When a financial and economic crisis strikes, policymakers have only two options.
One is to protect the financial system — cutting interest rates, pumping reserves into the banking sector, preventing big financial companies from collapsing. That's known generally as monetary stimulus.
The other is to protect people — pumping money into household budgets, strengthening safety net programs such as unemployment insurance, allowing the government to step in as the source of family income when employers abandon them through layoffs and shutdowns. That's fiscal stimulus.
