After today's good jobs report, my colleague Ramesh Ponnuru needles Paul Krugman: "So, I assume Krugman will now concede that market monetarism is working."

Market monetarism, as advanced by Ponnuru and the economist David Beckworth, among others, holds that aggressive monetary policy is a sufficient force to smooth out business cycles. They favor aggressive monetary action and fiscal austerity, on the ground that monetary forces can offset any fiscal contraction.

And over the last year we've just had a mini-experiment along these lines. Congress and the president have imposed fiscal tightening by raising taxes and allowing sequestration's haphazard spending cuts to come into effect. And the Federal Reserve has (with occasional tentativeness) gotten more aggressive in its easing, setting a specific target for unemployment and running an open-ended program of asset purchases since the fall.

The results so far are good but not great. Job growth is steady and economic growth is modest but positive. Sequestration's human impacts are real, but a macroeconomic drag is not yet apparent. This looks a lot better than Europe, where the central bank hasn't been so aggressive and many economies have slid back into recession.

Yet we should worry about the limits of the market monetarist approach. Monetary and fiscal policy are both constrained by political forces, not just economic ones. A full year of sequestration cuts amount to 0.5 percent of gross domestic product, which is significant but substantially less than the degree of fiscal tightening than Ponnuru and Beckworth advocate. Even if the Fed has the power, theoretically, to scale up its actions to offset a much greater degree of fiscal tightening, it's not obvious that its officials would have the political will to do so.

We're now seeing the boundaries of the Fed's willingness to act. Ezra Klein commented this morning on the "amazingly consistent" pace of job growth over the last three years. Is it amazing? Or does it reflect the political constraint on Fed action: willing to act just enough to keep the U.S. out of recession and deflation, but not much more?

Federal Reserve Chairman Ben S. Bernanke at Jackson Hole, Wyoming. Photographer: Andrew Harrer/Bloomberg

If that's the Fed's political rule, you might conclude that hyper-aggressive Fed action would materialize if it were necessary to stop a recession caused by sharp fiscal tightening. But the Fed may face two simultaneous constraints: an unwillingness to get more aggressive when the economy is already growing modestly, and an absolute limit to the size of its easing actions. That we are surviving sequestration does not mean that the Fed will offset unlimited amounts of fiscal austerity.

So while the last year provides evidence that the monetary channel for improving the economy is effective, the evidence is not so clear as to support Ponnuru and Beckworth's advice to shut off the fiscal channel altogether. Ponnuru admits their case isn't won yet either: "I don't think the latest growth number is strong evidence for the arguments Beckworth and I made about the primacy of monetary policy, but it is certainly not evidence against them." That tentativeness is right -- and it's a reason to act on market monetarists' calls for more monetary easing and see how that works before trying their proposed fiscal tightening.

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