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Now the reckoning - the bill to fight the virus

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Whatever it costs, governments say they will pay to defeat the coronavirus and prevent the global economy from melting down.

Economists are only now beginning to estimate what it might actually cost. The figure looks massive and will likely have a profound impact on policy for years to come.

G20 economic powers have pledged north of $5 trillion in support for economies that were deliberately stalled to halt the spread of the COVID-19 epidemic. Some of that support is in loans and guarantees, and the actual spending is only just starting.

That means the final bill remains to be seen. But the first estimates show it will be large and the likely accumulation of national debt will be staggering.

Morgan Stanley's chief economist, Chetan Ahya, for example, estimates the cumulative rise this year in the primary fiscal gaps, excluding interest payments on standing debts, of the United States, the euro zone, Japan, Britain and China will be about $2.8 trillion.

Such large national debts can't be serviced without central banks keeping their funding costs near zero for years to come. The resulting low interest rates and high government spending........

© Japan Today