We will get through this, but acting now and genuinely practicing social distancing matters. But as the former Fed governor Kevin Warsh put it, “If you’ve seen one financial crisis, you’ve seen one financial crisis.” In other words, the tools used to combat a mortgage-driven credit crunch are of limited use to fight a global pandemic. It also arranged with other central banks to ease the flow of dollars around the world, which can seize up in times of crisis. Benchmark interest rates in all of the world’s major developed economies are now near — or below — zero. The “firing of so many bazookas at this particular stage,” notes Mohamed El-Erian of Allianz, represents a “monumental policy bet.” In essence, monetary policy has exhausted all of its ammunition.

Source: New York Times March 16, 2020 11:30 UTC