tag:blogger.com,1999:blog-2546602206734889307.post2367187372900347233..comments2024-03-28T04:29:22.717+00:00Comments on mainly macro: What is the attraction of helicopter money?Mainly Macrohttp://www.blogger.com/profile/09984575852247982901noreply@blogger.comBlogger11125tag:blogger.com,1999:blog-2546602206734889307.post-1732849428074419372015-01-13T05:53:36.876+00:002015-01-13T05:53:36.876+00:00Mark Carney decent reviews for our further study.Mark Carney decent reviews for our further study.penyebab wanita frigidhttp://obatkeputihanonline.com/ciri-ciri-penyebab-dan-solusi-wanita-frigid/noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-37931350629869796692013-02-15T09:29:43.054+00:002013-02-15T09:29:43.054+00:00Simon,
Why is there “no control”? If the BoE MPC (...Simon,<br />Why is there “no control”? If the BoE MPC (or whoever) decide that £Xbn of helicoptering is in order, the government of the day then has a choice as to how to allocate that money. Assuming government of the day wanted to be democratic (howls of laughter), it would allocate the extra money in accordance with the wishes of the electorate as expressed at the most recent election: that’s very roughly half the money being used to boost public spending, and half used to boost private or household spending.<br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-79416357663066236552013-02-15T05:52:15.348+00:002013-02-15T05:52:15.348+00:00This comment has been removed by a blog administrator.Anonymoushttps://www.blogger.com/profile/00459439543708406662noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-85130454577102975172013-02-14T18:34:22.059+00:002013-02-14T18:34:22.059+00:00I'm not sure that "helicopter money"...I'm not sure that "helicopter money" is really the best option. It would mean that there is no control about where money goes. Why not use newly created central bank money to do useful things directly. The money could be used to pay nurses, doctors, teachers, policemen, firemen, for example. Or for infrastructure payments - building roads, public transport systems, hospitals, schools, renewable energy etc. Or it could be used to pay off government debt - which has cost UK taxpayers £495 billion in interest charges since 1995. These are all things that just about everyone in society would approve of. But instead of paying for it via taxation, or with Public Private Partnerships which will cost a fortune in the long run, just pay for it directly with debt free central bank money.Simon Thorpehttps://www.blogger.com/profile/02605233720415886802noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-56494063435690943202013-02-14T04:44:25.715+00:002013-02-14T04:44:25.715+00:00I agree with K that short-term rates and the quant...I agree with K that short-term rates and the quantity of base money can be determined independently without any trouble if the central bank operates a floor system. In that regard, the "standard macro" clearly isn't right. That is not to deny that a large balance sheet can affect the central bank's income position and, ultimately, its incentives and credibility when it comes to fighting inflation. But there surely is no mechanical link from high base money to low interest rates, let alone high inflation.<br /><br />More broadly, I also dislike the muddied public debate about helicopter money. In essence, it is a fiscal expansion, financed by a reduction in the net worth of the central bank (which is of course part of the consolidated public sector balance sheet). Whether or not such an operation is dangerous depends on (i) how weak is the overall balance sheet of the public sector; and (ii) to what extent the weaker central bank balance sheet, per se, affects the central bank's ability and credibility in pursuing price stability. <br /><br />If there is little concern about (i) and (ii), helicopter money will provide effective fiscal stimulus. But then why not do it the old-fashioned way, by financing the stimulus through the budget, while letting the central bank stick to its usual mandate--a much cleaner approach from the viewpoint of accountability and transparency!<br /><br />Conversely, if (i) or (ii) give rise to serious concerns about currency debasement, caution is warranted. Moreover, those who would still advocate helicopter money in this case need to justify much better why the current modus operandi (with a formal separation between fiscal and monetary policy, even if the central bank decides to buy government bonds under QE) is no longer appropriate.Andre M.noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-46318021439058443912013-02-10T12:16:13.832+00:002013-02-10T12:16:13.832+00:00"But just as in a free market the apple produ..."But just as in a free market the apple producer cannot flood the market with apples and keep the price of apples high, the central bank cannot flood the economy with money and keep interest rates high. It cannot independently control base money and short term interest rates."<br /><br />The central bank can however do something like let a part of the apples in the market suddenly rot, that is, increase the minimum reserve threshold for the commercial banks. Doing that it would diminish (or completely eliminate) excess reserves and therefore again be able to increase short term rate. <br /><br />Alex Hummelnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-31461512989673762652013-02-10T07:21:28.453+00:002013-02-10T07:21:28.453+00:00Adair Turner advocates helicoptering, or what he c...Adair Turner advocates helicoptering, or what he calls “overt monetary finance”. See:<br /><br />http://www.fsa.gov.uk/static/pubs/speeches/0206-at.pdf<br /><br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-59896548347755005952013-02-09T07:23:19.502+00:002013-02-09T07:23:19.502+00:00“helicopter money is either a plea for fiscal expa...“helicopter money is either a plea for fiscal expansion - which is good, but why not call it that - or a policy for above target future inflation..” I beg to differ.<br /><br />Re the “plea for fiscal expansion”, helicopter money combines fiscal with monetary policy, doesn’t it? That is, if government prints money and does a helicopter drop let’s say via feeding the extra money to wage earners via reduce National Insurance contributions and increasing the state pension, that would be classified as “fiscal” had the money been borrowed. But given that “helicoptering” increases the amount of monetary base in the hands of the private sector, the latter gives helicoptering a monetary element, doesn’t it?<br /><br />Also I don’t see a strong connection between helicoptering and “above target future inflation”. One can go for “above target future inflation” via conventional fiscal or monetary policy, and at the same time, one can do some helicoptering in a responsible or non-inflationary manner, if the total amount of money helicoptered is limited.<br /><br />Re the para starting “Let me first summarise…”, I agree that helicoptering is the same as “fiscal plus QE”. However I don’t agree with the second half of that para where you suggest that helicoptering poses inflationary dangers because (unlike QE) it cannot be reversed. Helicoptering can be reversed by raising taxes and “unprinting” the relevant money (that’s a fiscal way of “reversing”). As for doing a “monetary reverse”, that could be done simply by the central bank wading into the market and offering to borrow at above the going rate of interest (even if the CB was not in possession of any government debt). That might not be legal under present arrangements, but the law can and should be changed if the change makes sense.<br /><br /><br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-65580494880350218112013-02-09T05:52:47.444+00:002013-02-09T05:52:47.444+00:00At the end of the day QE in its present form isnot...At the end of the day QE in its present form isnot much different.<br />-The sterilisation measures are so easily to counter theirselves via other measures.<br />-Hardly anybody believes the CBs can sell the bonds back to the market even a lot of them donot see it happening over the longer term.<br />Present QE looks like a sort half helicopter. In how far things are priced in is difficult to say there are so many influences, hard to quantify things. <br /><br />Next to being pretty uneffective. The money ends up with mainly financial investors and mainly lead to new bubbles and very little new jobs.<br />On the other hand that confirms that under the present market conditions at least there is clearly room to do things. Seen as there is also a lot of deleveraging probably not a conclusion that will a necessarily always be the same. And marketconditions can change 10s times faster than measures to correct the new unstable situation. Riknoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-53480899656520427892013-02-08T22:02:28.912+00:002013-02-08T22:02:28.912+00:00Simon,
"It cannot independently control base...Simon,<br /><br />"It cannot independently control base money and short term interest rates."<br /><br />Why not? Doesn't the BoE operate a floor system? What prevents them from changing the floor rate and doing QE at the same time? Of course, under those circumstances we have to stop even pretending that the QTM anchors the price level (but then it never really did, so that's a good thing).<br /><br />"Standard macro would suggest that a permanent increase in base money will raise the price level eventually, so it may no longer be possible to prevent inflation exceeding its target at some point."<br /><br />Not true in a floor system. The standard macro argument is based on logic that says that *eventually* the nominal natural rate will rise above zero and then the excess money supply will cause inflation by depressing the real rate below the natural rate. But in a floor system where you can *always* set the real rate arbitrarily high, this is not the case. Increasing the money supply depresses the nominal rate to the floor *not to zero*. So you can always control inflation.<br /><br />So the ability to prevent *deflation* is limited by the ZLB which is inescapable due to the existence of zero interest currency. But the ability to prevent *inflation* is limited only by the ability to raise the short rate. *That* in turn is not limited by the mere existence of money. It is only limited by our (former) insistence of setting the floor rate (IOR) at zero.Khttps://www.blogger.com/profile/09226058602565040485noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-43848198251829797872013-02-08T20:42:14.653+00:002013-02-08T20:42:14.653+00:00Helicopter money in not formally equivalent to a d...Helicopter money in not formally equivalent to a debt financed tax cut - unless there are lump sum taxes in force. In the UK there are few if any lump sum taxes and so a debt financed tax cut would be a give away to the upper regions of the income distribution. The attraction of helicopter money is distributional.dcomerfhttps://www.blogger.com/profile/18378883188453226827noreply@blogger.com