With persistently weak economic conditions becoming the norm in Europe, economists are considering increasingly unconventional policy options. One tool that has yet to be taken out of storage is ‘helicopter money’, i.e. the overt monetary financing of government deficits. This column recounts a policy debate on helicopter money that was held at LBS in April 2013 among three of the world’s leading monetary economists.VOX.eu
Helicopter money as a policy option
Lucrezia Reichlin, Professor of Economics at London Business School, Adair Turner, Member of the UK Financial Policy Committee, and Michael Woodford, John Bates Clark Professor of Political Economy, Columbia University
More stabbing in the dark, but at least they recognize that fiscal policy is needed instead of relying on monetary policy. But they are so bound up in "central bank independence" they are blindsided.
2 comments:
Here's Turner:
"Michael’s proposal is essentially that (i) the government increases its fiscal deficit, directly putting money into people’s pockets (whether by tax cuts or public spending increases);"
A 'tax cut' is NOT directly putting money into peoples pockets...
Here is Llando at Warrens yesterday:
"Here’s what’s craziest: THESE ARE ALL THE SAME THING."
OK, maybe ex post the numbers work out the same but they are NOT 'the same thing'...
Here's Bill Mitchell from the other day:
"When we understand that deficit spending is the only way that net financial assets in the currency of issue can enter the economy then..."
ie SPENDING IS THE ONLY WAY NFA can ENTER...
Bill's statement is more accurate or truly descriptive of what is really going on....
The 'Order of Procedure' is important.... the ex post results are yes perhaps interesting and can be used as evidence of some sort, but cannot be descriptive of what is happening in the system in real time...
rsp,
It's funny how in these people's minds the Treasury and politicians are always the irresponsible (or potentially irresponsible) ones, whereas central bankers are responsible and thus must preserve their "independence" to completely fuck up the economy by cluelessly fucking around with interest rates whenever it takes their fancy, jerking them up so as to steal money, jobs and homes from the poor, whilst shoveling mountains of free money (interest on govt debt) into the pockets of the rich. i.e. what they refer to as "tightening monetary policy". Assholes.
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