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Messages from “Fiscal Space” (Project Syndicate, 7 min read) “[Differences] in fiscal responses across countries can be explained by longstanding systemic inequalities in the global economy, in which developing countries must borrow in internationally accepted reserve currencies. As a result, they simply do not have the fiscal freedom enjoyed by countries that issue such currencies. That is why a new issue of the IMF reserve asset, Special Drawing Rights, has become such an urgent priority”.
Fed Is Doing Quasi-Fiscal Operations by Buying ETFs (Sounding Line, 2 min read) Mohamed El-Erian believes that via Special Purpose Vehicles, the Fed, who are now buying ETFs with credit default risk, have distorted the lines between monetary policy and fiscal action. They are potentially violating the 1913 Federal Act and creating dislocations in the markets.
Inequality Everywhere You Look (Wealth of Common Sense, 5 min read) The divide between rich and poor is broadening in all walks of life. Mega-cap companies like Disney raised $11bn on ultra-low levels of interest (1.7% to 3.8%), whereas SMEs have no funding at all. The bottom 25% of the income percentile are four times more likely to get the coronavirus relative to the wealthiest 25%. 85% of capital in the stock market belongs to just 10% of the population.