Other-things-equal, the goldilocks scenario above would be "inflationary", though perhaps not as much as the QE+stimulus during the pandemic, if there isn't as direct a route for turning financial liquidity into regular economy spending. (Fiscal stimulus effectively mainlined the QE monetary expansion into the economy during COVID).
Other-things-equal, the goldilocks scenario above would be "inflationary", though perhaps not as much as the QE+stimulus during the pandemic, if there isn't as direct a route for turning financial liquidity into regular economy spending. (Fiscal stimulus effectively mainlined the QE monetary expansion into the economy during COVID).
But even with this distinction, you are correct, that the Fed and Treasury are in conflict. The Fed wants to tighten financial conditions (with a lagged impact on inflation), while the Treasury is looking to loosen financial conditions.
Other-things-equal, the goldilocks scenario above would be "inflationary", though perhaps not as much as the QE+stimulus during the pandemic, if there isn't as direct a route for turning financial liquidity into regular economy spending. (Fiscal stimulus effectively mainlined the QE monetary expansion into the economy during COVID).
But even with this distinction, you are correct, that the Fed and Treasury are in conflict. The Fed wants to tighten financial conditions (with a lagged impact on inflation), while the Treasury is looking to loosen financial conditions.