POPA ReconA tighter version of the argument holds up better: the economy and markets lean on monetary and fiscal support in recessions and shocks…
A tighter version of the argument holds up better: the economy and markets lean on monetary and fiscal support in recessions and shocks, and excess liquidity is a useful signal then. In long, stable expansions (roughly 1983–2007 and the 2010s), growth came more from real drivers and steady, predictable policy, so the indicator carries little information. The split supports the refined version of your argument. Near recessions, excess liquidity predicts next-year stock returns (correlation 0.30); in expansions it predicts nothing (−0.02). “Near a recession” means within 12 months of an officia…
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