Of late I have been seeing more and more reference to ‘Helicopter money’ as a fiscal stimulus tool.
Helicopter money is the concept of just printing extra money and giving it to citizens directly (i.e visualize a helicopter flying over a city dumping money out the windows). Now that interest rates are near or below zero in some countries, people are getting tired of trying to stimulate the economy via interest rate manipulation. The theory seems clear – with all this free money gained by the populous, demand for goods would increase, raising the inflation rate.
If you look at google trend – you can see an uptick of search interest – if that is any indicator.
Ben Bernanke, ex US Fed Chairman, just wrote an article about it, as a policy of last resort. I agree with Mr. Bernanke – if countries do resort to helicopter money, it would be an admission that large scale manipulation of the economy and interest rates via the central banks is not effective. So if this continues to be discussed, be aware we are down to a dangerous last resort.