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“We Aren’t Thinking About It At All”, Or How Kuroda Just Assured That Helicopter Money Is Coming To Japan

“We Aren’t Thinking About It At All”, Or How Kuroda Just Assured That Helicopter Money Is Coming To Japan

On Friday, courtesy of a Deutsche Bank report laughably titled Helicopter Money 101, we showed how to trade the coming helicopter money paradrop that will be provided by central banks in the very near future. When asking the question of who would be the first to try it, one of the first central banks that comes to mind (both Deutsche’s and ours) would be the Bank of Japan. To date, the BoJ has tried everything in order to increase inflation (or simply to generate any, for that matter), and boost their economy. Everything that is, except for helicopter money (giving money directly to the government or citizens and bypassing all current institutions acting as middle men).

Yesterday according to Bloomberg, BoJ governor Haruhiko Kuroda said that he isn’t thinking about using so-called helicopter money, and that the notion contradicts the law.

“In advanced nations nowadays, fiscal policy is determined by the government and the parliament while monetary policy is decided by the central bank, which is separate from government and parliament,” Kuroda told lawmakers in the Japanese Diet. “Deciding and implementing these things together would contradict the current legal framework. So unless the existing legal framework changes, helicopter money isn’t possible, and we at the Bank of Japan aren’t thinking about it at all.

If you read the end of that carefully, you’ll want to revisit our article on how to trade the coming helicopter money (here). First, we’ll start with the fact that Deutsche Bank already has an answer on how to work around the “current legal framework”, and it’s called simply getting the legislature’s approval.

…click on the above link to read the rest of the article…

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