macroVS Episode 18: It's Not Just About the Debt Ceiling

De-coding the G7 finance ministerial communique & what it means for monetary policy

Despite the constant drumbeats in the news cycle, economic policymakers are taking far more action regarding geoeconomics, inflation, and climate change than the debt ceiling. 

The language data (the Quote of the Week and our Top Reads) illuminate how and why policymakers remain focused on sharpening their economic swords against China and accelerating their climate change policy shifts.

Each macro trend by itself would be sufficient to trigger difficult inflation challenges for central banks. Intensifying geoeconomic competition with China together with an accelerated policy focus on the climate transition potentially poses at least as many challenges as the current debt ceiling negotiations.

The main difference is that at least in the United States, the negotiating parties on either side of Pennsylvania Avenue start from the proposition that the nuclear option is not on the table. At the end of the day. all of the negotiators share an interest in doing what is best for America even if they disagree on the mechanism to achieve that goal.

When it comes to geoeconomic competition with China, it is far from clear that the parties share the same goals.

macroVS Episode 18: It's not Just the Debt Ceiling; Decoding the G7 Ministerial Communique