Well, they’d say not, absolutely not, no no no. But the government is going to start using the BoE as a source of financing and will run up overdrafts at the Old Lady. Twitter has decided that this is the first step towards MMT and helicopter money.

The “failure” of the Phillips Curve to show a good relationship between employment and the CPI has been a puzzle for economists. Markets are pricing in nearly a 50% chance of US deflation - is that overly pessimistic?

The US Federal Reserve pinned the Treasury yield curve at fixed levels during WW2. This caused some dislocations once the war was won, but eventually allowed the Fed to gain independence from the Treasury. With debt levels heading to wartime amounts again is there anything to learn from the Fed’s experiences in the 40s and 50s?

The idea that the eurozone was going to get together to issue Coronabonds to deal with the economic impact of the pandemic was always optimistic - but there’s more than one way to skin a cat, and this week we may see two other pan-European bodies, the ESM and EIB used to borrow cash instead. Also U.K. household inflation expectations leapt in March. Does that have implications for wage inflation when we get through this?

The latest data for client flows in the US mutual and ETF market show that the outflows might be moderating, and that high yield funds are very much in demand right now. Lots of cash sitting on the sidelines though.

There’s a great Andy Mukhergee article on Bloomberg which looks at the economic impact of the Black Death in the 14th century. It draws on Paul Schmelzing’s excellent Bank of England paper and looks at wages, consumption and borrowing. Today we look at the article and ask whether we should expect the same wage driven inflation when we come out of coronavirus lockdown.

Part 2: yesterday we looked at the extent of fiscal expansions around the world and the impact on debt/GDP ratios. Today we look at the three things governments can do to get debt levels down again when this is all over.

Part 1. Sovereign Debt to GDP ratios are going to increase by 10% to 25% over the course of this coronavirus crisis. It’s the right thing to do, but when this is all over how are we going to repay those bonds? In this episode I look at the scale of the problem; tomorrow, the solutions.

Fitch downgraded the UK’s credit rating on Friday, citing the increased borrowing it will need to take on the pay for the Coronavirus economic package. Is the U.K. really in increased risk of default as a result of the virus? Can rating downgrades be self-fulfilling prophecies?

It’s expected that there will be hundreds of billions of dollars of investment grade bonds getting “junked” this year as economic conditions deteriorate. Ford was downgraded to high yield yesterday. How much more is to come?