The boundaries between monetary and fiscal policies are fading. igh oil prices Did
Policymakers are blurring the lines between borrowing the money they need and simply finding that money, as they have to record spending resulting from the threat of another Great Depression.
Most modern economies have attempted to keep the two activities as separate as possible, but the typical setting for elected politicians was to take charge of budgets and meet any deficit by borrowing in bond markets, while the cash printing machine was separate in another branch of government, the central bank.
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But these breaks began to appear as full of holes after the global financial crisis in 2008, and then they all disappeared during the recession resulting from the outbreak of the new Coronavirus.
According to news agency ” Bloomberg “, public spending is the only thing that keeps the survival of millions of households and businesses, in the cause of the epidemic in the closure of the entire high unemployment industries, and the suffering of the responsible governments for relief efforts of the largest budget deficit in history. They pay at least some of the bills through what are considered effective loans from their central banks, which are debt that can be transferred indefinitely and is actually considered like money.
In the United States, the Federal Reserve is to buy $ 3.5 trillion of bonds this year – according to Bloomberg Economics’s estimates – most of which will be Treasury bonds, which cover a good portion of the fiscal deficit forecast of at least $ 3.7 trillion.
No one knows exactly when the debt will shift from the balance sheet to the hands of private sector investors if that happens. There are similar stories in developed economies from Europe to Japan, and even in some emerging markets, with Indonesia and Poland joining the battlefield.
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