Banking and business cycles from Beckworth

What the evidence does show is that in most cases where fiscal consolidation was accompanied by a robust recovery it happened because monetary policy was accommodative. In other words, a loosening of monetary policy made it appear that fiscal policy tightening was the cause of the economic recovery when in fact it was not. Beckworth's interpretation of the evidence.

OK, let's take his interpretation as correct. If the accommodation and fiscal tightening is all about the central bank and central government taking losses, then he may be right. But these two partners do not take losses unless there is a sustainable expansion in the cycle, and they are out of touch with the expansing sector.

The precursor here is business expansion due to technology change and restrictions on the ability of the central policy makers to participate in the recovery. The start of growth occurs first and inflation second.

From network theory this is easy to see. Sectors that participate in a new growth phase are those sectors coherent with the growth sector, their networks match. The lesser the inflation during expansion, the better network coherence that policy institutions have, they see fewer losses.

Let's put it more plainly.  Unless Congress and the Fed work closely with the venture community, they are going to see inflationary losses not deflationary gains. They are going to miss the Goodies.

Beckworth get cause and effect mixed up:

So if Russ Roberts is like me and wants fiscal policy consolidations that works he should really be clamoring for more monetary stimulus. Otherwise he may get more than he bargained for.

In the case of Europe, it looks like the German government is taking gains, German deflation, because Germany where growth occurs. The Greek and Spanish governments are missing out.

Beckworth is a monetarist:

Moreover, his analysis ignores what monetary policy is really capable of doing for the U.S. economy: increasing nominal spending and nominal incomes. Another Beckworth

In our case, the Midatlantic is the regional economy most dependent upon government operations. But are the technology gains coming to government and is government working closely with the technology sector? No, so the Midatlantic will see more inflationary losses during the expansion. The problem for Congress is that they have little available yield to spare for losses and the technology change occurring is huge.