Tuesday, April 12, 2016

Former Federal Reserve Chair Ben Bernanke
Is Advocating Helicopter Money Drops
Bernanke references his 2002 deflation speech in which he suggested the use of helicopter money drops to combat deflation .. Bernanke thinks we have arrived to that point now - "Money-financed fiscal programs (MFFPs), known colloquially as helicopter drops, are very unlikely to be needed in the United States in the foreseeable future. They also present a number of practical challenges of implementation, including integrating them into operational monetary frameworks and assuring appropriate governance and coordination between the legislature and the central bank. However, under certain extreme circumstances—sharply deficient aggregate demand, exhausted monetary policy, and unwillingness of the legislature to use debt-financed fiscal policies—such programs may be the best available alternative. It would be premature to rule them out" .. Zero Hedge: "In short: Ben Bernanke has nodded his head in approval, and all that remains is for Congress to agree. There is some good news: as Bernanke admits, 'helicopter money is a presumably last-resort strategy for policymakers.' Which means that once it is implemented, and fails resulting in either even more acute deflation or hyperinflation as these are the only two practical outcomes, that wil be the end of central banking as we know it. For that alone we welcome the inevitable monetary paradrop, and in fact wish it would arrive as soon as possible."
LINK HERE to the commentary
LINK HERE to the original essay

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