There a trope of leftist critique that says "the government can provide X dollars overnight to bail out banks and big companies, why can't they bail out working families?!" I am sympathetic to this critique, which is perfectly valid and not inaccurate. However I think it obscures the degree to which the financial system, and the central bank in particular, are capable of flexing to avoid breaking. Big bailouts come, that is, in response to an existential threat to the institutions that reproduce and enforce class arrangements; to demand big bailouts for households, workers, and borrowers is a completely different kind of thing.

To just cry "bail out households not big corporations," that is, fails to acknowledge or challenge the actual arrangement of power. This line of leftist critique was visible in 2008, it is visible in 2020, and we will see it again, likely in another form. It seems helpful to make sense of it now, while it is still sufficiently fresh.

In March, the Bank of England announced an effectively unlimited funding facility for commercial paper to try to limit the damage to relations of production due to COVID-19. Companies big enough to pay the banker's fees associated with issuing commercial paper (short-term bonds) were guaranteed effectively unlimited funding:

The BoE would be indemnified by the government for the risk of these loans and Mr Bailey said the facility was potentially unlimited in size. "We didn't put a limit on it ... we didn't announce it was 'X' because the reason for that is we don't know."

By making it clear that companies can issue new commercial paper directly to the BoE and have it financed by newly issued sterling, the facility is in effect an unlimited form of quantitative easing.

What does unlimited money mean? To take advantage of the facility, companies can issue new bonds to the central bank in exchange for newly created money. Terms of credit will be loose: the whole purpose of the facility is to expand credit when repayment is deeply uncertain. Many borrowers will not be able to pay back. The central bank is not concerned about this, and that lack of concern is consistent with orthodox central banking practice. They don't really care if the loans get paid.

Why don't they care? The global economy is going into a synchronized recession, work is stopping everywhere, everything is disrupted. There will be defaults on a large amount of debt at all levels. Every institution everywhere is going through its existential reflex: trying to bend as much as possible under the circumstances without ceasing to exist. The central bank hosts the institution of payment. Unlimited financing is the assertion that payment itself is more important than any particular bond actually being paid on schedule.

And payment itself is the logic that underlies class: class differentiation is an elaboration and institutionalization of the underlying creditor–debtor relationship, and capitalism is a mechanism for stabilizing and enforcing that differentiation.

It should also be noted that this intervention supports another argmument I have made: MMT is not a left political project. The central bank is willing to open unlimited money creation in support of private business. There is nothing special about government finance here; any debt will do.