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Pandemic Bills Are So Big That Only Money-Printing Can Pay Them

  • Barriers between monetary and fiscal policies are disappearing
  • Federal Reserve is set to buy $3.5 trillion of bonds this year
Treasury Secretary Mnuchin Views Production Of Currency Bearing His Signature
Photographer: Andrew Harrer/Bloomberg

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Forced into record spending by the threat of another Great Depression, policy makers are blurring the lines between borrowing the money they need and simply creating it.

Most modern economies have tried to keep the two activities as separate as possible. The typical setup has been for elected politicians to take charge of budgets, and meet any shortfall by borrowing on bond markets –- while the money-printing machinery was walled off in another branch of government, the central bank.

But those barriers began to look porous after the financial crisis of 2008. And in the coronavirus slump, they’ve all but disappeared.