Investing during an era of Fiscal Dominance

As the Street parsed Powell’s Jackson Hole speech and obsessed over whether the Fed would raise an additional quarter-point, the annual Fed symposium at Jackson Hole is meant for central bankers to consider Big Ideas which reflect the concerns of the day.
 The centrepiece of such ideas was usually an academic paper. As an example, the Big Idea in 2020 was “flexible average inflation targeting” and the now quaint problem of persistent low inflation. A paper by University of California at Berkeley academic Yuriy Gorodnichenko argued that the Fed needs clear, simple and transparent communication to create the link between higher inflation expectations and actual spending behaviour. The Big Idea in 2023 is fiscal dominance, or the problem of big government deficits and skyrocketing debt around the world. 
How should investors position themselves in an era of persistent deficits, rising sovereign debt, and fiscal dominance?

The full post can be found here.