Some day this crisis will end. When, and at what human and economic costs, remain big unknowns. But when markets return to something like normality, investors are likely to find a fundamentally altered political and economic landscape: one in which the role of monetary policy has shifted from primary to secondary importance.
For some time I have talked of this impending paradigm shift, referring to it as the end of monetary dominance and the return of fiscal reliance. But the Covid-19 crisis has made it a reality. Indeed, March 2020 will go down as one of the most dramatic months for policymaking in modern memory.
The G10 policy interest rate, weighted by gross domestic product, is now zero — a record low. Quantitative easing is back, at a broader and larger scale than seen before. Other measures are in place to help with the functioning of markets, giving us a whole new round of acronyms to get used to.