Zero Hedge: “Think “helicopter money” is/will be confined only to Japan, which has been sending conflicting trial balloons about this unprecedented next step in monetary policy for the past two days (first Japan’s Senkei reported that the government will be adopting “helicopter money” followed by a government spokesman denying the report, then followed by a separate Bloomberg report about a 10T yen stimulus plan, the concluding with Abe advisor Koici Hamada saying that “boosting fiscal and monetary stimulus at the same time would be effective” in Japan)? Think again.
Speaking overnight in Australia, the Fed‘s Loretta Mester said “helicopter money” could be considered to stimulate America’s economy if conventional monetary policy fails.”
Opinion: That from the same Federal Reserve that says the economy is doing well enough to consider raising interest rates.
Time to review some definitions:
- Inflation – a general increase in prices and fall in the purchasing value of money.
- Deflation – a general decline in prices, often caused by a reduction in the supply of money or credit.
- Hyperinflation – price increases are so out of control that the concept of inflation is meaningless.
- Quantitative Easing (QE) – monetary policy/printing money that is used by central banks to stimulate the economy when standard monetary policy has become ineffective.
- Helicopter drop, also known as helicopter money, is a hypothetical tool of monetary policy that involves printing large sums of money and distributing it to the public in order to stimulate the economy.
Helicopter money was first coined by famed economist Milton Friedman in 1969, and repeated by former Fed Chairman Ben Bernanke in 2002 as a tool to fight deflation.
So three rounds of QE didn’t work, a decade of zero interest rates didn’t work, and negative interest rates are not working in Europe; instead of fixing the problem by making government spend only what it takes in, another scheme of giving away money is making the rounds.
It won’t work either. It will create an even bigger mountain of debt that cannot be paid back and make existing money worth much less.
At the risk of repeating myself, these schemes are setting the stage for an economic shock. I don’t mean to run out and sell assets because I really don’t think that when the big collapse comes we will be here.
Revelation 6:5-6 comes after Revelation 3:10, 4:1, 6:1-2, 6:3-4.