The American economist and Nobel Prize, Milton Friedman, in 1969, launched this genial idea of helicopter money in a now famous paper “The Optimum Quantity of Money”. He said in the following parable:

Let us suppose now that one day a helicopter flies over this community and drops an additional $1,000 in bills from the sky, which is, of course, hastily collected by members of the community. Let us suppose further that everyone is convinced that this is a unique event which will never be repeated.”

This idea is so simple and effective that the FED and others are seriously considering it to easy the output of economy. Unfortunately they are doing it only for the financial sector, not the households…Why? There is unsolved power issues… See this link from the World Economic Forum (https://www.weforum.org/agenda/2015/08/what-is-helicopter-money/)

Then, we come back to the science of economics with this funny parabhelicopterle…

“In the south of France is a small town, very dependent on tourism. But the weather has been wet and dull all summer, and the visitors have not arrived. The townspeople have fallen into debt. They hoard what little money they have against an uncertain future, and business has dwindled away.

“One day the rain stops, the sun emerges, and a rich Russian tourist drives into the town square. He enters the hotel and asks to see a room with a sea view. The proprietor produces a choice of keys but asks for a 100 Euro deposit in case of loss. The Russian agrees and walks up the stairs to inspect the available rooms.
“The proprietor immediately races around the corner to the grocer, and uses the 100 Euros to pay an overdue bill. The grocer now runs to the wholesaler with the money to discharge a debt of his own. The wholesaler owes money to a nearby farmer, so the money is now passed to him. The farmer also owes money, to the town prostitute with whom he has regular appointments, and with a happy kiss she accepts the money from him. But the prostitute also owes money – to the hotel owner, whose rooms she rents.
“At exactly the moment that the prostitute is pressing the Euro note into the hands of the hotel owner, the rain resumes. The rich Russian descends the stairs and announces he won’t stay in the hotel after all. He returns the keys; the hotel owner returns the deposit; and the Russian drives away. Everybody in the town stands in exactly the same position that they did an hour before. But with debts extinguished, the mood has changed. The town’s recession has ended, and the townspeople can look to the future with confidence.”

Welcome to the “science” of economics and the salon of the politicians…

Advertisements