. Pandemic stimulus has given way to structural imbalance.
The Congressional Budget Office just released its newest budget outlook. It isn’t pretty. The 2026 deficit is projected to hit $1.9 trillion and grow to $3.1 trillion in 2036. America’s slow-moving debt crisis shows no signs of waning.
But this isn’t solely a fiscal problem. It also has an unappreciated monetary dimension. If we’ve learned anything from the inflation surge of 2021–22, it’s that the boundary between fiscal and monetary policy can dissolve much faster than many economists once assumed. We had better come to terms with this quickly, or else money mischief and fiscal folly will become our new normal.
For years, concerns about “fiscal dominance” were largely theoretical possibilities discussed in graduate seminars. Things have changed. The pandemic response showed how fast large deficits and central bank balance sheets can become intertwined. Inflation is the most obvious consequence, but by no means the only one — nor perhaps even the most severe.
In normal times, monetary policy and fiscal policy are institutionally separate. Congress and the White House decide how much to tax and spend. The Federal Reserve controls the money supply and targets interest rates to stabilize prices and employment. The Fed is said to be “independent” because it can tighten policy even if doing so makes government borrowing more expensive. In truth, the Fed is not independent from political oversight. But this basic story is still a reasonable approximation of day-to-day operations.
...read more at thedailyeconomy.org
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Alex Salter is THE SHIT.
Love his stuff
That’s some next-level shit! aahah
Seems backward to me. Sound money ultimately enforces sound public finances.
Or at the very least, sound money gives unsound public finances much less of a runway to cause generational damage.
PSA
What is Stacker News?
It is a social media platform intentionally created to enable a P2P V4V BTC denominated community.
Originally Stacker News (SN) custodyed sats on behalf of participants but the threat of government regulatory prosecution on the pretext of money transmitter forced a move away from the custody of sats by the platform to the platform enabling participants to send sats via their wallets.
To achieve this participants need to attach wallets to both send and receive sats.
Where participants do not or cannot attach LN wallets transactions will often default to Cowboy Credits.
This change was a compromise forced by the threat of government prosecution.
The difficulty of attaching both sending and receiving wallets is moderate- it takes some effort and newbie or non tech people may struggle with it, but most competent Bitcoiners can succeed in attaching wallets and thus enabling sats denominated P2P transactions.
But a number of Stackers have chosen not to attach wallets- in particular sending wallets which enable you to send sats into the SN community.
Very few have attached just a sending wallet- many have attach just a receiving wallet.
Those who only attach a receiving wallet can receive sats from others but cannot send sats into the community. They may feel that as content providers they have no need or obligation to send sats into and within the SN community. I disagree.
Where these receive but not send (horse but no gun) Stackers proclaim to be Bitcoiners but refuse to enable a sending wallet they are demonstrably hypocrits. They claim they want to build and grow the BTC LN MoE network but they cannot be bothered contributing toward that growth by attaching a sending wallet and demonstrating they are not just talking, but are also walking and supporting a sats denominated platform.
If we do not use the LN wherever and whenever we can it will not grow and develop.
Some claim it is too hard to attach wallets- its too hard on their self custody nodes or wallets- this just highlights how much work the LN still needs before it is capable of anything approaching 100% reliable MoE capability.
But the best way to grow and strengthen the LN is it use it – despite its remaining flaws and glitches.
When wallets are supported by people using them they receives transaction fees and can develop liquidity and systems further.
When LN wallets are not used the LN decays- it does not have the usage and fees income to grow.
So when self proclaimed advocates for BTC and LN refuse to attach wallets (especially sending wallets) I see hypocrit.
I will continue to see hypocrit until and unless someone can explain why I should not.
Calling me a Nazi, trolling and making fun of me crudely seeking to avoid the issues I raise will not stop me from asking why are you claiming to be a Bitcoiner but refusing to attach wallets and use the LN here where we can help it grow.
Now some are deliberately concealing their wallet status, as if this is about a right to privacy.
Concealing your wallet status means nobody else can verify whether or not you are serious about using BTC LN, or whether you are just an all talk no walk hypocrit.
Do not trust- verify.
What about this fundamental principle do they not understand?
And then they talk about 'content' being more important than whether or not you have attached wallets - in this context the intentional lack of attached wallets undermines your credibility as your actions do not match your words.
Your submitted content may be great, but you as someone claiming to be a serious Bitcoiner are undermining your credibility and the credibility of your content by being a hypocrit.
Your content, is tainted by your verifiable hypocrisy.
SNs needs both good content providers and those who pay for that content if it is succeed.
I am more in the latter group than the former but both are required overall or the model does not work.
So as a net contributor of sats and thus a net consumer of content I object where content providers refuse to engage in the P2P V4V ethos by refusing to attach both sending and receiving wallets and I will both withhold my contribution of sats and sometimes downvote in response.
V4V needs to work reciprocally or it will not work at all.
The content providers need net sats contributors/content consumers who send sats into the platform, or the entire platform fails.