{"id":21417,"date":"2016-07-14T15:56:37","date_gmt":"2016-07-14T20:56:37","guid":{"rendered":"http:\/\/olduvai.ca\/?p=21417"},"modified":"2016-07-14T15:56:37","modified_gmt":"2016-07-14T20:56:37","slug":"helicopter-money-the-biggest-fed-power-grab-yet","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=21417","title":{"rendered":"Helicopter Money\u2014\u2014The Biggest Fed Power Grab Yet"},"content":{"rendered":"<header>\n<h3 class=\"entry-title\"><a href=\"http:\/\/davidstockmanscontracorner.com\/helicopter-money-the-biggest-fed-power-grab-yet\/\">Helicopter Money\u2014\u2014The Biggest Fed Power Grab Yet<\/a><\/h3>\n<\/header>\n<div class=\"entry-content\">\n<div class=\"pf-content\">\n<p>The Cleveland Fed\u2019s Loretta Mester is a clueless apparatchik\u00a0and Fed lifer, who joined the system\u00a0in 1985 fresh out of\u00a0Barnard\u00a0and Princeton and has imbibed in its Keynesian\u00a0groupthink and institutional arrogance ever since.\u00a0So it\u2019s not surprising that she was out flogging\u2014-albeit downunder in Australia\u2014-\u00a0the\u00a0next step in the Fed\u2019s rolling coup d\u2019 etat.<\/p>\n<blockquote><p>We\u2019re always assessing tools that we could use,\u201d Mester told the ABC\u2019s AM program. \u201cIn the US we\u2019ve done quantitative easing and I think that\u2019s proven to be useful.<\/p>\n<p>\u201cSo it\u2019s my view that<em><strong>\u00a0[helicopter money]<\/strong><\/em>\u00a0would be sort of the next step if we ever found ourselves in a situation where we wanted to be more accommodative.<\/p><\/blockquote>\n<p>This is beyond the pale because \u201chelicopter money\u201d isn\u2019t some kind of new wrinkle in monetary policy, at all. It\u2019s an old as\u00a0the hills rationalization for monetization of the public debt\u2014\u2013that is, purchase of government bonds with central bank credit conjured from thin air.<\/p>\n<p>It\u2019s the ultimate in \u201csomething for nothing\u201d\u00a0economics. That\u2019s because\u00a0most assuredly those government bonds originally funded the\u00a0purchase of real labor hours, contract services or dams and aircraft carriers.<\/p>\n<p>As a technical matter,\u00a0helicopter money\u00a0is exactly the same thing as QE. Nor does the journalistic confusion that it involves \u201cdirect\u201d central bank funding of public debt make a wit of difference.<\/p>\n<p>Suppose Washington issues treasury bonds to the 23 primary dealers on Wall Street in the regular manner. Further, assume that\u00a0some or all of these dealers\u00a0stick the bonds in inventory for 3 days, 3 months or even 3 years, and then sell them back to the Fed under QE (and most likely at a higher price).<\/p>\n<p>So what!<\/p>\n<p>&nbsp;<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Helicopter Money\u2014\u2014The Biggest Fed Power Grab Yet The Cleveland Fed\u2019s Loretta Mester is a clueless apparatchik\u00a0and Fed lifer, who joined the system\u00a0in 1985 fresh out of\u00a0Barnard\u00a0and Princeton and has imbibed in its Keynesian\u00a0groupthink and institutional arrogance ever since.\u00a0So it\u2019s not surprising that she was out flogging\u2014-albeit downunder in Australia\u2014-\u00a0the\u00a0next step in the Fed\u2019s rolling coup [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[68,5979,2120,303,5981,452,14181,2151,534,3650],"class_list":["post-21417","post","type-post","status-publish","format-standard","hentry","category-economics","tag-ben-bernanke","tag-contracorner","tag-david-stockman","tag-fed","tag-helicopter-money","tag-japan","tag-loretta-mester","tag-monetary-easing","tag-monetary-policy","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/21417","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=21417"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/21417\/revisions"}],"predecessor-version":[{"id":21418,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/21417\/revisions\/21418"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=21417"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=21417"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=21417"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}