Englund

  Gold traded at $300 an ounce. Last week gold reached a new record high of $2,619.90 an ounce. Fed Gov. Ben Bernanke delivered an interesting speech.  “Deflation: Making Sure ‘It’ Doesn’t Happen Here,”  https://fraser.stlouisfed.org/title/statements-speeches-ben-s-bernanke-453/deflation-making-sure-doesn-t-happen-8874 The future Fed chief referenced Milton Friedman’s ‘helicopter drop of money,’ he argued for a range of policies including Fed-financed government spending to ward off deflation, were it close to happening. MarketWatch 23 September 2024 https://www.marketwatch.com/story/this-chart-shows-gold-vs-the-stock-market-since-bernankes-famous-helicopter-drop-speech-a65038f2 Helikoptrarna närmar sig mars 21, 2020 https://englundmacro.blogspot.com/2020/03/helikoptrarna-narmar-sig.html

The government had much to fear, and undertook its massive fiscal and monetary expansion to avoid the threat of riots. Interest in helicopter money was fed by more than a decade of subpar growth and interest rates that remained stuck at the zero lower bound, even in the face of vast quantitative easing. Matthew Brooker Bloomberg 28 May 2022 https://www.bloomberg.com/opinion/articles/2022-05-28/venice-has-a-400-year-old-covid-monetary-lesson-on-helicopter-money Helicopter money is a valid tool for central bankers FT View Editorial 6 April 2020 https://englundmacro.blogspot.com/2020/04/ledare-i-financial-times-oppnar-for.html  

Centrals banks have been monetizing large fiscal deficits in what amounts to “helicopter money” or an application of Modern Monetary Theory.  At a time when public and private debt is growing from an already high baseline (425% of GDP in advanced economies and 356% globally), only a combination of low short- and long-term interest rates can keep debt burdens sustainable.  Monetary-policy normalization at this point would crash bond and credit markets, and then stock markets, inciting a recession.  Central banks have effectively lost their independence. Nouriel Roubini 14 April 2021 https://www.project-syndicate.org/commentary/stagflation-threat-after-covid19-pandemic-by-nouriel-roubini-2021-04 The 1970s were an era of stagflation — high inflation and low growth. They were also, as a result, an era of terrible performance for asset prices. Martin Wolf 26 March 2021 https://englundmacro.blogspot.com/2021/03/a-spectre-is-haunting-investors-return.html If the strategy fails, ...

https://voxeu.org/article/helicopter-money-another-pandemic-recession-venice-1630

Kommer ni ihåg när det var kris och Bildt, Wibble och Ingvar Carlsson skulle spara oss ur krisen med fast växelkurs.  Sedan bytte alla fot och det som gällde var rörlig växelkurs och ett regelverk som skulle garantera starka statsfinanser.  This time is different. Nu skall krisen mötas med stora underskott. Ekonomer är inte oeniga, som det ofta påstås. De är eniga, men föremålen för enigheten växlar.  För Er som vill hänga med i svängarna, och det vill ju nästan alla, har jag här ett antal länkar om det nya budskapet.  Underskott spelar ingen roll. Om man har en egen valuta och därmed en egen sedelpress. Det har Sverige, men inte Grekland och Italien mfl. Rolf Englund på Facebook 27 augusti 2020 https://englundmacro.blogspot.com/search/label/MMT --- Economic theory discredited https://internetional.se/aztopics.htm#economictheory Medborgare mot EMU http://www.nejtillemu.com/medborgare/mindex.htm Om man har en sedelpress går man inte i konkurs Rolf Englund november 201...

conducts an air assault with UH-60 Black Hawk helicopters Youtube

 FT 23 June 2020 The Deficit Myth: Modern Monetary Theory and How to Build a Better Economy by Stephanie Kelton The government, proponents argue, can print as much money as it wants to fund whatever it wishes. The only constraint is excess demand and so inflation. It is right, because there is no simple budget constraint. It is wrong, because it will prove impossible to manage an economy sensibly once politicians believe there is no budget constraint. Books

I put forward an idea last year called the “Doomsday Dollar” scenario, which laid out how both the greenback and stock prices could potentially fall at once.  Foreign buyers of Treasury bills are getting worried that helicopter money is turning slowly but surely into MMT, meaning the central bank funding of the Treasury, and that from there it will be a slippery slope over time to the post-dollar world.  Rana Foroohar FT 20 April 2020 In fact, the decade between the 2008 financial crisis and this one saw the creation of a vast asset price bubble in just about everything.  That bubble is now bursting Rana Foroohar FT 19 April 2020

“If we can’t do this today, I tell you the populists will win — today, tomorrow, the day after, in Italy, in Spain, perhaps in France and elsewhere,” he said.  “The Marshall Plan, people still talk about it today . . . we call it ‘helicopter money’ FT 16 April 2020 Emmanuel Macron is right that without solidarity the single currency could fail Many details need to be worked out. There would have to be conditions. But the scale of this crisis requires a demonstration of exceptional solidarity.  Without it, political support for the euro will evaporate. FT Editorial 19 April 2020

In exceptional circumstances, such as times of war, deep depressions or pandemics, it is the job of the central bank to support the overriding need for the state to protect people’s lives and livelihood. Only the craziest libertarian would disagree.  As an organ of the state, the central bank must help. Its independence, while normally desirable, is a means to an end, not an end in itself. Even price stability is not overriding in all circumstances. Other things matter. Martin Wolf FT 9 April 2020 Even “helicopter money” might well be fully justifiable in such a deep crisis. Martin Wolf FT 7 April “Independence doesn’t mean having to say no to a request for direct monetization,” says Willem Buiter, a former Bank of England policy maker and Citigroup chief economist.  “It means you can say yes or no.”  MMTers say the question of whether spending is financed by treasury bonds or central-bank reserves isn’t a big deal -- since both are government l...

This is something that you have to say when you are currently a central banker, to prevent politicians running off to the sweetshop with central-bank funded spending. Those who have previously been in the chair, such as Lord King, seem relaxed at the largesse. The question is one of degree, and confidence in the independence of institutions. Telegraph  8 April 2020 Ledare i Financial Times öppnar för Helicopter Money

But the support that matters will have to come from the European Central Bank.  There is no alternative. Nobody should care. There are ways to manage the consequences.  Even “helicopter money” might well be fully justifiable in such a deep crisis. Martin Wolf 7 April 2020

Ekonomer och andra måste lägga Joakim von Anka bakom sig, skrev jag här i går . Detta upptogs inte väl av alla. Det får man ta. I dag kan man läsa en ledare i Financial Times som skriver: Helicopter money is a valid tool for central bankers Quantitative easing programmes may be here for the long term Without limits, allowing a government to finance itself by creating money can lead to hyperinflation. But these risks can be manageable There is no clear distinction between quantitative easing and monetary financing. The scale of today’s downturn means even the most direct monetary financing, such as “helicopter money”, or handing cash to the public, should remain an option. FT View Editorial 6 April 2020

A series of policy ideas which were once the province of a small number of mavericks and limited to purely theoretical discussions are taking centre stage. The most important of those unorthodox approaches is the “helicopter drop”  “We have to be willing to accept fiscal deficits on the scale of 2009,” says Adair Turner, the former head of the UK’s Financial Services Authority. Martin Sandbu 20 March 2020 New World Order Is Coming, Maybe in Helicopters John Authers Bloomberg 9 mars 2020 Helicopter Money -- The Fed's Final Tool The Atlantis Report 19 November 2019 What to do if stagnation threatens when interest rates are already close to zero? Adair Turner Project Syndicate 29 March 2019

Volcker’s victory over inflation ushered in a quarter-century of triumph for a broadly laissez-faire model of globalization anchored by trusted central banks. That foundered in the financial crisis of 2007-09.  The immediate fear in the wake of the Lehman Brothers bankruptcy was that a balance sheet recession would come in its wake, bringing with it deflation. Now that there is no confidence that central banks can avert deflation, the central case for buying stocks has also eroded. With confidence lost in central banks, that new order looks almost certain to involve the kind of fiscal expansion that has been out of vogue since the 1970s, possibly even including helicopter money. John Authers Bloomberg 9 mars 2020 Helicopter Money at IntCom Jag tycker det är skriande uppenbart att räntan världen över är för låg och att en större del av stimulanserna borde ske via finanspolitiken. Det skrev jag på min blogg  första gången den 5 december 2009

John Authers Bloomberg 18 oktober 2019  The Case For People’s Quantitative Easing by Frances Coppola

She is making the case for helicopter money – quantitative easing, but carried out by placing money directly into people’s accounts.  My long-time colleague and mentor, Martin Wolf of the Financial Times, commented John Authers Bloomberg 10 september 2019  Highly recommended

Expecting the fiscal authorities to help out looks like wishful thinking Central banks posting cheques to households, is detailed in a superb new book,  The Case for People’s Quantitative Easing by the economist Frances Coppola.  One problem with this common sense idea is its simplicity, which rarely appeals to economists charged with taking important decisions.  Eric Lonergan FT 2 August 2019

Bank of Japan: a distant whirring sound Helicopter money is more effective, so it’s bad news for bond holders As well as disrupting the market, bidding ever higher prices for bonds renders more costly the ultimate, paradoxical denouement of the policy, when inflation finally arrives, causing yields to rise and bond prices to crash.  Really credible stimulus should avoid this. FT 18 July 2016 As the policy debate intensifies, investors might spare a thought for Korekiyo Takahashi,  Bank of Japan governor from 1911 to 1913.   Gillian Tett, FT 2 September 2010 The ghost of Takahashi haunts Abenomics Edward Chancellor examines the similarities between Japan’s current economic situation and that of the 1930s FT 31 March 2013

As regular readers will know, my advocacy of helicopter money (HM) does not depend on it being different from, or better (at stimulating demand) than, fiscal policy 7 June 2016 Money and Debt