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We need to wake up to the new economic normal – Sydney Morning Herald

Our shift to relying on government spending rather than manipulating interest rates to manage the economy is not temporary.



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Note that we were caught in our liquidity trap long before the virus came along. The pandemics just brought matters to a head. The problem the economic managers are responding to is structural deep-seated and long-lasting not cyclical: temporary.
So dont imagine the switch from using interest rates to using the budget is temporary. It will continue for as long as very low interest rates keep monetary policy impotent. And for as long as the rich countries bigger problem remains unemployment, not…

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