The money explosion of spring 2020, as it happened

Tim Congdon ()

Chapter 5 in Money and Inflation at the Time of Covid, 2025, pp 153-167 from Edward Elgar Publishing

Abstract: In the weeks following the announcement of a global medical emergency in March 2020, most central banks – working with governments and finance ministries – announced their preparedness to finance large budget deficits and to purchase assets (in “quantitative easing” programmes). As the author explained in emails (of 24 March 2020, 30 March 2020 and 6 April 2020) sent out from the Institute of International Monetary Research, these announcements implied an explosion of broad money growth in leading economies. According to the principles of broad-money monetarism, this explosion in turn would be followed by sharp increases in inflation. In other words, the author translated policy announcements into quantitative impacts on broad money and, in a rough and ready way, applied the proportionality postulate to make forecasts of higher inflation. The forecasts turned out to be mostly correct.

Keywords: Paul Krugman; Vaccine availability; Team Transitory; Energy prices; Money stimulus; Quantitative easing (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035328963
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