The world has felt the economic shocks of the pandemic for nearly two years, resulting in a shrinking workforce and financial instability. In his new book, “Shutdown: How Covid Shook the World’s Economy,” Adam Tooze discusses the central monetary powers that saved global economies from further devastation.
“How do you calm an ocean when it’s storming? That’s what they were trying to do.” –Adam Tooze, Columbia University
Listen: Author and economic historian Adam Tooze on the power of banks during the pandemic.
Adam Tooze is a professor of history at Columbia University and author of “Shutdown: How Covid Shook the World’s Economy.” He says, in hindsight, to have prepared the economy for an event like the pandemic is an unrealistic expectation. “[A pandemic] wasn’t completely unanticipated,” he says. “It’s not completely obvious what preparation for that kind of event would have looked like … That’s not a way that you can perpetually run the world economy.”
As much as the pandemic has devastated the world economy, Tooze says the Federal Reserve and global central banks prevented the worst possible effects. “It’s a huge act of stabilization they performed … How do you calm an ocean when it’s storming? That’s what they were trying to do,” he says.
Tooze says there are reasons to be hopeful that the world financial system is stronger than it was before the pandemic. “As gloomy as we tend to be, there are some good news stories here,” he says. “One thing we didn’t have to deal with in 2020 was a big bank collapse… [and they] were forced to stabilize their balance sheets … We learned lessons.”