The past quarter has set records in extra spending by governments measured as a share of (normal) GDP. For the developed world this emergency spending has ranged between an additional five percentage points to as much as 15% of GDP. Another record has been set in money created by central banks — of the order of an additional $5-trillion. Included in the current bout of quantitative easing (QE) has been substantial purchases of corporate debt.

The monetisation of debt has meant very low interest rates with which to fund rapidly growing fiscal deficits, and rising debt to GDP ratios. Records are therefore also being set in the amount of cash raised by businesses. Since the end of March US-listed firms have raised a quarterly record-beating $148bn of extra share capital. Monetary policy has made capital raising on a vast scale possible on increasingly favourable terms, without which recovery from the lockdowns would be impossible...

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