Fiscal-monetary coordination is not on

There is an important reassessment ongoing, in stages, about macroeconomic policy.  That reassessment has important implications for actual policy and for its knock-ons to markets.  Most of these implications have already played out, but there is probably also some juice left in the theme. 

The point of this report is to insist that fiscal-monetary “coordination” is a mostly unhelpful way to think about the situation. For the short run, coordination sounds bullish, at least in isolation, given the environment.  That aspect is probably net helpful. But coordination also sounds — unnecessarily — radical, which might prevent people from recognizing that the correct, equally bullish, scenario is actually playing out, in large part because it is mundane.  

Over the longer horizon, coordination puts our minds in the wrong space, in which extreme things, possibly involving a lot of inflation, are likely.   Stay away from that as if it were The One Ring.

I expect “coordination” will have shelf life, just like “money printing” did. Rather than risk being monomaniacal in opposition, I will have this on the website to link to.