More on the move to a consolidated fiscal and monetary policy

The weekly post on Monday was on the new Japanese LDP Prime Minister Abe's threat to strip the Bank of Japan of its independence as a central bank. The thrust of his threat goes to  the integration of monetary and fiscal policy to create a consolidated government balance sheet so that government can better serve its policy aims.
Tim Duy has a good post on this issue that I highly recommend. And the big idea that Tim has here is that it is fiscal policy that is king here. As I have been saying for some time now, tight fiscal and loose monetary leads to recession. Fiscal will always win in a debt deflationary or deleveraging environment. The problem for policy makers is that fiscal and monetary policy are not necessarily completely aligned. And so those who are looking to push the envelop o...

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