There Ain’t No Such Thing as a Free Lunch – Part 2

Romain/ avril 27, 2020/ Finance/ 10 comments

‘Situations emerge in the process of creative destruction in which many firms may have to perish that nevertheless would be able to live on vigorously and usefully if they could weather a particular storm’
Joseph Schumpeter

One year ago, I posted an article discussing the negative side-effects of so-called quantitative easing measures, focusing on the asset inflation problem that leads to a financial squeeze of lower and middle classes in most developed economies (see There Ain’t No Such Thing as a Free Lunch)

Today, I would like to talk about another consequence of MMT that is related to the corporate sector.

Since Covid-19 pandemic hit financial markets, billion to trillion dollars stimulus packages and new unconventional monetary decisions have been announced in the US, in Europe and in Japan. The main motivation of authorities has been to counter the economic shock provoked by several weeks of human lock down. And one of the key measures has been a huge bail-out program for companies that would run out of cash because of this crisis