Global central bankers say fiscal aid crucial in new phase of pandemic battle

By Howard Schneider and Balazs Koranyi

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Stop the politics already. Central bankers need to provide the right environment (monetary policy) for government to provide the necessary fiscal aid. Or sue China and both. You can't shut everything down and argue and do nothing else.

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"....fiscal aid crucial in new phase of pandemic battle."

Am I the only one who has noticed that whatever the experts advise doing, the US President does the opposite? Whether it is face masks, social distancing, or helping citizens cope with the economic consequences of the pandemic, the US President does the opposite of what the experts recommend.

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Fiscal deficit countries running even bigger fiscal deficits while tax revenues are falling due to economic slowdown. Hmmm.

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Fiscal deficit countries running even bigger fiscal deficits while tax revenues are falling due to economic slowdown.

While I can't speak for most countries, I can speak for the US. The problem with running bigger fiscal deficits to bail out the economy is that the US keeps giving it to the wrong people. The average American will spend if you give them money. But they are typically pushed behind corporations. The average corporation takes care of the upper levels of management before focusing on other business expenses when they are bailed out. Those individuals don't spend and the corporations will still enact a hiring freeze until things improve.

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When was the last time central bankers wanted less money in the system - in Allende's Chile, or Mugabe's Zimbabwe?

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The governments need to provide a lot more stimulus money now....or else, say good bye to prosperity.

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Making old vulnerable people stay home, and getting young people back to normal working life and stimulating small businesses with interest free loans is the best approach.

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You need to get the money to the right people, meaning those who will spend it. Just giving money to corporations will delay a recovery. I think for example a moratorium on the sales tax of 10% would immediately boost the economy.

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The governments need to provide a lot more stimulus money now.

Can we not call it "stimulus money", please?

I can bear "life support money", if we must try to tide economies over this pandemic disaster.

But I look at the Go To stimulus programs here in Japan and can't help but feel they are a poor idea. I at least want to support the needy, but I do not want to stimulate demand for services provided to the rich.

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Can we not call it "stimulus money", please?

"Stimulus" has long been an accepted and common term in the study of economics.

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Top U.S. and European central bankers on Tuesday called for renewed government spending to support families and businesses as the battle against the coronavirus-triggered recession enters a newly critical phase.


Does anyone really think that central bankers give a hoot about families and businesses, especially SMEs? It probably has more to do with funding welfare with debt in order to justify extended lockdowns, where only the big businesses survive and everyone else is left to beg for welfare.

Are these the same central bankers, including the IMF, who Belarus president Luschenko claims offered him loans on the condition that he implement harsh coronavirus conditions like those of Italy, with extreme lockdowns and curfews?

Meanwhile, the IMF continues to demand from us quarantine measures, isolation, a curfew. This is nonsense. We will not dance to anyone's tune,” said the president.


That's what he said, take it or leave it.

An IMF spokesman, Gerry Rice, dismissed the claim, saying:

But still on Belarus, I I can tell you, we did not demand quarantine, isolation, lockdown, but we sought assurances for steps to contain the pandemic in line with WHO recommendations, which is our standard operating procedure in all countries. So, just the same.


Luschenko is something of a thug, but the IMF has form in extracting their pound of flesh from loan recipients and muddying the waters when it comes to telling the truth about their loan programs (Asian Financial Crisis for one), so it's difficult to tell who is telling the truth. But apart from some sympathy from Russia and supporters in his own country, it's unclear what he would have to gain from lying about this, as probably doesn't;t have the leverage to extract better terms on a prospective loan. And taking the loan, conditional on crippling the economy with lockdowns, would further hamper Belarus's ability to pay it back. So no win there.


Given that the death rate in Belarus is about 6 per day from COVID-19 without IMF-imposed lockdowns and the rmeasures, he has probably made the right trade-off.

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Jeff, of course you are right! But are we trying to stimulate our economies right now?

It seems like the wrong thing to do in the middle of a pandemic, with record infection counts reported in some countries in recent days.

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When was the last time central bankers wanted less money in the system

Sigh. Do you know what a deflationary spiral looks like? If adding money too fast to an economy causes inflation (rising prices and later rising wages to keep up), reducing the supply of money caused deflation, falling prices and wages. What's the problem with that you ask? Well the one thing that does not fall are the balances of any outstanding loans. Most businesses and home owners have an outstanding loan balance, be it business loans and lines of credit or a home mortgage. Each party needs enough money coming in to cover basic expenses and make their loan payments. But during a deflation a point is often reached where incomes, both personal and business, are not enough to make their loan payments. When that point is reached you have mass bankruptcy, mass mortgage defaults, huge unemployment as businesses go under and suffering rivaled only by war. THAT is why central bankers are loath to ever allow the money supply to enter a period of decline.

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