In many ways the coronacession is very different from earlier slumps. Still, as Adam Tooze says, "much of what’s happening in financial markets today seems incredibly familiar to anyone who spent a lot of time in the 2007-’08 story and its aftermath." 1/ vox.com/2020/3/28/2119…
And as in the 2008 crisis, my inbox is full of people warning that the Fed's efforts to stabilize markets amount to massive money-printing and will lead to runaway inflation; also that budget deficits will bankrupt us. So a bit of wonkery on why that's all wrong 2/
On the monetary side, you really shouldn't think of the Fed as "printing money." What it's really doing is recycling money that is trying to flee into safe havens, with potentially disastrous effects 3/
Private investors are running from anything that's even slightly risky or illiquid, making capital costly or unavailable to business. Look at yields on federal debt, which have dropped to zero, versus commercial paper 4/ 
A lot of this flight capital basically ends up parked at the Fed, which is in turn lending it back out by buying longer-term securities and even corporate bonds. This does increase the monetary base — "printing money" — but it's best seen as recycling funds into productive use 5/
Deficit spending is in a way a similar story. The private sector suddenly wants to spend much less, and accumulate assets instead. But my spending is your income, and your spending is my income. If everyone tries to spend less, the result is a depression 6/
So the government is borrowing the money the private sector doesn't want to spend, and spending it instead. The market is basically paying the government to do this: real interest rates on federal debt are negative 7/
The world doesn't always look like this. But in times of crisis it does, and huge monetary and fiscal expansion isn't irresponsible; on the contrary, refusing to engage in expansion would be irresponsible 8/
