FISCAL AND MONETARY DIVERGENCE

Summary from the TLDR Crypto newsletter

This post discusses the divergence between U.S. fiscal and monetary policies and their impact on different parts of the economy. In recent years, the U.S. experienced a shift from monetary to fiscal dominance, impacting inflation, bond markets, and liquidity. The Fed's aggressive rate hikes to combat inflation contrasted with the Treasury's liquidity-boosting measures, leading to a complex macroeconomic environment. These actions affected financial markets and the broader economy, highlighting the significant impact of centralized fiscal and monetary policies. This divergence is expected to continue, with fiscal policy likely remaining dominant in the 2020s and 2030s, influencing U.S. GDP growth and the performance of various asset classes, including crypto.