Bill Mitchell — The government has all the tools it needs, anytime, to resist recession

Several new articles have appeared in the last few weeks in the major media outlets expressing surprise that central banks have had little effect on economic growth despite the rather massive buildup of their ‘balance sheets’ via various types of quantitative easing programs. I have indicated before that I am coming to the view that most of the media, politicians, central bankers and other likely types (IMF and European Commission officials etc) seem to be in a constant state of ‘surprise’ as each day of reality fails to confirm what they said yesterday or last week (allowing for lags :-)). What a group of surprised people we have to effectively run our nations on behalf of capital. Poor souls, constantly be shocked out of their certainties. That is what Groupthink does – creates mobs that deny reality until it smacks them so hard in the face that they can only utter “that was surprising!” And in that context, the latest media trend appears to be something along the lines of ‘well let’s get the turbines moving’ or ‘those helicopters are about to launch’ and when we read that and what follows we learn that the media input into our lives only reinforces the smokescreen of ignorance that we conduct our daily lives within.…

Bill Mitchell – billy blog
The government has all the tools it needs, anytime, to resist recession
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Roger Farmer — A Bridge Too Far?

Closing in. Roger Farmer weighs the options and their consequences.

Roger Farmer's Economic Window
A Bridge Too Far?
Roger Farmer | Distinguished Professor of Economics at UCLA

Dylan Matthews — To fix the economy, let's print money and mail it to everyone

On the Mark Blyth and Eric Lonergan proposal for helicopter drops.

It's undemocratic, they concede — but then again, so's the current system. "We live in this bizarre world already where central banks are tasked with everything," Blyth says. "We can philosophically bemoan this fact, and I do bemoan it, or we can accept it and say, if you really want these guys to be the last economic institution standing, give them the tools they need." 

Lonergan adds that in an important way, giving people cash rather than spending on bonds is more democratic. Whereas today, European Central Bank chief Mario Draghi is "trying to force businesses and households to borrow and force savers to take on risks they don't want to take," under the helicopter drop proposal "spending decisions [would be] decentralized to households."…

Intrigued? Be sure to check out the full transcript of my, Lonergan, and Blyth's conversation by toggling here. Be sure to also check out Reihan Salam's discussion of the idea at National Review.

VOX

To fix the economy, let's print money and mail it to everyone
Dylan Matthews

Ellen Brown — Even the Council on Foreign Relations Is Saying It: Time to Rain Money on Main Street

Ellen comments on the Mark Blyth and Eric Lonergan article on actual helicopter drops published in Foreign Affairs (posted here at MNE last week). 

If you haven't read it in its entirety, it's worthwhile. Even if you have, since its appearance a long comments section has been generated in which Eric Lonergan addresses multiple objections.

It's a serious proposal for central banks adopting fiscal policy to complement monetary policy, since the latter has shown itself to be ineffective.

While I am reticent to see a small cohort of unelected and unaccountable bureaucrats invested with even more political and economic power, this may be the only practical alternative to permanent gridlock in legislatures.

However, even this has similar limitations, since if it were tried, TPTB would soon capture the appointment process to ensure that only cronies were appointed and helicopter drops were directed at them.

So I don't see this as a viable alternative to democratic process in the long run, even though it might provide a short term fix.

Web of Debt
Even the Council on Foreign Relations Is Saying It: Time to Rain Money on Main Street
Ellen Brown

Scott Fullwiler and Stephanie Kelton — Krugman, Helicopters, and Consolidation

Paul Krugman has a new post that explains why the debate over money- vs. bond-financing of government deficits is really much ado about nothing. In it, he essentially echoes longstanding MMT-core principles, as we will show below.

New Economic Perspectives
Krugman, Helicopters, and Consolidation
Scott Fullwiler and Stephanie Kelton

Ashwin Parameshwaran — Implementing The Helicopter Drop

Speaking of helicopter drops. 

Ashwin proposes a way to counter irrational expectations.

Macroeconomic Resilience
Implementing The Helicopter Drop
Ashwin Parameshwaran

Ashwin — The Case Against Monetary Stimulus Via Asset Purchases

I’ve advocated many times on this blog that monetary-fiscal hybrid policies such as money-financedhelicopter drops to individuals should be established as the primary tool of macroeconomic stabilisation. In this manner, inflation/NGDP targets can be achieved in a close-to-neutral manner that minimises rent extraction. My preference for fiscal-monetary helicopter drops over negative interest-rates is primarily driven by financial stability considerations. There is ample evidence that even low interest rates contributeto financial instability.

There’s a deep hypocrisy at the heart of the macro-stabilised era. Every policy of stabilisation is implemented in a manner that only a select few (typically corporate entities) can access with an implicit assumption that the impact will trickle-down to the rest of the economy. Central-banking since the Great Moderation has suffered from an unwarranted focus on asset prices driven by an implicit assumption that changes in asset prices are the best way to influence the macroeconomy. Instead doctrines such as the Greenspan Put have exacerbated inequality and cronyism and promoted asset price inflation over wage inflation. The single biggest misconception about the macro policy debate is the notion that monetary policy is neutral or more consistent with a free market and fiscal policy is somehow socialist and interventionist. A program of simple fiscal transfers to individuals can be more neutral than any monetary policy instrument and realigns macroeconomic stabilisation away from the classes and towards the masses.

Read it at Macroeconomic ResilienceThe Case Against Monetary Stimulus Via Asset Purchases
by Ashwin

No one says exactly how the central bank is going to accomplish fiscal injection, however. Most of the more obvious means are beyond central banks' authority since this impinges on the fiscal authority. The fiscal authority must first delegate some of that authority to the central bank, a political matter that seems profoundly undemocratic and politically improbable.