“April is the cruellest month,” TS Eliot wrote in his 1920s poem, The Waste Land . Next month’s spring meetings of the International Monetary Fund and World Bank will be held virtually, locked down by the pandemic that is still raging worldwide. The world is in a cruel situation. The uneven arrival of vaccines means a few rich countries get them first while the health and economic conditions of the many are dire. The latest OECD Economic Outlook suggests this year’s recovery will be divergent, meaning certain countries will do better while others struggle. That is polite language for devastation. When the pandemic hit, developed countries spent roughly three times as much on stimulus packages as during the 2008 financial crisis. Poorer emerging market economies could not afford to print money to the same extent, but they witnessed considerable capital outflows. According to the Institute of International Finance, emerging markets attracted US$313 billion in portfolio flows in 2020, 13 per cent less than the previous year. Furthermore, foreign direct investment fell 42 per cent from US$1.5 trillion in 2019 to an estimated US$859 billion in 2020, according to the Unctad Investment Trends Monitor. With less export income as commodity prices tumbled, many developing countries face debt distress. In the past decade, the external debt of developing countries rose from US$4.5 trillion in 2009 to US$10 trillion, or 29 per cent of GDP, in 2019. Developing countries face repayments on their public external debt amounting to an estimated US$700 billion to US$1.1 trillion. Thus, when official forecasts discuss recovery on an average basis, we should have no illusions that the situation for the bottom half of society in many emerging markets is serious. The rich do not fear inflation, but when food and energy prices rise amid massive monetary creation, the poor will be the biggest victims. In the 1930s, English economist John Maynard Keynes identified the liquidity trap, where aggregate demand lags behind aggregate supply. Too much savings was stuck in short-term liquid assets and not enough money was put into long-term investments to get jobs going again. Funding is available, but since no one is investing for the long term and improving productivity, you get secular stagnation and a slide into slow-growth depression. We have a similar situation today. Since the 2008 financial crisis, the invention of quantitative easing used painless, short-term monetary policy to avoid painful fixing of long-term structural deficiencies. Since Wall Street controls Main Street through money politics, no one is willing to tax the rich to deal with the widening inequalities. After World War II, the US emerged as the world’s strongest and richest country. It acted as the world’s banker, lending dollars to those who needed them to recover, including creating multilateral development banks like the World Bank to provide long-term development funds. Today’s situation is reversed. The US has become the world’s largest borrower, with a net foreign liability of US$14 trillion as of September 2020, or more than 60 per cent of US GDP. The rest of the world is in effect funding its banker , who is not investing long-term in its own home market or the rest of the world. Here’s how the global balance sheet looks. The emerging market economies, including China, hold roughly US$10 trillion of the US$12 trillion in global foreign exchange reserves , of which 60 per cent is in US dollars. At the same time, the emerging markets owe roughly US$10 trillion in foreign debt, mostly in US dollars. Since they pay a 4 per cent margin – 2 per cent higher borrowing costs and 2 per cent lower return on short-term investments and deposits – they provide global bankers and asset managers with US$400 billion revenue for not lending them money for long-term investments. Since global ratings agencies define credit risks to rich countries as low and those in emerging markets as high, emerging market economies are being starved of their own money. There is no shortage of short-term money since central banks increased their balance sheets by more than US$9 trillion in 2020 alone. The multilateral development banks have estimated total assets of US$1.6 trillion while UN Sustainable Development Goal investments have an annual financing gap of US$2.5 trillion. The rich countries that control the multilateral banks refuse to increase their capital to help address this gap, instead asking emerging market economies to resort to market funding. But the financial markets are only funding the rich. The world’s stock markets have only 41,000 listed companies, but there are millions of small and medium-sized enterprises that cannot access public capital. The global financial system is designed for the few, not the many. If the world’s bankers refuse to think for their clients, it is time for emerging markets to think for themselves. The recent US and European support for a US$500 billion increase in special drawing rights for the IMF is a step in the right direction, but it does not address the structural liquidity trap. Who will lead the investment in long-term green and inclusive infrastructure for the developing world? The first thing to address is the massive implementation capacity gap. Too much short-term thinking has depleted governments’ operational capacity to design, execute and operate long-term infrastructure. Many public-private partnerships have turned out to be opportunities for corruption or weak project designs. The multilateral development banks complain, but they lack the effective experience that existed before the 1980s. Project engineers dominated operations then, rather than present-day macroeconomists and MBA holders who talk more theory than hard skills. Democracy is about the many for the many. It is time for the many in emerging markets to think and act for themselves. Andrew Sheng worked at the World Bank in the 1990s on development finance. The views expressed here are his own