As society melts down, markets melt up. The constant manipulation of interest rates has turned the world of finance upside down. Serious investment has become impossible. It’s the sort of topsy-turvy state Lewis Carroll might have imagined if Alice was putting money to work.
The massive fiscal deficits engendered by the virus should see off deflation. The spectre of rising prices now beckons. While its potential horrors shouldn’t be downplayed, inflation can resolve great imbalances and festering social discontents besetting the global economy.
Dependency on risk models may be leading policymakers astray in handling the pandemic, just as such models did ahead of the financial crisis. If “risk societies” are to prosper, they must apply large doses of common sense to avoid the groupthink that hinders smart decisions.