The hurdles to ‘helicopter money’ are shrinking, by Stephanie Flanders in the Financial Times.
[W]e are not literally talking about throwing money out of aircraft. The government would announce, for example, that it had decided to give $500 to all citizens via their bank accounts….
A helicopter drop would also have a better chance of reaching every household, allaying worries about the distributional consequences of QE [quantitative easing].
The QE programs of the last few years only gave money to friends of the central banks. I didn’t get any.
For now, the taboo against more explicit central bank financing is still operating. But the barriers against monetary-driven fiscal stimulus look a lot weaker than they did even a few years ago.
If another downturn threatens while policy rates are still close to zero and balance sheets are still enlarged, it is a reasonable assumption that at least one central bank abandons the pretence and monetary financing will complete its move from the unthinkable to the merely “unconventional”.
Which validates what we’ve been saying: come the next recession, or simply to get debt-reducing inflation going, central banks are going to have to print (create effectively debt-free money) because they cannot lower interest rates further.
Now the author of that piece, Flanders, just happens to be the chief markets strategist for Europe, JPMorgan Asset Management. JP Morgan are one of the world’s biggest banks, and the key private bank in the US for implementing certain aspects of US monetary policy.
So this is a call for helicopter drops of free money — there is trouble brewing in elite world, almost certainly because JP Morgan or associated parties are in too much debt. Naturally the message is heavily dressed up in technobabble, but she is asking for a handout of cash for everyone because her bank needs it.
Bankers and their shareholders got vastly rich in the run up phase of the bubble from 1982 to 2008, but it hasn’t been so good since it peaked in 2008 and now they are asking for handouts. See graph.