Bad Money’s Pyrrhic Victory Over the Pandemic

The economic spasm of the COVID-19 pandemic occurred when Western economies were far into a long cycle of monetary expansion. The monetary authorities led by the Federal Reserve then injected a new boost into the process of monetary inflation. At the time of writing, it was uncertain how all this would end up. After surveying a range of possible outcomes, the authors conclude that any apparent success of the monetary regime will give way to multiple failures. Building on their analysis, the authors use the monetary experience of the pandemic as a key experiment in the laboratory of history to test hypotheses formed earlier in this volume about good and bad money. They explain why the pandemic has strengthened these malevolent forces by raising super-monopoly profits of the pressure groups, raising the state’s tax revenues and showing politicians how easy it is to curtail civil liberties when people run scared.