What would it take for the Fed relax its indepenent stance in pursuit of its triple mandate and begin to consider the Treasury's needs in its decisionmaking?
The boundaries on the Fiscal Dominance Cube were chosen based on one possible answer to that question. It reckons that if:
...all at the same time, then the Fed might begin, either through voluntary cooperation or Congressional action (similar to the WWII-era legislation passed under comparable conditions), to relax its independence as a money supply manager only and consider Treasury budgetary needs in its policy decisions.
Last observation in the quarter. NIPA with NIPA, funds from FRED, book coupon from Fiscal Data. The plotted path runs from 2000-Q1 through the last quarter where those inputs all exist. That quarter-end label is not the date BEA released the print, and it is not the sustainability cube's last point. The gold diamond is a Gemini guess for the next quarter-end — not a BEA print, not a forecast you should trade. It is often wrong, and sometimes amusing. F1 uses live funds minus the last book coupon. F2/F3 NIPA is whatever Gemini returned that night. See the guess and its sources.
Quarter on the cube: …
Release date: …
On the plot: …
Straight-line distance to the magenta box, in the same units the cube is drawn in. The line rises when the quarter moves away, falls when it moves closer, is zero on the surface, and is negative inside.
Zero is the surface. The diamond is the hike quarter with the lowest distance on this line, and the dashed cube above is that same quarter. If a later hike prints lower, both move.
Same distance as in 01 (negative = inside, 0 = the surface) on x; quarterly net FOMC Δ on y. Distance is the independent variable: did being inside the box change the hike / hold / cut. Missing FOMC prints are omitted, not plotted as a hold. Magenta ring = inside the box.
Same idea as the refi gap, except the left-hand rate is FEDFUNDS rather than the CMT-weighted marginal. This plot is the cube coordinate, not the raw gap.
F1 = −(funds − book − 0) / σ σ from 2000-Q1
Sign flipped so F1 > 0 means funds are already at or under the book — a hike is then a fiscal tightening of the stock.
NIPA interest to the public over general-fund current receipts. General fund = current receipts minus social-insurance contributions. Magenta wire at 0 is 20% of that till.
(A091 / (FGRECPT − W780) − 20%) / σ σ from 2000-Q1
Are operations still open. Magenta wire at 0: still borrowing after interest.
100 × (FGEXPND − A091RC1Q027SBEA − FGRECPT) / GDP
All four named series NIPA / BEA SAAR, same vintage as the till. Interest stripped so this axis asks “are we borrowing for operations,” not “is the till already paying the coupon.” This is the flow, not a z-score of debt held by the public / GDP. High stock with a primary surplus is a different country. Completes Δ(debt/GDP) ≈ (r − g)×stock + primary.