I wouldn't call Friedman a socialist. But, I do think central banks rarely do any sort of stimulus for the people. They do it for the wealthy. But that creates dangerous imbalances. That is why I hope they do stimulus for the masses, not UBI, but a one time helicopter money that somewhat expands the balance sheet with no government bonds involved. There are not enough of them anyway.

Call me a delusional nut. I know you don't mean it, Doug!

I believe there is massive demand for bonds for use as collateral in the new clearing houses for derivatives. If anything, that demand would possibly interfere with the use of helicopter money and NGDP targeting as rates could stay low anyway. After all, the Fed has to protect the collateral from being destroyed by higher rates!

But think about it, real helicopter money would not expand the balance sheet so far out of whack as it is now, and governments would collect more taxes. That would ultimately help the Fed's balance sheet in good times. In bad times, with rates going toward zero, bolstered by demand for bonds, the Fed's balance sheet could grow and it would not be a problem at all. The Lonergan plan does not make every citizen a millionaire, but is more responsible than asset buying, or all nations doing QE at the same time. Lonergan's plan acknowledges that government debt is worse than helicopter money, as properly defined.

The type of helicopter money that Japan could use is to buy Japanese debt, and set the interest rate to zero. That would be a form of helicopter money, but only for the government. The government could then stimulate the economy while debt fades away. That could help. But it isn't as good as Lonergan's plan, IMO.

One thing we know, we are headed to negative bond rates forever if something isn't done. And so call me a nut, but something needs to be done. The alternative is even more nutty, or is it nuttier?

I think all forms of helicopter money are illegal in Japan, so I think this is mostly talk. But laws can be changed.

Nice article. #HelicopterMoney appears to be quite illegal in Japan. So, even perpetual bonds, with zero interest rates, would be a form of helicopter money that may be illegal as well. We would have to see the bonds to believe they would ever exist. Real helicopter money, as defined by Eric Lonergan, would help the real economy worldwide. But it requires an unsterilized expansion, one time only, of base money. I can't see Japan seeing that as being "clean". I wrote about it in my last article.

This is my opinion only, but it is based on my interpretation of the article cited below. Solar City packed up and left Nevada, when Nevada got tired of Musk sponging off the power grid. It was not just Musk, but the growth of solar in general that started to eat into profits of the public utilities. I am sure Musk did not think he was a welfare recipient, but he did use the Federal government to get perks that apparently hurt the states in a financial manner. www.slate.com/.../...ower_losing_at_the_state.html

First let me be clear, for Fed officials, helicopter money is sterilized and is accompanied by government debt. But that is not how real helicopter money should work, as Eric Lonergan has shown us. But it is interesting, John, that Mester is calling for it, or at least what she may think that it is. It is surprising because the Cleveland Fed is generally a do nothing, wait and see organization.

It is difficult from the article to tell your personal opinion on a cashless society. I hope you would read this article I wrote on Talkmarkets about the position of the Riksbank on the banning of cash. www.talkmarkets.com/.../riksbank-cash-must-be-a-protected-legal-right-for-good-reason

I am not pleased that business after business in some regions of Scandinavia no longer accept cash. There have always been a few, like insurance companies, but even they accept money orders and cashiers checks, which cash is able to procure. But when we are talking about everyday businesses selling food and products, that crosses the line for me.

One difference is that the Chinese won't bow to Basel regulations, I think. If they don't bow the money may stay in the US market longer. How much longer? I don't know. But I do know the Japanese bowed to Basel 1 and it ripped their nation apart.

I don't see how it is possible for the #Eurozone and #Euro to go away, but this article is definitely a cause for thought. The Euro is flawed, a currency without a nation. That was madness to start with. But now, the ECB is literally protecting the bonds of all the Eurozone nations which are now used as collateral in many deals and in the derivatives markets. That is the glue that holds the project together. If that all goes bad we would see the mother of all margin calls as bonds thought to be pristine, were really just periphery bonds that deserved far higher rates. All you know what will break loose if this project fails. JMO.

I am curious if the author sees any letup in the massive demand for bonds? Goldman Sachs would scare people to sell their bonds, just to then buy them up. That sort of thing happened before. Is it happening again?

Nice charts. Clearly GDP was in decline after 3/2007. And in August, 2007, the commercial paper market, key to funding subprime, was sharply hindered. All that was left to seal the fate of the Great Recession was the closing up of access to wealth in houses, as #HELOC's went away in mid 2008. So, the Fed had lots of time between March, 2007, and the destruction of HELOC's to do something and didn't do anything.