“A huge global pandemic is a really big deal. It’s killed hundreds of thousands of Americans, many more people around the globe, and it’s also led to many cases of non-fatal illness that were nonetheless serious and involved hospitalizations or prolonged recuperation at home. The pandemic has also significantly altered almost everyone’s daily conduct — not commuting to offices, wearing masks on the job, conferences and conventions going global, schools getting stricter about attendance while sick. An economic cost alongside the humanitarian one is inevitable; there’s nothing fiscal or monetary policy can do about that. What policy can do is impact what kind of cost is ultimately borne.
In the beginning, it seemed like the pandemic would induce a really serious recession. But thanks to Jerome Powell and Steve Mnuchin and Nancy Pelosi and Joe Biden and Raphael Warnock and others, that hasn’t been the case — we pumped a ton of money into the system, flushed people’s pockets with cash, and largely averted severe economic deprivation despite a very scary and disruptive virus. Instead, we got a moderate amount of inflation, which while bad is clearly preferable to a prolonged spell of mass unemployment. So why don’t policymakers always opt for “moderate amount of inflation” over “prolonged spell of mass unemployment?””
And he goes on to discuss in more detail (complete post is available for subscribers).