of fiscal and monetary policies. to paraphrase keynes, monetary and fiscal policies are “ a subtle device for linking the present to the future ”. these policies may be seriously misguided if they are based on false expectations about the future. on the other hand, the success of these policies in averting a collapse of the world economy right after the lehman brothers ’ failure, in the autumn of 2008, might fuel the illusion that the same policies can bring us back to the halcyon days of mid – 2007, when we were “ still dancing ” as one famous banker put it. it would be an illusion, as i just said. and a waste of time and effort. i briefly discussed these views in bini smaghi ( 2009 ). samuelson ( 2004 ). rajan is working on a book in which he analyses the impact of growing inequalities in advanced economies on agents ’ behaviour leading to the crisis. to avoid this waste, we need to come back to keynes ’ intuition, which is that the problems of the future cannot be dealt with simply by applying the solutions of the past, because the problems of the future are different from the problems of the past. if we want to put our societies back on a path of sustainable prosperity we must stand ready to fundamentally reform the way in which our economies work and compete in the global environment. in doing that, we may well have to resuscitate some defunct economist. and read their work carefully. references aizenmann, joshua, and marion, nancy ( 2009 ), “ using inflation to erode the u. s. public debt ”, nber working paper 15562, december 2009. bernanke, ben s. ( 1983 ), “ irreversibility, uncertainty, and cyclical investment ”, quarterly journal of economics, 98 ( 1 ), 85 – 106. bini smaghi, l. ( 2009 ), “ towards the g8 – strategies for emerging from the crisis ”, speech at the luiss university, 27 may 2009 ( www. ecb. int ). brunner, k. ( 1985 ), “ monetary policy and monetary order ”, in monetary policy and monetary regimes, center for research in government policy and business, number cs – 17, graduate school of management, university of rochester, rochester, ny. cogley, timothy w., and thomas j. sargent ( 2008 ), “ the market price of risk and the

of all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice significant structural change during which the share of employees working in the manufacturing sector fell from 26 % to 16 %. there are two important points i would emphasise here. first, the variation in skills demanded by employers across industries has probably shrunk in a more service oriented economy, which would assist transition where it is needed. and second, policy intervention, particularly the furlough scheme, will help to preserve viable employment going forwards, and skills specific to particular jobs or companies, which is a good thing. ahead of its may monetary policy report, the mpc will assess the impact of the extension of the furlough and related schemes, announced in last week ’ s budget. my expectation would be that this is likely to reduce the peak level of unemployment over the coming months. however some rise in unemployment as the scheme tapers will be hard to avoid. just as workers are often specialised, capital such as plant and machinery can be specialised for specific tasks. the more specialised capital is, the harder it is to redeploy. bank staff have estimated capital “ redeployability ” scores for different types of assets using a similar approach to kim and kung ( 2017 ). information and communications technology, machinery and buildings tend to be highly redeployable, with uses across many industries. in contrast, there are few alternative uses for aircraft. capital may also be in the wrong location even if the pattern of output is similar, if covid results in such a change of location, for instance related to the rise of home working. it is also reasonable to think that there is, and will be, considerable uncertainty over which changes in demand will prove temporary and which will persist ( vlieghe, 2020 ). we do know that as of now many people expect working from home to remain more common after the covid pandemic is over. half of new remote workers say they would like to continue to work from home all or most of the time even when lifting restrictions permits a return to normal working patterns ( felstead and reuschke, 2020 ). employers in some sectors also expect the proportion of staff that regularly work from home to more than double ( chartered institute of personnel and development, 2020 and dmp, 2021 ) 1, and many contacts of the bank ’ s agents expect a hybrid model of