The Incoming Currency War

Not sure where this is coming from. We're in the prime of expansive monetary policy. As you say, its old constraints have dissolved. That increases its primacy.

> Most plausible successors treat fiscal and/or tax policies as part of the monetary system

The Eurozone was pioneering in decoupling monetary policy from fiscal authority. The status quo being proven isn't exactly revolutionary.

I understand the need to frame everything in terms of generational upheaval and cycles of history. It's tempting and has been since the dawn of written history. But it's largely escapism. A monetary revolution [1] isn't cyclically required any more than Moore's law guaranteed to continue.

At this time, the most likely future appears to be central banks creating, alongside physical and digital money, cryptocurrency money on an authorized ledger. This will re-tool arcane pieces of financial plumbing, but otherwise leave the system untouched.

[1] Note that each of the recent monetary revolutions, from metal to paper to fiat, from free (i.e. de-centralised) to central banked, from national to supranational, increased the power of the state. If you're rooting for a monetary revolution, it's more likely to concentrate power than not.

This is a somewhat "loaded" statement, with assumptions about what the financial system strives to be. Some of that load is, IMO, monetarism. Some of it is adjacent to monetarism.

Though I suspect we have different views on what we're seeing, I reckon we're seeing a lot of the same things.

It's always easier to explain the past, so this is what it is. That said, I reckon these are a few factors that went into asset value appreciation during the crisis:

1 - As you say, a (correct) market prediction of loose fiscal and monetary policies.

2 - A (probably correct) prediction of long term, near-zero interest rates... regardless of inflation. IE, markets directly predict an end to CB monetarism, as it has been practiced for decades.

3 - (more speculative) ...Lockdowns and such accelerate digitisation and its associated centralisation. E Commerce over physical retail. Netflix over theatres. Etrc. Empirically, digital goods, especially in the hands of very large companies, produce much higher profit margins and/or growth rates. This translates directly into market cap. IE, if $10bn of retails spending/revenue moves from traditional retail to amazon, this is a (substantially) plus-sum game in terms of total market cap.

In any case, this isn't unprecedented. Wars & post war demilitarization have played similar, paradoxical roles before. Conclusions in the past have also been similar... that public spending and the health of the private economy are often complimentary, rather than competitive.

Moving forward, whether or not a majority of US spending is done by the government, all USD spending originates in government money printing. That much is no longer deniable. A view of the world where money originates in private markets, funding government spending via taxation is no longer viable.

IMO, a compromise that doesn't involve central planning is redistribution, either directly or via taxation. There just seems to be more reluctance around the latter than the former, once you get into specific policy cases.

> Worse, any progress begats pushback, backlash, doubling down.

> It's like we can't win.

> Today, I subscribe to David Graeber's theories for making social progress. Work in the margins. Push forward where you can, strategically. Don't storm the castle. Conserve your strength. Pick your battles. Take the (really) long view.

Do you have any links or references that go into that in more detail? It sounds interesting.

I do kinda feel like too much progress too quickly seems to just break society.

Why? We don't have inflation so rates are being kept low. Countries with inflation pressure are raising rates and holding off inflation.

> issuing currency (eg USD) without issuing an equal and opposite (kinda) number of debt instruments

This is how the Federal Reserve has worked for over a century. The Fed doesn't create Treasuries; it absorbs them onto its balance sheet while creating money for the selling bank.

There is theoretically a problem if the Treasury stops issuing debt. This was momentarily considered in the 90s, when the U.S. ran a surplus. But that isn't a problem right now.

> Monetarism (the monetarism I'm referring to) allows and encourages this.

The type of monetarism which encouraged fiscal neutrality was never mainstream. Even in the case of the EU, the presumption was the monetary union would cause fiscal union. A large part of the Eurozone crisis involved recognizing that wasn't a sure thing.