Covid Showed Us What Keynes Always Knew
About this episode
Economic historian Adam Tooze argues the pandemic vindicated John Maynard Keynes: when Covid froze the economy, governments discovered they could spend massively, central banks could backstop everything, and the supposed constraints of deficits melted away. Tooze and Klein compare the Covid response to the 2008 crisis, debate whether inflation would prove transitory, and discuss the new power — and politicization — of the Federal Reserve. They also turn to the future: whether central banks should fight climate change, the fragility of global supply chains, the return of labor power, and the geopolitical strains between the U.S. and China. Tooze's throughline is that the pandemic revealed both the extraordinary capacities of the modern state and how quickly old economic orthodoxies can collapse.