The United States has responded to the economic havoc wrought by the coronavirus with the biggest relief package in its history: $2 trillion. It essentially replaces a few months of American economic activity with a flood of government money -- every penny of it borrowed.And where is all that cash coming
The United States has responded to the economic havoc wrought by the coronavirus with the biggest relief package in its history: $2 trillion. It essentially replaces a few months of American economic activity with a flood of government money — every penny of it borrowed.The traditional view of economic theory holds that governments and central banks have distinct responsibilities. A government sets fiscal policy — spending the money it raises through taxes and borrowing — to run a country.
But to the theory’s adherents, the lock-step maneuvers by the Fed and the government were not the arrival of a far-out idea but the removal of a fig leaf. In the world of central banking, this muted statement qualified as seriously radical. The new policy didn’t put a number on the bonds the Fed would buy, a tacit nod to the idea that it could buy unlimited amounts.
The CARES Act borrowing is, in many ways, the natural result of an evolution that began with the 2008 financial crisis. The bond-buying programs that central banks undertook around the world helped ensure low-cost financing for governments running giant deficits as policymakers contended with a deep recession and a prolonged period of lackluster growth. And despite constant, high-decibel warnings that such an approach would surely ignite a surge of inflation, it never happened.
But the ideas have found broader currency in some unlikely places, such as Wall Street. In recent years, some at huge money management firms and gold-plated investment banks have increasingly turned to MMT as a useful analytical framework to understand the strong links between central banks and markets that have grown since the financial crisis.
France Dernières Nouvelles, France Actualités
Similar News:Vous pouvez également lire des articles d'actualité similaires à celui-ci que nous avons collectés auprès d'autres sources d'information.
How the Government Pulls Coronavirus Relief Money Out of Thin AirThe United States has responded to the economic havoc wrought by the coronavirus with the biggest relief package in its history: $2 trillion. It essentially replaces a few months of American economic activity with a flood of government money -- every penny of it borrowed.And where is all that cash coming
Lire la suite »
Rihanna Is Co-Funding a $4.2M Grant for Domestic Violence Victims in LA Affected by COVID-19Rihanna has already donated $5 million to coronavirus relief organizations.
Lire la suite »
Rihanna Is Co-Funding a $4.2M Grant for Domestic Violence Victims in LA Affected by COVID-19Rihanna has already donated $5 million to coronavirus relief organizations.
Lire la suite »
Watch: Coronavirus task force holds briefing as government considers additional reliefMembers of the coronavirus task force are expected to hold a press briefing Wednesday amid signs that the curve is flattening in some hard-hit areas.
Lire la suite »
Where the Stimulus Loans for Small Businesses Are GoingThe federal government has so far approved loans and grants worth nearly $250 billion for more than one million businesses impacted by the coronavirus outbreak under its small business relief program.
Lire la suite »