Helicopter Money Now A Hot Idea To Fight Off The Next Downturn

According to an article published late Saturday night in    Bloomberg Economics , an emerging consensus says the next downturn may need to be fought with direct and permanent injections of cash –- often called “helicopter money’’ -– and that central banks can’t deliver it alone. . .
That type of stimulus used to be taboo, in part because it risks eroding the independence from politics that monetary policy makers prize -- and President Donald Trump is already threatening.
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A Long-Despised and Risky Economic Doctrine

Is Now a Hot Idea

By Enda Curran and Ben Holland    

‎September‎ ‎21‎, ‎2019‎ ‎10‎:‎00‎ ‎PM

"It’s like a design competition. Hardly anyone thinks central banks can fix a stalling world economy with their current tools. So some of the biggest names in finance are trying to invent new ones.

The proposals so far -- including recent entries by billionaire Ray Dalio and monetary policy maven Stanley Fischer -- have one thing in common: They foresee the once all-powerful central bankers taking a more junior role, and collaborating with governments . . "

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The monetary policy makers can encourage private actors to spend or invest, by making it cheaper to borrow. By historical standards, though, interest rates are near rock-bottom already and the credit cards of households and businesses are pretty maxed out. In the low-rates era, it’s mostly been governments doing the borrowing.

 

The new thinking says central banks can get in on this act too –- an idea, known in the jargon as fiscal-monetary cooperation, that economists are now trying to flesh out. It could solve problems, and maybe create some new ones, on both sides...

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