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14 Free money - Coggle Diagram
14 Free money
This new epoch has four defining features
the jaw-dropping scale of today's government borrowing and the limitless potential for yet more
rich countries will borrow 17% of their combined GDP this year to fund $4.2trn in spending and tax cuts designed to keep the economic going
American Congress is debating another spending package
The European Union has agreed on a new stimulus funded by common borrowing
the whirring of the printing presses
print money to buy government debt
long-term interest rates still stay low
the state's growing role as capital-allocator-in-chief
buying business debt
low inflation
no need to worry the fallout of the printing money of large scale
free money
what to concern
interference of the government will grow stronger
even before the pandemic, inflation and interest rates were subdued despite a job boom
deficits and money-printing may well become the standard tools of policy-making for decades
central banks becomes the "markermakers of last resort"
it may bring oppotunities
easier to improve infrastructure
cover the spending on health and pensions which is inevitable
still presents grave risks
inflation is erratic
politicians can play favourites
politician's myopia
The task
delegating fiscal firepower to technocrats
reforming the financial system to enable central banks to take interest rates deeply negative
exploiting the revolutionary shift among consumers away from old-style banking to fin-tech and digital payments