"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."
"The most eye-catching of [fiscal stimulus] views is a call to deploy ‘helicopter money’, which we define as monetary financing of fiscal deficit. However, this argument is misleading. Surely this has already been implemented in many developed countries through QE. Why bring it up now despite it has been already deployed?"
Just look at it as a repo for everyday depositors: post your €500 notes as collateral, take the haircut, get smaller bills in return.
There were hopes that China would announce a raft of fscal stimulus measures at the much ballyhooed NPC aimed boosting growth and taking some of the pressure off of montary policy. No such luck. The budget deficit came in at just 3%, an expansion from last year's 2.3%, but well below the 4% some analyasts were hoping for.
If central bankers think that "helicopter money" might be an option to combat deflationary pressures and sluggish economies, the right time to launch the choppers is before consumers realize they need them. As history shows, after that, it is too late.
It looks like the board-game company sees the writing on the wall and is preparing the children of today for the new world order – a cashless society.
"The world has fundamentally shifted over the last decade, especially since we’ve emerged from the Great Recession... But the professional class has been very slow to understand what is going on, not just quantitatively but qualitatively in a new generational configuration that I call the Fourth Turning. They don’t accept the new normal. They keep insisting, just two or three years out there on the horizon, that the old normal will return – in GDP growth, in housing starts, in global trade. But it doesn’t return."
"There is excessive debt everywhere and negative interest rates are dangerous... My number one fear? That’s the same as asking me where it will start. When you view the economy as a complex, adaptive system, like many other systems, one of the clear findings from the literature is that the trigger doesn’t matter; it’s the system that’s unstable. And I think our system is unstable... Central Bank models are just wrong"
Another Bank Throws In The Towel: "After 6 Years Of Outperformance" Citi Cuts US Stocks To UnderweightSubmitted by Tyler Durden on 01/05/2016 11:35 -0400
Yesterday JPM, which despite calling for a 2,200 year end price target, paradoxically warned that the regime of "buying dips" is over, and that "we take the view that equities are unlikely to perform well on a 12-24 month horizon" adding that "the regime of buying the dips might be over and selling any rallies might be the new one." So don't buy dips yet somehow the S&P will rise 150 points? Fair enough. Today, it is Citigroup's turn to try to somehow predict both a 12% "gain for global equities in 2016" even as it tells clients to start selling US stocks because "fading EPS momentum and rising Fed funds mean that, after 6 consecutive years of outperformance, we cut the US to Underweight."
Despite the increasing perception of policy divergence between The US and the rest of the world, it appears 'factors beyond the control of the central planners' has stymied hope for any US-based sparking of global growth. Between The Fed's liquidity withdrawal and the deflationary tsunami from an emerging world buried in credit-fueled mal-investment, it is increasingly clear that central banks have lost control and everything is now going down together. As Citi's Willem Buiter recently noted, "everything's failed" so how long before we see the money drop?
"If, as seems possible, the ECB will increase, in H1 2016, the scale of its monthly asset purchases from €60bn to, say, €75bn, and if these additional purchases are concentrated on public debt, the euro area will benefit from a ‘backdoor’ helicopter money drop –something long overdue."
“To the intelligent man or woman, life appears infinitely mysterious, but the stupid have an answer for everything.” ~Edward Abbey
"Corporate balance sheet deterioration may well be a theme in 2016, raising market concerns, in our view. A mirror image of that is the rise in bank non- performing loans. Our contacts among the banks seem increasingly concerned about the NPL issue in 2016."
It’s easy to be frightened by these proposals. But if governments think they can force us to accept negative interest rates on our savings by abolishing cash, they need to think again. It’s preposterous to assume that savers will passively accept outright confiscation of their assets via negative interest rates or a ban on cash. Instead, people will simply revert to other stores of value.