Foreign Affairs: Hocus-pocus? Debating the age of magic money new magicians, same old tricks

“The COVID-19 recession has prompted states to offer vast amounts of financial support to firms and households. When combined with steps that central banks have taken in response to the financial crisis of 2008, the bailout is so large that it has ushered in what Sebastian Mallaby, writing in the July/August 2020 issue of Foreign Affairs, calls “the age of magic money.” The combination of negative interest rates and low inflation, Mallaby writes, has created a world in which “don’t tax, just spend” makes for a surprisingly sustainable fiscal policy.

The thrust of that description is accurate.”