The Covid-19 shock is posing unprecedented challenges to advanced country governments. As most have come to recognize, the economic crisis entailed by the pandemic is unique in that it combines a deep supply shock - arising from wide-ranging and prolonged lockdowns of entire economies with consequent demand shocks arising from a collapse in corporate investment plans, retrenchment of household spending, rapidly increasing unemployment and patchy social welfare systems reduced to their bare bones after decades of rentier capitalism as well as radical uncertainty and heightened fragility in financial markets. As a consequence, policy makers have focused on the provision of massive stabilisation packages, designed to flatten both, the contagion curve of the pandemic as well as the curve of economic meltdown and financial panic, through a raft of cash transfers, credit lines and guarantees from governments to households and firms. Doing so depends on the ability of governments to borrow from their central banks or for central banks to revert to their original role as bankers to their governments on the required scale, a concept often referred to as fiscal space. How to deal with this necessary accumulation of government debt in response to the crisis, and in particular, how to avoid the mistake of turning to austerity to make adjustments once the crisis has passed, is already beginning to tax the minds of policymakers in the advanced economies.