An ultra-expansionary (fiscal and monetary) economic policy is possible only if there are capital controls or financial nationalism

Some countries (Japan, China) have chosen to implement an ultra-expansionary economic policy: large fiscal deficit, stimulatory monetary policy with low interest rates and strongly growing liquidity. Such a policy is possible only if there are either controls on capital outflows, or financial nationalism (strong preference for the country's assets). In a different configuration, there are considerable capital outflows (as we saw in China from 2014 to 2016), the fiscal deficit becomes difficult to finance and the exchange rate depreciates drastically. We cannot use China or Japan as examples of economic policies that should be conducted without understanding that capital controls or financial nationalism are an integral part of this economic policy choice.