The IMF and the Nobel fraternity helicopter money or something akin to Modern Monetary Theory (MMT)

The IMF and the Nobel fraternity are more worried that the global economy will slip into a protracted slump as defaults increase and long economic Covid does its worst. 

If so, there will be pressure on central banks to tear up the rule book and opt for helicopter money or something akin to Modern Monetary Theory (MMT), in which case debate on the technicalities of today’s QE becomes irrelevant.

Ben Bernanke is calling for a “coordination mechanism” between the Fed and Congress, pointing the way to joined-up fiscal and monetary policy. 

He has suggested the nuclear option of helicopter money to fund the federal deficit and inject money into the veins of the economy.

Central bank independence as we knew it has become a shibboleth. 

Lord Adair Turner from the Institute for New Economic Thinking proposes a fiscal twin to the Monetary Policy Committee that could calibrate the dosage of monetisation in order to prevent electoral prime-pumping by politicians.

It would be dangerous for the UK to go it alone, but there is herd immunity from the markets if all the big central banks move in concert.

The world is not yet ready for such a radical departure. But when you have the IMF warning that the global economy is in a liquidity trap, it may not be so far away either.

Ambrose Evans-Pritchard Telegraph 30 November 2020

https://www.telegraph.co.uk/business/2020/11/29/dangerously-close-repeating-austerity-errors-2010/