One of the themes at the forefront of everyone’s mind (well, at the forefront but still behind “make America great again,” of course) is the passing of the baton from monetary to fiscal policy.
There’s a growing chorus of observers out there who think it may be time to start unwinding the global monetary gravy train in favor of fiscal stimulus and that chorus has only grown louder in the wake of Donald Trump’s ascendance to the highest office on the planet.
As Barclays puts it, “against a backdrop of decreasing monetary stimulus there appears to be a definite shift toward fiscal stimulus across the globe.”
And why not, right? It’s not like eight years of monetary stimulus has been especially effective:
With all of the campaign promises flying about, it’s often difficult to get a bird’s-eye view of exactly what’s going on in terms of policy shifts around the globe.
To help with that, I bring you the following chart from SocGen which shows you the expected policy stance for 2017 broken down by country:
My only question is this: what happens to the US diamond there when the Fed has to lower rates just to help pay for Trump’s fiscal stimulus package?