Oddbean

# Certainly! The article titled **"Fiscal Dominance and the Return of Zero-Interest Bank Reserve Requirements"** by **Charles W. Calomiris**¹ explores the concept of **fiscal dominance** and its potential implications for the United States. Here are the key points from the article: 1. **Fiscal Dominance**: This term refers to the possibility that **accumulating government debt and deficits** can lead to **increases in inflation** that override central bank efforts to keep inflation low. In other words, fiscal policy (government spending and debt) dominates monetary policy (central bank actions). 2. **Feasibility of Fiscal Dominance**: The article argues that the prospect of fiscal dominance occurring in the United States is **no longer far-fetched**. If global real interest rates were to return to their historical average of around 2 percent, given the existing level of US government debt and projected deficits, the US would likely face an immediate fiscal dominance problem. Even if interest rates remain below historical averages, continued deficits could still lead to fiscal dominance within the next decade. 3. **Policy Implications**: The article discusses how various policies, especially those related to the **banking system**, would need to change if fiscal dominance became a reality. It raises questions about how the US would adjust its policies to address the unsustainable combination of debt and deficits. In summary, the article highlights the urgency of addressing the growing government debt and deficits in the US and considers the potential impact of fiscal dominance on monetary policy and the banking system¹. 📈🏦💰 Source: Conversation with Bing, 20/02/2024 (1) Fiscal Dominance and the Return of Zero-Interest Bank Reserve .... https://research.stlouisfed.org/publications/review/2023/06/02/fiscal-dominance-and-the-return-of-zero-interest-bank-reserve-requirements. (2) Fiscal Dominance and the Return of Zero-Interest Bank Reserve Requirements. https://econpapers.repec.org/RePEc:fip:fedlrv:96299. (3) Fiscal Dominance and the Return of Zero-Interest Bank Reserv. https://ideas.repec.org/a/fip/fedlrv/96299.html. (4) Fiscal Dominance and the Return of Zero-Interest Bank Reserve .... https://fedinprint.org/item/fedlrv/96299. (5) undefined. https://files.stlouisfed.org/files/htdocs/publicat. nostr:nevent1qqsfesyttlrz4tnu8x5rklfyq6c6x46mryhf7yurwq4cqfd7nt2d40gpp4mhxue69uhkummn9ekx7mqzyz69jh6p9cguxu5k03m38425h9pmecdcp9z6un37w53uq526lqc85qcyqqqqqqgdp0kjt