The sharp rise in public debt ratios can be justified; the sharp rise in the money supply cannot

The sharp rise in fiscal deficits and in public debt ratios (we look at the OECD and the world) can be justified by the situation of excess ( ex ante ) global private savings: governments must absorb these excess savings to prevent global deflation. But there is no justification for the sharp rise in the money supply (whether central bank money or money held by non-bank economic agents). It does not respond to a sharp rise in demand for money and therefore creates distortions (abnormally high asset prices: bonds, equities, real estate; squeezing of risk premia). So there are grounds for governments’ fiscal polic ies , but not for central banks’ monetary polic ies .