What is the cost (the risk) of today’s fiscal and monetary policy?

The highly expansionary fiscal policy is necessary, given the fall in GDP caused by the lockdown. A first risk is therefore one of an excessive rise in public debt ratios and a sharp rise in long-term interest rates. Indeed, there is now much debate about the consequences of very high debt ratios. But it is important to understand that public debt is being monetised by central banks, and that if this monetisation is irreversible, the monetised public debt is effectively cancelled. So there is no public debt problem or risk of a rise in interest rates, since only the public debt that is not held by the central bank matters. In effect, central banks and governments are employing helicopter money and modern monetary theory. Inflation in goods and services prices is not a risk either, given the absence of a ny link between money creation and inflation in contemporary economies. This leaves the risks associated with excessive money creation, i.e. the risk of serious financial instability. It is on this point that the debate should focus, and not on the level of public debt or on the need to use helicopter money. After all, in reality the public debt is not rising and helicopter money is already being used.