We have heard repeatedly this year that co-ordinated monetary easing is not going to be enough when the next recession comes. Fiscal stimulus will be necessary to maintain global growth. Unfortunately, this pronouncement reminds me of my childhood Christmas wishlist. For several years running, I put a baby brother at the top. But doggedly wishing for something is not enough to make it happen.
There is widespread agreement that central banks do not have the tools needed to address the kind of supply-side shocks the global economy is facing. The world is caught in a liquidity trap, with persistently low interest rates and a glut of savings. Fiscal stimulus would be one way to escape it.
But while the economics are sound, the politics are problematic. In the US, the 2020 election means bipartisan consensus on any major new initiatives is all but impossible. Fiscal stimulus in an election year is not unprecedented — a Democrat-led Congress and Republican president passed a programme in February 2008 amid signs of a sharp slowdown. But US growth in the third quarter this year was 1.9 per cent, slow but not alarming.