Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Helicopter Money’

Sky-High Monetary Policy

Posted by hkarner - 19. November 2016

Stefan Gerlachgerlach

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Trump’s $1 Trillion Infrastructure Plan: Lincoln Had a Bolder Solution

Posted by hkarner - 16. November 2016

Posted on by Ellen Brown, Web of Debt BlogBrown Ellen

Donald Trump was an outsider who boldly stormed the citadel of Washington DC and won. He has promised real change, but his infrastructure plan appears to be just more of the same – privatizing public assets and delivering unearned profits to investors at the expense of the people. He needs to try something new; and for this he could look to Abraham Lincoln, whose bold solution was very similar to one now being considered in Europe: just print the money.

In Donald Trump’s victory speech after the presidential election, he vowed:

We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals. We’re going to rebuild our infrastructure, which will become, by the way, second to none. And we will put millions of our people to work as we rebuild it.

It sounds great; but as usual, the devil is in the details. Both parties in Congress agree that infrastructure is desperately needed. The roadblock is in where to find the money. Raising taxes and going further into debt are both evidently off the table. The Trump solution is touted as avoiding those options, but according to his economic advisors, it does this by privatizing public goods, imposing high user fees on the citizenry for assets that should have been public utilities. Den Rest des Beitrags lesen »

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Helicopter Money Is in the Air

Posted by hkarner - 23. September 2016

Photo of Robert Skidelsky

Robert Skidelsky

Robert Skidelsky, Professor Emeritus of Political Economy at Warwick University and a fellow of the British Academy in history and economics, is a member of the British House of Lords. The author of a three-volume biography of John Maynard Keynes, he began his political career in the Labour party, became the Conservative Party’s spokesman for Treasury affairs in the House of Lords, and was eventually forced out of the Conservative Party for his opposition to NATO’s intervention in Kosovo in 1999.

SEP 22, 2016, Project Syndicate

LONDON – Fiscal policy is edging back into fashion, after years, if not decades, in purdah. The reason is simple: the incomplete recovery from the global crash of 2008.

Europe is the worst off in this regard: its GDP has hardly grown in the last four years, and GDP per capita is still less than it was in 2007. Moreover, growth forecasts are gloomy. In July, the European Central Bank published a report suggesting that the negative output gap in the eurozone was 6%, four percentage points higher than previously thought. “A possible implication of this finding,” the ECB concluded, “is that policies aimed at stimulating aggregate demand (including fiscal and monetary policies) should play an even more important role in the economic policy mix.” Strong words from a central bank. Den Rest des Beitrags lesen »

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The Unavoidable Costs of Helicopter Money

Posted by hkarner - 2. September 2016

Photo of Michael Heise

Michael Heise

Michael Heise is Chief Economist of Allianz SE and the author of Emerging From the Euro Debt Crisis: Making the Single Currency Work.

SEP 2, 2016, Project Syndicate

MUNICH – The long-running debate about the advisability of so-called helicopter money has changed shape, as new ideas emerge about the form it could take – and questions arise about whether it is already being dropped on some economies. What hasn’t changed is that embracing helicopter money would be a very bad idea.

According to the conventional view, helicopter money is newly printed cash that the central bank doles out, without booking corresponding assets or claims on its balance sheet. It can come in the form of cash transfers to the public or as the monetization of government debt; in both cases, it is a permanent loss for the central bank.

In practice, helicopter money can look a lot like quantitative easing – purchases by central banks of government securities on secondary markets to inject liquidity into the banking system. The helicopter-money version would be the purchase of zero-interest-rate government bonds that will not be repaid, either because they are perpetual bonds or because they are rolled over every time they mature. Den Rest des Beitrags lesen »

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On The Impossibility Of Helicopter Money And Why The Casino Will Crash

Posted by hkarner - 20. August 2016

by  • August 18, 2016Stockman

NOTE TO READERS

I am in the throes of finishing a book on the upheaval represented by the Trump candidacy and movement. It is an exploration of how 30 years of Bubble Finance policies at the Fed, feckless interventions abroad and mushrooming Big government and debt at home have brought America to its current ruinous condition.

It also delves into the good and bad of the Trump campaign and platform and outlines a more consistent way forward based on free markets, fiscal rectitude, sound money, constitutional liberty, non-intervention abroad, minimalist government at home and decentralized political rule.

In order to complete the manuscript on a timely basis, I will not be doing daily posts for the next week or two. Instead, I will post excerpts from the book that crystalize its key themes and which also relate to the on-going gong show in the presidential campaigns and in the financial and economic arenas. Another of these is included below.

I am also working with my partners at Agora Financial on a new version of Contra Corner. More information on that will be coming later this month. Den Rest des Beitrags lesen »

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Demystifying Monetary Finance

Posted by hkarner - 10. August 2016

Photo of Adair Turner

Adair Turner

Adair Turner, a former chairman of the United Kingdom’s Financial Services Authority and former member of the UK’s Financial Policy Committee, is Chairman of the Institute for New Economic Thinking. His latest book is Between Debt and the Devil.

AUG 10, 2016, Project Syndicate

LONDON – Eight years after the 2008 crisis governments and central banks – despite a plethora of policies and approaches – have failed to stimulate enough demand to produce sustained and strong growth. In Japan, so-called Abenomics promised 2% inflation by 2015; instead, the Bank of Japan (BOJ) expects it to be close to zero in 2016, with GDP growth below 1%. Eurozone growth halved in the second quarter of 2016 and is dangerously dependent on external export demand. Even the US recovery seems tepid.

Discussions of “helicopter money” – the direct injection of cash into the hands of consumers, or the permanent monetization of government debt – have, as a result, become more widespread. In principle, the case for such monetary finance is clear. Den Rest des Beitrags lesen »

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Japan’s “Helicopter Money” Play: Road to Hyperinflation or Cure for Debt Deflation?

Posted by hkarner - 26. Juli 2016

Posted on by Ellen Brown, Web of Debt BlogBrown Ellen

Fifteen years after embarking on its largely ineffective quantitative easing program, Japan appears poised to try the form recommended by Ben Bernanke in his notorious “helicopter money” speech in 2002. The Japanese test case could finally resolve a longstanding dispute between monetarists and money reformers over the economic effects of government-issued money.

When then-Fed Governor Ben Bernanke gave his famous helicopter money speech to the Japanese in 2002, he was talking about something quite different from the quantitative easing they actually got and other central banks later mimicked. Quoting Milton Friedman, he said the government could reverse a deflation simply by printing money and dropping it from helicopters. A gift of free money with no strings attached, it would find its way into the real economy and trigger the demand needed to power productivity and employment.

What the world got instead was a form of QE in which new money is swapped for assets in the reserve accounts of banks, leaving liquidity trapped on bank balance sheets. Whether manipulating bank reserves can affect the circulating money supply at all is controversial. But if it can, it is only by triggering new borrowing. And today, according to Richard Koo, chief economist at the Nomura Research Institute, individuals and businesses are paying down debt rather than taking out new loans. They are doing this although credit is very “accommodative” (cheap), because they need to rectify their debt-ridden balance sheets in order to stay afloat. Koo calls it a “balance sheet recession.” Den Rest des Beitrags lesen »

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Krugman and DeLong Are Right, Eurotimidity Must Be Defeated. Here Is How

Posted by hkarner - 4. Juli 2016

By on July 1, 2016  RGE EconoMonitor

From Eurotimidity to Euroaudacity

A new proposal has come from a group of leading European economists (the Resiliency Authors) on how to shore up the Eurozone’s resiliency. Their recipe includes diversifying bank portfolios; decreasing banks’ overexposure to domestic loans; transferring the responsibility for banks’ rescue from national governments to the European Stability Mechanism (although the authors consider this option to be politically unfeasible); introducing fiscal expenditure rules (linking expenditure reduction to debt levels); strengthening the ESM, and making it more effective and better coordinated with the ECB; and further adjusting competitiveness with more structural reforms.

Would these measures improve the Eurozone resilience to future bad shocks?

Possibly.

Yet, is resilience the very first priority for the Eurozone at this point in time? Is it really what the Eurozone needs now? Den Rest des Beitrags lesen »

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Helicopter money: The illusion of a free lunch

Posted by hkarner - 25. Mai 2016

Claudio Borio, Piti Disyatat, Anna Zabai 24 May 2016, voxeu

Head of the Monetary and Economic Department, Bank for International Settlements.

Director of Research, Bank of Thailand

Economist, Bank for International Settlements

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Helicopters on a Leash

Posted by hkarner - 10. Mai 2016

Photo of Adair Turner

Adair Turner

Adair Turner, a former chairman of the United Kingdom’s Financial Services Authority and former member of the UK’s Financial Policy Committee, is Chairman of the Institute for New Economic Thinking. His latest book is Between Debt and the Devil.

MAY 9, 2016, Project Syndicate

PARIS – Faced with a slowing global economy, a number of observers – including former US Federal Reserve Chair Ben Bernanke and Berkeley economist Brad DeLong – have argued that money-financed fiscal expansion should not be excluded from the policy toolkit. But talk of such “helicopter drops” of newly printed money has produced a strong counterattack, including from Michael Heise, the chief economist of Allianz, and Koichi Hamada, the chief economic adviser to Prime Minister Shinzo Abe and one of the architects of Japan’s “Abenomics” economic-recovery program.

I disagree with Heise and Hamada, but they rightly focus on the central issue – the risk that allowing any monetary finance will invite excessive use. The crucial question is whether we can devise rules and responsibilities to guard against that danger. I believe we can and must, and that in some countries the alternative will not be no monetary finance, but monetary finance implemented without discipline. Den Rest des Beitrags lesen »

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