silver and lead...
Posted on 07/13/2016 7:36:46 PM PDT by dennisw
Think "helicopter money" is/will be confined only to Japan, which has been sending conflicting trial balloons about this unprecedented next step in monetary policy for the past two days (first Japan's Senkei reported that the government will be adopting “helicopter money” followed by a government spokesman denying the report, then followed by a separate Bloomberg report about a 10T yen stimulus plan, the concluding with Abe advisor Koici Hamada saying that "boosting fiscal and monetary stimulus at the same time would be effective" in Japan)? Think again.
Speaking overnight in Australia, the Fed's Loretta Mester said "helicopter money" could be considered to stimulate America's economy if conventional monetary policy fails.
"We're always assessing tools that we could use," Mester told the ABC's AM program. "In the US we've done quantitative easing and I think that's proven to be useful.
"So it's my view that [helicopter money] would be sort of the next step if we ever found ourselves in a situation where we wanted to be more accommodative.
Mester's qualified support for the use of "helicopter money" comes amid expectations that the Bank of Japan is poised to unleash a major fiscal stimulus package of at least 10 trillion yen ($130 billion) to kickstart its flat-lining economy.
The surprising comments from a Fed hawk, come on the heels of two other Fed presidents hinting that more QE could be used as additional "ammo" should the US economy relapse back into recession, and as major central banks consider unconventional policy tools in a world of slowing growth, low inflation and record low interest rates. Mester said that concerns about the Brexit vote were a consideration in June when the Federal Reserve left rates at between 0.25 and 0.5 per cent, a consideration While the immediate impact of Brexit rattled financial markets, Mester said the Fed would be looking to medium and long term fallout.
"Between now and our next meeting and future meetings we are all going to be assessing what the impact of that decision will mean in terms of economic conditions and how they effect the medium term outlook for the US economy," she explained.
Ironically, the same Mester said she believes there are risks in keeping US interest rates too low for too long. "For the US, if we overstay our welcome at zero then of course there would be financial stability risks," Dr Mester acknowledged. So her "solution" is not just more easing, but outright monetary paradrops.
Isn’t the Fed already using “helicopter money” to buy US Treasuries and suppress natural interest rates???
silver and lead...
They did that for a while but stopped to let Europe and Japan do it. It actually does not matter much which central bank does it at any given time. We will inevitably do it again since we can’t face up to the fact that we need a rapid and thorough deliveraging to start getting long term growth. Instead we will take easy road which leads to hell.
The government’s solution to failed socialist policy is more socialist policy.
The government’s solution to failed monitary policy is more monitary policy.
Oh, “helicopter money”. That’s money that is given freely to everyone except normal citizens.
The government has 12 billion a year to give to Afghanistan. They GIVE hundreds of millions for ISIS, oops, I meant the moderate opposition. 300k to the Israeli opposition party. Banks too big to fail, domestic and foreign. They spend a fortune on foreigners who hate us, who decide to move here without permission.
But the one thing they cannot spend money on is a US citizen, directly or indirectly.
Id like to see entitlements curbed hard. But I do not support a dime of US entitlement cuts when we give money to Afghanistan, or buy 1.5 billion in German subs for Egypt.
What’s the definition of insanity again?
Deleveraging will bring on a Paul Volker style 1980-1982-1983 crash but its the only way out. We might even get a derivatives crash from this. I am willing to eat pork and beans for a few years.
Bring back Glass-Steagall in a stronger version to return limits and discipline to banking and the theiving banksters !!
That a Fed Hawk is mentioning it favorably shows you how freaked out they are about the imminent debt deflation.
To the man with his hand on the lever, that's Armageddon.
Cash is king.
Unless they turn $4 trillon dollars of printed money over to the crack heads in Baltimore.
On your dime.
If you are going to write an article like this, you might at least tell the 99# of us who never heard the term what “helicopter money” is, preferably in the opening paragraph.
Ben Bernanke is one of the most dangerous men walking the planet. In this age of central bank domination of economic life he is surely the pied piper of monetary …
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Any chance this financial crap can be written in plain Joe Sixpack English?!
Completely agree with DesertRhino and dennisw.
It doesn’t matter which dumbass idea they try — so long as the deficit and the national debt are out of control — the poor suffering taxpayer will take it on the chin!
And, the “Grand Dumbass Poobahs” who make these dumbass decisions NEVER have to suffer the consequences of their dumbass decisions!
If ALL governments lived within their means, balanced their budgets and paid attention to Econ 101 concepts and plain old common sense, the problems they purport to “solve” with their scientific wild (dumb) ass guesses would not be necessary!
And, we’d all be better off!
Helicopter money is monetary policy so loose, so profligate, so reckless that you might as well throw money out of a chopper to everyone.
It is basically giving money away to various groups as direct ‘stimulus’.
In Japan the central bank has printed Yen and purchased all the sovereign (national) debt. They then moved on to the bond market and bought up all the bonds (we are headed there). They ran out of those so they have been purchasing all the public stock. The central bank is printing money and buying everything. They will own large amounts of everything. With a currency that means nothing.
The only step left is helicopter money.
This is happening all over the world. All the Western countries are kicking the can farther down the road than anyone dreamed would happen. They are all racing each other to see which one can devalue their currency first - which will ease their massive, unpayable, debt obligations. All of this is going to make the resulting correction catastrophic.
I doubt we go more than 12 months more without a currency crisis. The party is over and the bill WILL be paid.
Silver and lead is right.
Stop screwing around with our money, fed. Hey congress get some fiscal responsibility! It ain’t asking too much ya know!!
Brass and lead not silver and lead.
“Helicopter money has been proposed as an alternative to Quantitative Easing (QE) when interest rates are close to zero and the economy remains weak or enters recession.
Economists have used the term ‘helicopter money’ to refer to two very different policies. The first set of policies emphasizes the ‘permanent’ monetization of budget deficits.
The second set of policies involves the central bank making direct transfers to the private sector financed with base money, without the direct involvement of fiscal authorities. This has also been called a citizens’ dividend or a distribution of future seigniorage.
The idea was made popular by the American economist Milton Friedman in 1969 and reinforced in contemporary times by former Federal Reserve chairman Ben Bernanke.”
That's the problem, it is not "our" money. Read up on Jekyl Island to understand how we've all been made debt slaves.
/hedge accordingly, get some PM in your safe.
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