42 sats \ 1 reply \ @halalmoney 28 Apr \ on: Germany's Social Spending Soars to New Heights in 2024 Budget Allocation econ
Tom - there’s a good write up about the US situation here:
https://www.fxstreet.com/analysis/the-federal-reserves-345-trillion-problem-202404261906
Extract:
"When fiscal imbalances are large and fiscal credibility wanes, it may become increasingly harder for the monetary authority to stabilize inflation around its desired target. If the monetary authority increases rates in response to high inflation, the economy enters a recession, which increases the debt-to-GDP ratio. If the monetary tightening is not supported by the expectation of appropriate fiscal adjustments, the deterioration of fiscal imbalances leads to even higher inflationary pressure. As a result, a vicious circle of rising nominal interest rates, rising inflation, economic stagnation, and increasing debt would arise.”