UK chancellor Rishi Sunak seems to be trying to build for himself the image of a man who is not afraid to “tell it like it is” when the situation requires it. But his actions show that he is prepared to sacrifice long-term economic development for a short-term boost for his Conservative party.
If after the great financial crisis of 2007-2009 the word “extraordinary” characterised monetary policy, the Covid-19 pandemic calls for a much stronger adjective: “unprecedented”.
As the world has never before been faced with an instance when virtually all economic activity stopped for a certain period of time, this is an appropriate word. However, in monetary policy really very little can be said to be truly “unprecedented”.
For example, take modern monetary theory (MMT) — a theory about how to have your (monetary) cake and eat it, which (simplistically) states that if a country can print its own currency, that country will never default on its debt because it can create as much currency as it wants to and use it to pay back the debt.
Major central banks, to a certain degree, have already begun versions of MMT.
Before the new coronavirus pandemic, one of the main ways in which the UK’s Conservative Party boosted consumer confidence was pushing house prices up with the aid of various taxpayer-funded schemes such as Help to Buy.
But as the damage done by Covid-19 to the economy heaps pressure on the public purse, should the taxpayer still generously fund schemes that mainly serve to boost house prices and the fortunes of a few big companies and their already well-off clients?
The fact that chatter about a wealth tax is increasing to the point where it could become reality in the UK should not be a surprise. But it would be a very odd thing for a Conservative government to be the one to actually implement it.
Just like he “urged everyone to find closure” regarding Brexit following his victory in elections last year, UK Prime Minister Boris Johnson last week urged everyone to “move on” from the Dominic Cummings saga. But just like then, it is easier said than done.
The reports of the death of the European Union have been greatly exaggerated – to quote Mark Twain — a few times already in the bloc’s tumultuous life.
This time, however, the European Central Bank (ECB) cannot be the only one to do “whatever it takes” to save the eurozone – and implicitly the wider EU — from the economic consequences of the Covid-19 crisis.