Echoes of the early 1980s US policy mix? With no signs of meaningful fiscal consolidation, markets are increasingly turning to the Federal Reserve to counter price shocks. (Please see my FT column from a week ago for details.) The longer this dynamic persists, the more likely the overall policy mix is to resemble that of the early 1980s: overly reliant on monetary tightening while lacking fiscal restraint—a combination that tends to bolster the US dollar and pressure interest-rate-sensitive sectors, both headwinds to balanced economic growth. In terms of the historical comparison, the silver lining is that today’s positive productivity shock is likely to materialize much faster than that seen then, which became effective in the 1990s. #economy# #markets# #growth# #federalreserve# #monetarypolicy# #fiscalpolicy# #budget#