But it’s already here!
It has finally sunk in: what everyone really wants is helicopter money. Central banks, instead of transferring trillions of newly created dollars or euros or whatever to the banks should just hand them directly to the people, like dropping bank notes from a helicopter, so that these people can grab them and spend them all in one fell swoop, thereby creating sudden artificial demand, driving up inflation, and solving all economic problems of our times.
Instead of creating asset price inflation, as QE had done, it would create consumer price inflation. Wages would still remain stuck, and workers would soon not be able to buy the normal things at these inflated prices, but that wouldn’t matter because now they’re getting helicopter money, and companies could increase their sales, margins, and profits simply by raising prices without having to sell a single extra item.
Among economists, it’s the hottest idea of the century. But the ECB will have none of it. Or so it said today, on two different occasions, by two different officials, curiously using the same words.
“It’s not on the table,” ECB Executive Board member Peter Praet told a bunch of economists today who’d been pushing for an answer at a conference organized by the Center for Financial Studies in Frankfurt.
He hadn’t come to discuss helicopter money. His speech was all about rationalizing monetary policy measures that have become absurd to everyone except to those who’ve been drinking the Kool-Aid.
He was explaining how these measures — the negative interest rates, the more-than-free money where lenders pay borrowers, the purchases of bonds, including securities backed by Italian non-performing corporate debt, the whole schmear — would “ward off the risk of a too prolonged period of low inflation,” although low inflation benefits every worker in the Eurozone.
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