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The Age of Magic Money
Article

The Age of Magic Money

Can Endless Spending Prevent Economic Calamity?



Editorial Rating

8

Qualities

  • Analytical
  • Eye Opening
  • Hot Topic

Recommendation

In just a dozen years, the world economy experienced two massive disruptions: the 2008 financial crisis and the 2020 COVID-19 pandemic. The response in the United States and other advanced economies has been an explosion of monetary and fiscal stimulus that presages an era of “magic money.” Journalist Sebastian Mallaby describes the possible economic and political upshots of broader state interventions in this intelligent examination of what is likely to be a new macroeconomic normal.

Take-Aways

  • US government spending will take the nation’s debt-to-GDP ratio past its historical high-water mark.
  • The mounting debt in advanced countries appears sustainable, at least for now.
  • The Fed’s accommodative posture could change dramatically if inflation returns.

About the Author

Sebastian Mallaby is a journalist and a senior fellow at the Council on Foreign Relations.