Monetary support in a crisis. Does it work?

Governments spent up big at the start of the COVID crisis, but they are being a bit more canny with their money right now. Meanwhile, central banks are seeing the need to step in, with monetary policy being used to fill the gaps where fiscal stimulus isn’t forthcoming. But are they kidding themselves? Can the economic consequences of a pandemic really be filled by a central bank dropping interest rates and buying back a large number of government bonds? In short, the answer is no. In this week’s Debunking Economics podcast Prof Steve Keen discusses the limitations of monetary policy measures with Phil Dobbie. Plus, why QE isn’t creating money, its just moving it around a bit, to those people who need it the least.

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