The Fed and ECB Are in the Process of Changing Their Monetary Policy Objectives.

The shift from fiscal dominance to inflation control will not be without instability.

Since the subprime crisis in 2008-2009, monetary policies in OECD countries have adopted a “fiscal dominance” strategy, where fiscal policy is continuously expansionary and is not modified to stabilize the public debt ratio. It is monetary policy that is used to ensure the solvency of governments (the sustainability of public debts).

To this end, central…