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Zero Hedge Does Not Understand Helicopter Money

Date: Monday, May 2, 2016 11:57 PM EDT

Zero Hedge does not understand the concept of Helicopter Money. I am a fan of the blog, and it has very interesting and informative articles. Also, Michael Snyder is afraid of the concept. I am here to help! For one thing, helicopter cash would be used to prevent NIRP and a cashless society. Helicopter money would certainly be preferable to those ideas.

If you want to fear something, Michael, fear NIRP, fear the destruction of cash. I can help you fear those things because they scare me. As far as Snyder's fears, the central bank can always be protected when times are good, for sacrificing a little base money for the people when times are bad.

Tyler Durden has said that helicopter money is Keynesian. But it really isn't. It is not a fiscal stimulus. Yes, it stimulates fiscally, but that is simply a by-product. Helicopter money, or HM, is simply a monetary stimulus using no additional debt, no cut in taxes, no cut in government spending, and no treasury bond transfers. Quite simply, HM is the passing out of money, preferably to everyone equally in society, that is created by the Federal Reserve Bank.

It is either a one time gift, or given out in a short window of time, from 12 to 18 months according to Eric Lonergan, guru of the concept. He has thought it out far more than the father of the idea, Milton Friedman. So, When Zero Hedge says, in the article Why Helicopter Money Can't Save Us: We Have Already Doing It for 8 Years, the blog doesn't get it. Durden goes on to say we have been doing that for 8 years. He says:


The government prints one paper liability and buys it from itself with another paper liability that the government also prints.


Sound familiar? It’s called QE.


The only difference is who the bonds are bought from. With QE, the central bank buys in the secondary market in an absurdly transparent attempt to pretend like there’s some degree of separation between the central bank and the government.


In so-called “helicopter money,” the central bank simply drops the bullshit facade (pardon the language) and buys directly from the government. But it’s all deficit financing. Need proof? Just compare changes in government deficits to the changes in bank reserves (i.e. where QE shows up) as shown in the table below.

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