Helicopter Money: A Disguise For debt Financing Funded By Short-Term Borrowing

By John Kay – No one really envisages that money would be dropped from a helicopter.

What they have in mind is that in a recession government would increase expenditure in a manner that would directly stimulate private sector spending.

The ideal format in which to undertake the borrowing required is bank notes, which pay no interest and need never be repaid. That is why the idea of dropping currency from a helicopter has appeal.

Proponents of helicopter money seem to think government borrowing undertaken in this way does not really count — whether because it is irredeemable, and not really anyone’s liability; or because it is channelled through the central bank.

The so-called Maastricht figure for EU government indebtedness, collated by the European Commission, does not consolidate the balance sheets of the zone’s central banks.

The mystery of all this arises from the belief that central banks can never be insolvent because they can always print money and that bank notes are not exchangeable for anything but another bank note. more> https://goo.gl/g3aKj0


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