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You’ve Been Warned – Ben Bernanke Praises “Helicopter Money” in Latest Blog Post

You’ve Been Warned – Ben Bernanke Praises “Helicopter Money” in Latest Blog Post

Don’t say you weren’t warned. 

What follows are some excerpts from Banana Republic Ben’s latest blog post titled, What Tools Does the Fed Have Left? Part 3: Helicopter Money.

When monetary policy alone is inadequate to support economic recovery or to avoid too-low inflation, fiscal policy provides a potentially powerful alternative—especially when interest rates are “stuck” near zero. However, in recent years, legislatures in advanced industrial economies have for the most part been reluctant to use fiscal tools, in many cases because of concerns that government debt is already too high. In this context, Milton Friedman’s idea of money-financed (as opposed to debt-financed) tax cuts—“helicopter money”—has received a flurry of attention, with influential advocates including Adair TurnerWillem Buiter, and Jordi Gali.

In this post, I consider the merits of helicopter money as a (presumably last-resort) strategy for policymakers. I make two points. First, in theory at least, helicopter money could prove a valuable tool. In particular, it has the attractive feature that it should work even when more conventional monetary policies are ineffective and the initial level of government debt is high. However, second, as a practical matter, the use of helicopter money would involve some difficult issues of implementation. These include (1) the need to integrate the approach with standard monetary policy frameworks and (2) the challenge of achieving the necessary coordination between fiscal and monetary policymakers, without compromising central bank independence or long-run fiscal discipline. I propose some tentative solutions for these problems.

To be clear, the probability of so-called helicopter money being used in the United States in the foreseeable future seems extremely low. 

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

Federally Funded Think Tank Explains How U.S. Government Could Attack Decentralized Digital Currencies

Federally Funded Think Tank Explains How U.S. Government Could Attack Decentralized Digital Currencies

The RAND report goes one step further and suggests that governments should use advanced technical means to actively disrupt virtual currencies. That includes terrorist groups, but also peaceful deployments of digital currencies by other non-state actors, and a general war on privacy and encryption.

According to the RAND analysts, virtual currencies demonstrate a resilient means of storing data in a highly distributed fashion that is very hard to corrupt and could permit, for instance, information dissemination (blogs, social media, forums, news websites) that is resilient to nation-state interference.

The RAND report seems to suggest pre-emptive strikes and notes that “perhaps the best strategy for the United States and its allies to thwart a VC [virtual currency] deployment would be to target those properties of a VC that would most increase its acceptance, most notably transaction anonymity, security, and availability.”

– From the Bitcoin Magazine article: The RAND Corporation Report: National Security Implications of Virtual Currency

When government devolves into little more than a Banana Republic-style oligarchy burgeoned by a cadre of media propagandists and corrupt politicians, the only objective of said government is to secure, protect and grow its wealth and power. In such circumstances, which are the historical norm not the exception, “the people” come to be seen as the enemy by government and the oligarchy that controls it. Indeed, this is the unfortunate state of affairs in which we find ourselves today.

Decentralized virtual currencies pose a clear threat to government control, which is why their deployment concerns the status quo so much. Some of these concerns were outlined in a recent RAND Corporation report titled, “National Security Implications of Virtual Currency.” Bitcoin Magazine covered some of its more troubling angles in an article published a couple of days ago.

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

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