Thursday, October 22, 2015

Helicopter time says Mark Thoma

Economists View: Quantitative easing has had a difficult time stimulating demand (which would put pressure on prices and raise inflation). The money mostly piles up in banks instead of turning into new loans and new spending. Helicopter money would, I think, do much better, especially if it was distributed to people with a very high propensity to spend the money (so it would have much better distributional consequences as well). But central banks seem afraid to try this, or even consider it seriously.
Or call it monetary regime change.  The US economy does this every generation.  The last time was the Nixon shock when we left the gold standard in 72.

My question to the Kanosians is: If helicopter fights work, then why not fly them yearly, in both directions?

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