Protecting the Health, and Wealth, of Nations

摘要

International policymakers are focused on the threat of COVID-19. The pandemic threatens not just our health, however, but also our wealth. Countries have spent incredible sums of money fighting the virus. This is especially true of the United States (US). But there is a downside to this profligacy. At the end of July, Fitch Ratings questioned the country's long-term financial viability by moving the AAA-rated country's credit outlook from 'stable' to 'negative' (Fitch Ratings, 2020). And yet we cannot allow the virus to run its course without significant countercyclical stimulus (Brookings, 2020). Economic policymakers must therefore do the seemingly impossible: avoid the deflationary risks of today without adding to the inflationary risks of tomorrow. This article proposes a solution.