heise9_Kazuhiro Nogi_AFP_Getty Images_Bank of Japan

Economics

直升机撒钱的不可避免的成本

Sep 2, 2016 Michael Heise

慕尼黑—随着关于所谓的直升机撒钱的可能形式的新概念的出现，对其是否值得考虑的长期争论形势也发生了变化，并且出现了直升机撒钱是否已在某些经济体落地的疑问。没有发生改变的是采取直升机撒钱是一个非常糟糕的主意。

根据传统智慧，直升机撒钱即中央银行提供新印现金，而不记录对应的资产或对其资产负债表的索偿权。其形式可以是面向公众的现金转移支付或者政府债务货币化；它们都会导致央行的永久亏损。

在实践中，直升机撒钱可以与量化宽松非常相似——央行在二级市场上购买政府债券，以此为银行系统注入流动性。这种直升机撒钱的形式是购买不会得到偿付的零息政府债券，要么是因为它们是永续债券，要么是因为它们每次到期都会展期。

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0 Comments on this paragraph, 52 Comments on this article

Thomas Adams Nov 13, 2016

Spoken like a future central banker. But then, how does the central bank "lose" in the helicopter drop? I mean, after all, they have nothing ventured... their risk is that they can only profit in degrees, and never lose, save a total collapse.
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Andreas Bimba Sep 26, 2016

Cars should not have accelerators because drivers can press them too hard?

Herr Heise is just a proponent of the neoliberal monetarist ideology that serves the interests of the corporate elite that seek to take over the world. Good governance is not his concern and his support of the eurozone is another example.

In the bin with this article.
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Joe Bongiovanni Sep 11, 2016

Yet another major fail by yet another chief economist of yet another investment bank that knows oh so little about the 'monetary system'.
The result is a plethora of errors too numerous to engage.

Suffice to say that one of the "majors" is in the area of the untruths of monetary history, and the other major is to attempt to use Milton Friedman as a hedge against 'public money issuance without debt', when Milton Friedman was the courageous stalwart against private bankers 'creating and destroying money', through fractional-reserve banking.
No reference in support of these vacuous opinions are given.
Wiemar in Postwar Germany for instance, was a "private" banking initiative and here I suggest a read of Stephen Zarlenga's "The Lost Science of Money" for the truth of these and other matters.

Today, we have the report of KPMG Iceland on the potential of a non-bank issued money supply.
Everyone should have a read.
https://assets.kpmg.com/content/dam/kpmg/is/pdf/2016/09/KPMG-MoneyIssuance-2016.pdf

The bibliography should serve as 101 in modern monetary economics.

For the Money System Common.
And Money without Debt.
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Francisco Flores Sep 8, 2016

Establishing a Full Employment Fiscal policy coupled with a Job Guaranty would create a buffer stock of employed folks at the minimum wage, which would expand and shrink depending on private sector activity. It would be countercyclical and inherently non-inflationary. See Bill Mitchell.
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Francisco Flores Sep 8, 2016

You know what carries risks? Drinking water. You risk drinking too much water and making your stomach explode.
- Andreas Bimba Sep 26, 2016
  
  Excellent comment.
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Avraam Dectis Sep 7, 2016

Dr. Heise has done a great service by listing his objections to the entity referred to as Helicopter money.

May I offer some counter arguments:

Argument 1:
“In fact, there are major downsides to helicopter money. Most important, by enabling the monetization of unlimited amounts of government debt, the policy would undermine the credibility of the authorities’ targets for price stability and a stable financial system. This is not a risk, but a certainty, as historical experience with war finance – including, incidentally, in Japan – demonstrates only too clearly”.

Counter Argument 1:
The argument assumes only one change to the government finance system - debt monetization. In such a case the argument is correct.
However, it is a bad assumption to make.
Implementation of additional demand reduction facilities, deployed precisely at inflating sectors, can control inflation.

Argument 2:

“The truth is that the central bank would struggle to defend its independence once the taboo of monetary financing of government debt was violated. Policymakers would pressure it to continue serving up growth for free, particularly in the run-up to elections.”

Counter Argument 2:

The universal mission of all central banks is to control inflation. In a governmental funding system where debt can be monetized as needed, additional mechanisms would accrue to the central bank for that inflation controlling mission.

For example, yes, debt could be monetized but the initial spending might still have to be raised via bonds, thus providing an implicit brake to excessive spending.

Much like interest rates now, taxing authority could be given to the central bank since the only real purpose of national taxes is avoiding inflation. Those taxes could vary with the inflation rate, much as interest rates do now.

Income taxes, unnecessary and inefficient, would be abolished, but national real estate and transaction taxes would exist and be simple and easy to vary with inflation.

Additional mechanisms would accrue to the central bank as well - such as loan to value ratios for specific asset classes, bank reserve requirements and others , all varying with the inflation rate.

Argument 3:

Various arguments asserting inevitability of inflation.

Counter argument 3:

See Counter argument 2.

Conclusion:

Essentially a bond funded governmental funding system, as obliquely described above, provides a much better mechanism for keeping an economy running at a maximum safe speed.

By explicitly accruing demand reduction mechanisms to the central bank, clear mechanisms exist for draining excess demand.

You cannot just change one thing in a complex machine without making adjustments elsewhere - something I would think a good German engineer would understand.

Perhaps someday I will get the opportunity to buy Dr. Heise lunch. No strings attached.

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Jan Smith Sep 6, 2016

Surely, Mr Heise could find a more competent authority figure than Milton Friedman.

Just for beginners, Friedman's TNSTAAFL "principle" is dead wrong. (For a tiny sample of the manifold disconfirmations, see the Summers FT column several months ago.)

If the unreasoned anxiety of this column were not so pathetic, it would be silly.
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Jason H Sep 6, 2016

Read a thorough rebuttal by an economist here: http://bilbo.economicoutlook.net/blog/?p=34315

Germany is caught in a post Weinmar world oh hyperinflation versus the reality of insane austerity. So many have died by this austerity policy by suicide and drug/alcohol abuse from unemployment it's now approaching 3rd world war genocide levels particularly of males who have no job and purpose.

500,000 alone in the USA and counting: http://bilbo.economicoutlook.net/blog/?p=34313
- Jason H Sep 6, 2016
  
  With the ECB constantly downgrading inflation forecasts the nest question is where's the inflation in Europe again approaching deflation with the same failed policies. Einstein defined insanity as doing the same thing over and over and exits ting a different result. The ECV should credit every European with 1000 euros much like AUSTRALIA did during the GFC and solve this mess (dystopia) overnight.
  
  http://www.telegraph.co.uk/finance/recession/5341306/Australians-get-900-cheques-from-government-to-boost-spending.html
  
  We avoided a recession and have positive interest rates bits not rocket science to look at real evidence.
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Panayotis Gavras Sep 6, 2016

Some interesting points, but ultimately unconvincing. The biggest error is that the critique of helicopter money focuses exclusively on monetizaton of government debt. The author is correct to say that there are some risks, chiefly political since the line between a one off monetization and recurring monetization to suit political exigencies is not very large It is a risk, but a known one, and as such there are ways to ring fence it so as to not create expectations.
The article completely ignores cash transfers to the public after mentioning them once in the second paragraph. In fact, this is the 'original' helicopter money idea when the concept was first presented.
This omission is a serious one, and either suggests forgetfulness or unwillingness on the part of the author, or else there are no good arguments against it, when a situation such as the one today exists which (arguably) warrants such a solution.
Beyond the permanent loss for the central bank (something the Bundesbank obsesses over but is really not a big deal) there really are no arguments against it, other than moralistic ones. But if it is morally OK to tax people and take money away from them (in any number of ways, direct/ indirect & transparent/untransparent), why is it not OK to pay them a dividend or a cash transfer?
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Helmut F. Karner Sep 5, 2016

https://fbkfinanzwirtschaft.wordpress.com/2016/09/02/the-unavoidable-costs-of-helicopter-money/
see comment
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david b Sep 4, 2016

MONETARY
REFORM
A BETTER MONETARY SYSTEM FOR ICELAND
https://www.forsaetisraduneyti.is/media/Skyrslur/monetary-reform.pdf

I have never understood why this well researched 110 page pdg never enters the discourse of these types of discussions. I'ts in my personal library
- Colin Doyle Sep 4, 2016
  
  David, How much do you think savers should earn from interest rates? Most analysis (the Iceland paper included) of alternative money systems sidesteps the issue of interest rates (maybe because the papers are written with borrowers in mind). Interest is a vital part of the transfer from savers in work now to income later in old age. The variability of the long term rates is very damaging. Pension schemes everywhere are right now in crisis. They need around 5% on their investments to stay solvent. In a sovereign money system, the amount of new money will be decided and created by the central bank. Interest rates will have no effect on money supply.
  
  Adjusting interest rates in a sovereign money system will simply vary the amount of savings in private banks. Warren Mosler describes banking in 1950’s USA, in which the local state banks were obliged to offer 5.25% to savers. Banks then of course were very eager to lend out those deposits. Sixty years later a stable long term savers’ rate of 5% to 5.5% still sounds about right.
  
  The other point is about deposit insurance for long term investment accounts in a sovereign money system. The Iceland paper and others say this will not be necessary. In practice, governments or the banks themselves will be forced to continue deposit insurance, perhaps via reinsurance with private investors. If you don’t believe this, think of the political uproar the first time after reform, when (say) half a million people lose savings in a collapsed bank. And if the failure was caused in part by government directed lending to special groups - also suggested in the Iceland paper ?
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Colin Doyle Sep 3, 2016

Michel Heise should never meet anyone who is hungry. He will not give food. He sees that once full the person will go on eating - and eating -and eating, until they are hyperinflationary obese. His dystopian solution is continuous (monetary) starvation, to maintain what he thinks is credibility! Chief economists should forswear politics and stick to mathematics. Or come out straight and write that he wants a world policed by bankers.

Doesn’t he understand that the current world wide problem is low demand, meaning companies do not sell enough to pay their employees more and go on creating more jobs.

Western countries have strong political traditions. We can expect that a near future Britain will indeed create long term checks and balances for the creation of public money, particularly to finance counter cyclical government deficits. By then, Michael Heise’s view will be looked on as dust from an old fairy-goblin story, involving some 19th centuryish joust of bankers and kings.

As of now, his ideas sound to be purely political - nothing to do with the calculated arguments expected from the chief economist for a major company. The examples, which he holds up like scarecrows, of civil war greenbacks and German post WW1 inflation, are both very old, very debated and very irrelevant - and grew out of circumstances vey different to today's proposals. When Michael Gove complained recently about loose talk from experts, he may well have had Michael Heise and similar cross dressing economists in mind!
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Ralph Musgrave Sep 3, 2016

Never read such a load of BS.
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M M Sep 3, 2016

Any helicopter money will end up in China before it is even printed.
- M M Sep 3, 2016
  
  Ralph, the problem has been and remains that no one can make money by doing and selling the good stuff. There are numerous examples other than China, Germany comes to mind.
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- Steve Hurst Sep 3, 2016
  
  @Ralph
  
  The creation of future debt in order to employ workers in another country to supply tat and rubbish for rapid landfill is barking mad. The problem is here not in China
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- Ralph Musgrave Sep 3, 2016
  
  If the Chinese want to supply us with real goods in exchange for bits of paper, more fool them. We should ENCOURAGE THEM. But I suspect they aren't that stupid.
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Steve Hurst Sep 3, 2016

@Micheal
You post in an earlier comment -
'The problem is also that wealth creation has decoupled from job creation as the factories of tomorrow will need less and less people'

Yes a good example of the polarity between private activity and public activity

Then in this comment you say basically lets try a heli drop

Yes, okay, fine. But how do you expect a one off stimulation to do much, particularly as the issue is which pocket the drop ends up in. If it does get in the individuals pocket you have 3 likely destinations: The purchase of imports due to the decline in home based production, inequality absorbing cash in the system and the option of paying down individual debt

You have decline in real wages, an increase in lower paid jobs, an ageing population, increase healthcare and social welfare costs, youth unemployment consistently trending up. AI coming on stream (synthetic labour supply), growing labour supply elsewhere in the world, wealth imbalances which are not just limited to the top 1% - baby boomers for example as a group have been beneficiaries. None of these issues are addressed by helicopters

IMO you have to start with long term steady wealth redistribution and youth joblessness or you are whistling in the wind. That requires political movement. For political movement to occur you have to wait for a number of things, amongst them for some voter blocs to decline, another decade. So the question is what reform can be undertaken in that decade.

The problem with the heli drop is not only do you have to get the money into individuals pockets you actually have to benefit particular social groups so by definition a very significant proportion will be off target before it is even dropped

In the EU the problem is even more pronounced due to the crazy 3 musketeers mentality - one for all and all for one. This means whatever intervention is undertaken has to be open to all EU citizens when the focus has to be on a few to be effective. The bureaucracy this 3 musketeers approach creates creates has to be seen to be believed, it starts by verifying origin of birth

If you dont engage youth in jobs and upskill them you end up in time having no taxpayers. If you give money to everybody it is ineffective, if you select a few there are political consequences
- Steve Hurst Sep 4, 2016
  
  @Micheal
  
  Thank you for your extended thoughts, most unusual for you Micheal. If it is due to a bottle of Southern Comfort pass it this way. I am patient and I expect progress. However as always the issue is where you and those important to you stand in the environment and that is always where my focus is. I have read PS for sometime considerable time but started to comment because I thought some whilst some articles are very good some outrageous articles were written : ). It also removes me from making market decisions when things look faux as I deliberately step away. Cognitive bias avoidance
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- Michael Public Sep 3, 2016
  
  A 2nd reply to your post:
  
  I sense your frustration that the current system does not work, you can clearly see that it does not work, and that the general system (supported by voters) is so confused and inert that in a best case scenario we can hope for change in 10+ years - and even then - it does not look good.
  
  Don't worry so much - look at the fall of aristocracy and the rise of Democracy. Aristocracy was a way of life that had lasted thousands of years and it literally just fell over and died when a better system presented itself. And don't underestimate the barriers that had to be broken through for this transition to happen - for example there were many religious writings that said God had appointed the King. Then there was the threat of military action, of trade ceasing, of foreign invasion, of mismanagement, of infighting, of communists and so on.
  
  And yet today aristocracy is gone and democracy is everywhere. Nowhere in the World (other than perhaps South Korea) is there a ruling King who passes rulership on to his son. In the same way, the current economics theory (and the general rulership that derives from this) has run it course the same as aristocracy did.
  
  There are always two ways to come to the right answer - the way of wisdom, where you can see ahead of time that it is wrong, and the way of pain, where you must live with the consequences of your lack of wisdom before you can find the correct answer. Clearly the World has chosen the way of pain when it comes to economics, but this way also leads to the right answer. The important thing is keep putting forward progressive ideas and thoughts into the public discourse. If there is not enough of that going on then there is an idea vacuum which is invariably filled by the likes of a Donald Trump (or, for that matter, economists who are paid to have ideas that profitable for their employers).
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- Michael Public Sep 3, 2016
  
  Hi Steve - good to see someone is really reading.
  
  To be honest I don't see any real benefits to a helicopter drop - if it even works (and as you indicate there are enormous practical problems) it will just delay real solutions to the real problems at hand. Think of it as a payday loan.
  
  If I take a look at the whole position of the article it is written by Allianz economist. Allianz owns Pimco - possibly the largest speculator in bonds. They need QE in the financial system to finance their speculation. So they get their guy to pen an article saying helicopter money will not work. The reason for this is because if somebody does try and it stimulates demand it will put an end to the QE approach which removes the money they need to speculate from the financial system.
  
  That is the main reason why on 'called nonsense' that helicopter money is a fundamentally flawed concept - and not because I think it will fix any real issues with the world or US/EU economies.
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Michael Public Sep 3, 2016

Helicopter money will work just fine to stimulate demand which is what we need in the short term. No doubt it's continued use would lead to a bread and circuses style decline of Ancient Rome. So use it as a once off.
- Michael Public Sep 3, 2016
  
  Hi Ralph
  
  I am aware of that. The US basically quadrupled the money supply. The only issue is that it round-tripped. I.e. it went to the banks and corporations who lent it back to the government directly or indirectly. In accounting they call this a contra-entry - i.e. it cancels itself out. Had it gone to Joe Public it would have pushed demand through the roof and eventually triggered high inflation. Helicopter money gets past this problem by skipping out the banks and corporations and giving the money directly to Joe Public who will spend it, thus increasing demand.
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- Ralph Musgrave Sep 3, 2016
  
  The money supply has been increasing year after year, decade after decade for the last century. Did you know that?
  
  The sky hasn't fallen in, far as I know.
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dan baur Sep 3, 2016

Helicopter or not, any monetary policy is about wealth redistribution... Which never goes as planned (or more precisely as claimed). The wealthy always land on their feet while the poor and stupid are always screwed.
- Michael Public Sep 3, 2016
  
  Edit: Should read "never is very long time". The hazards of typing on a phone.
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- Michael Public Sep 3, 2016
  
  Never is a very time. I would say that often it does not go as planned. I would also say that changing the way it is done can make it go as planned far more often. Remember that being wealthy is not a divine right. Society grants this right to people. The French and Russian aristocracy learned that lesson the hard way but the English aristocracy had the foresight to understand this principle and continue to live on today.
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dan baur Sep 3, 2016

Government is not responsible for creating jobs even indirectly. Just keep the level playing field so that investors can create wealth (which is what people really need instead of jobs).
- Michael Public Sep 3, 2016
  
  Investors don't actually create wealth. Less than 1% of investments ever reach companies. Most just buy out existing investors. Entrepreneurs create wealth and if you have ever been an entrepreneur you would know that investors will only touch you long after you are successful and don't really need their money as capital but rather to cash out. The problem is also that wealth creation has decoupled from job creation as the factories of tomorrow will need less and less people.
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ron smith Sep 2, 2016

Rather an upside-down view of the world which rests on the "moral authority" of the same folks who brought us "The Great Recession." Whether or not Hiese's view that Helicopter Money won't work (& he may well be correct), the last person on the planet to cite is, or ought to be, the primary architect of the great recession, Alan Greenspan. Anyone who believes, as Greenspan writes that he does, monopolies are self-destructing and pose no danger to the economy, thus anti-monopoly legislation is bad, clearly has abandoned his grasp of reality. But perhaps all is just a solipsistic mirage.
- Michael Public Sep 3, 2016
  
  The problem with economics is that ideas and not people are right. Heise could be the devil himself and if what he says is the truth it is of no use to point to ha past record. Just to be clear, I am not saying what he says is the truth.
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Paul Friesen Sep 2, 2016

"The problem, which Friedman identified in 1969, is that while helicopter money generates more demand in an economy, it does not create more supply. So the continued provision of helicopter money after an economy has returned to normal capacity utilization – the point at which demand and supply are in equilibrium – will cause inflation to take off. "

Well, of course. Which is why nobody in their right mind is advocating using helicopter money to push the economy beyond its production capacity. But in an economy like today's Europe, where output is obviously far below potential, creating 25% unemployment in Greece and not much less in Spain and Italy, you need to bring it up to potential. Why worry about problems that just might occur in the future if politicians can't contain themselves and ignore the real-world tragedy happening around you?

Of course, excessive money creation causes problems in an economy already at capacity. But one thing not mentioned is what printing money to finance WWII did. It ended the great depression.
- Paul Friesen Sep 6, 2016
  
  @Walter
  The money that has been printed is not effective because it is just winding up in the excess bank reserves of the banks. That is because interest rates are at the lower bound. Conventional monetary policy only works if it can reduce interest rates, which stimulates the housing sector, which puts money in the hands of builders and others who will spend it. But once interest rates hit zero, we need another mechanism to get money out into the real economy. That's the whole point of helicopter money.
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- Walker Hambrick Sep 2, 2016
  
  It's quite puzzling to believe that Europe's widespread unemployment can be cured with helicopter money, let alone any monetary policy "tool" possessed by the ECB. After all, hasn't Draghi been shooting off his bazooka for some time now? Perhaps you should consider other explanations as to why certain economies are producing far below their productive capacity.
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david b Sep 2, 2016

INVESTMENT FOCUS-Any ECB move into stocks unlikely to be plain sailing
http://uk.reuters.com/article/eurozone-ecb-etfs-idUKL8N1BE190

Look, I work the healthcare industry and I know how when working for your own self interest one has to make the case that it's about better patient care. I find it interesting that nobody mentions how with all of these big economic brains they can't figure out how to get money into the real economy. anyone beyond moron status understands the distribution of assets, so the ecb is going to buy stocks before helicopter money. that's insane. I'm tired of the corruption. it's all about delivering the goods to the most wealthy, and no pundit here will say it.
So when you fear the rise of populists just blame yourself because you can't reform.

the central banks and financial system is a criminal enterprise and too many pundits eknow they won't get a nice consulting job or some revolving door appointment if they told the truth
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walter libby Sep 2, 2016

Really, demand doesn't create supply? That aside, Heise states that embracing helicopter money would be a very bad idea. But what about capitalism, the idea that markets self-correct--it isn't. What about Keynesianism, the idea that fiscal policy can bring demand and supply back into equilibrium--it isn't. Then there is Marx--capitalism collapses--which it apparently is in a MAD world. But what really is a bad idea is doing nothing. Helicopter is the last option. However. I can understand the laments of economists against helicopter money, once it's successfully employed, they are out of a jobs--relics of a past era. http://theendpoint.blogspot.com/
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Paul Daley Sep 2, 2016

Balance sheet definitions of helicopter money ae useless; as Heise says, virtually any vehicle for monetary easing can be used to create credits that need not be repaid. And that fact vitiates any blanket condemnation of helicopter money.

The argument should focus on when the FED should intervene in what markets. After a crash, balance sheets need support and asset market interventions are appropriate. But once financial markets are stabilized, the FED should turn its attention to product markets by lending against income, both government income and private income, in support of new expenditures. It's gone wrong this time by trying to pump money through asset markets into product markets via wealth effects and similar slow-acting and massively distortionary means. An apt comparison would be to an irrigation authority that feels it must first fill a constantly expanding reservoir before releasing any water to farmers downstream. The result is only a flood upstream and a desert downstream. The FED, like the irrigation authority, needs bypasses to make sure money moves to its best uses as soon as possible after the holes caused by the crisis are plugged.
- Steve Hurst Sep 2, 2016
  
  @Jose
  
  'Meanwhile in advanced economies, the percentage of GDP accounted for by wages has fallen from 64% in 1980 to 57% in 2015'
  
  Source: OECD, UN Barclays Research; based on Germany, France, Italy, Japan, Australia, Canada, UK and US
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- Steve Hurst Sep 2, 2016
  
  @Jose
  
  Chances are the money ends up in the wrong pocket due to rising inequality. You need to deal with the mechanism driving inequality. Or do you think giving a one - off money drop to consumers deals with inequality
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- Jose araujo Sep 2, 2016
  
  @Paul, we all should by now know what's going on, but unfortunately this cockroaches keep on dragging us back to futile arguments that have been proven wrong to exhaustion.
  
  You have to be absolutely an idiot to be chief economist of an institution and believe the situation we are living is created by central banks. You have to be absolutely stupid to think that the responsible for the zero lower bound is monetary policy. Why would central banks do it? Do they do it to stimulate the economy? Why would Central Banks continue to lower interests after years of low interest rates an no investment, clearly the problem with investment isn’t interest rates, and Central Banks aren’t mandated to do economic policy. You never heard a governor speak about lowing interest rates or helicopter money has a solution to a stagnant economy, they always speak framed by the secular stagnation, deflation problem.
  
  If we lived in a normal economy, wouldn’t massive easing produce inflation? So why didn’t it produce inflation? It didn’t because money velocity is decreasing (Econ 101), so actually Central Banks have been accommodating the decrease in money velocity, if they didn’t we would experience much harder money tightening – yes deflation is a product of money tightening, and that’s what we have been living in.
  
  Money velocity is decreasing because risk perception change, and people tried to find refuge in liquidity and safe assets. People are holding to their money, savings are going up and demand and investment is going down, is that that hard to understand?
  
  Helicopter money would bypass the tradition connection between monetary and real markets and would in theory fuel demand -> that’s the definition of helicopter money, put the created money in the hands of the consumers.
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P. Foofootos Sep 2, 2016

"recognize one and for all".... have you read ANY macro in the past 15 years? Ever hear of Sec. Stagnation? Have you seen ANY data on debt, inflation, and expectations? Have you read ANY empirical studies? And why all the lies about the Weimar hyperinflation?

This is a disgrace of an article, just self-serving drivel.
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Jose araujo Sep 2, 2016

Ahh, the cockroaches strike again, the complete inability to want to understand the times we live in its appalling..

Not only that, but Mr Heise is deliberately lying, he Knows Weimar hyperinflation, or other episodes of hyperinflation weren’t due to Helicopter Money, nor can the situation we live in be compared to the situation in Germany or Japan in the 30’s.

We are living in time where all the money created, by what Mr Smart Heise called Helicopter money, but which is a normal intervention of a Central Bank, is held by the public. The decrease of money velocity is what has been causing the deflationary situation we are living in. Liquidity is being sterilized by risk aversion.

With the level of economic knowledge Mr. Heise is showing, and if Allianz is following his advices, well we all know how this is going to end…
- Francisco Flores Sep 8, 2016
  
  The government can issue as much money as needed to get to full employment. There is no incentive to issue more as that will create inflation. A Full Employment Fiscal Policy coupled with a Job Guaranty is the solution to stable growth and full employment.
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- Jose araujo Sep 5, 2016
  
  @Steve, I know democracy isn't perfect, but our system is by far the best we have.
  
  We should all refuse to have non elected idiots determining our policies, we have the right to pick our own idiots.
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- Steve Hurst Sep 2, 2016
  
  @Jose
  
  To get elected you need a majority. Most winning margins are quite small. So politicians will not take steps that alienate large groups. It doesn't matter which political party is involved. The problem right now is steps have to be taken which will upset key groups. So the idea you solve the problem by changing guvnt is self limiting. Central Banks have repeated said they cannot solve the issue on their own. Enjoy
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- Jose araujo Sep 2, 2016
  
  @Steve
  
  Politicians are elected; they are the only ones who have a mandate to spend our money. If you don't like the government you have use democratic ways to change them.
  
  Problem is that most of the wise guys are not democratic, they think they are above all of us, and apparently have no problems falsifying arguments and deliberately lying to people.
  
  We have already on Trump, isn’t that enough?
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- Steve Hurst Sep 2, 2016
  
  @Jose
  
  There is problem Jose. If you give politicians an open debt chest they will dip in, and dip in, and dip in, and dip in. It is 'free' money to them but not to someone else.
  
  There is also a very strange idea behind it all that growth is a natural outcome and that perpetual growth will result.
  
  The problem that got us here is declining demand in a consumer society principally thru the financial sector exploiting long term debt load on consumers for short term commission. AKA market manipulation
  
  Chances are the lack of demand will not disappear until the long term consumer debt load disappears which will need err... a long term. As inflation destroys debt a lack of inflation - a direct result of guvnt / central bank policy - simply perpetuates the debt overhang
  
  Incidentally due to ZIRP and NIRP the appetite for consumer long term debt can get a kicking as it is obvious things are going nowhere fast.
  
  Essentially this is all about an argument concerning how to expand debt in a debt based consumer society when consumers are incapacitated. So the question is - Helicopter money is short term and may help. However is the follow-on that given the opportunity for more debt will consumers take it - and the answer has to be not when they remain loaded with long term debt. If that is the case helicopter money once started has to continue long term. This in essence is the Japanese experience
  
  There are ways of dealing with this but they are politically nasty so politicians flinch at them. They are destroying debt thru bankruptcy (almost certainly involving shareholder losses when naive shareholders have been deliberately encouraged by guvnt), removing wealth from voter groups, removing job security from workers. Any guvnt implementing them would be voted out pronto
  
  The return point in the logic loop is long term debt was used to uplift (bubble) the economy, the economy slumped under debt saturation, the long term debt remains due to guvnt policy steps to avoid bankrutcy(s), getting more long term debt into the system is problematic because long term debt is already resident
  
  The West is going Japanese if you please
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M M Sep 2, 2016

Michael, excellent article, although it misses a couple of more points, nevertheless an excellent article. Spot on.
A new reply to this comment has been posted.
jagjeet sinha Sep 2, 2016

HELICOPTERS CAN BE ROCKET SCIENCE
There are several types of helicopters.
Fixed Asset Investments FAI enforces the creation of Public Infrastructure Assets.
FAI as percentage of GDP perhaps funded with Zero coupon perpetual bonds, ensures that interventions BUILD.
Other forms of helicopters ate interventions that are cash injections or financial instrument asset price enhancements.
FAI as percentage of GDP has a mathematical relationship with Inflation Targets and Unemployment Targets.
This helicopter ensures that The State interventions BUILD Public Infrastructure Assets.
Perhaps the helicopter that is the rocket science needed.
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