• BullionStar
    05/30/2016 - 21:24
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Helicopter Money Arrives: Switzerland To Hand Out $2500 Monthly To All Citizens

Tyler Durden's picture




 

With Citi's chief economist proclaiming "only helicopter money can save the world now," and the Bank of England pre-empting paradropping money concerns, it appears that Australia's largest investment bank's forecast that money-drops were 12-18 months away was too conservative. While The Finns consider a "basic monthly income" for the entire population, Swiss residents are to vote on a countrywide referendum about a radical plan to pay every single adult a guaranteed income of around $2500 per month, with authorities insisting that people will still want to find a job.

The plan, as The Daily Mail reports, proposed by a group of intellectuals, could make the country the first in the world to pay all of its citizens a monthly basic income regardless if they work or not.  But the initiative has not gained much traction among politicians from left and right despite the fact that a referendum on it was approved by the federal government for the ballot box on June 5.

Under the proposed initiative, each adult would receive $2,500 per months, and each child would also receive 625 francs ($750) a month.

 

The federal government estimates the cost of the proposal at 208 billion francs ($215 billion) a year.

 

Around 153 billion francs ($155 bn) would have to be levied from taxes, while 55 billion francs ($60 bn) would be transferred from social insurance and social assistance spending.

That is 30% of GDP!!!

The action committee pushing the initiative consists of artists, writers and intellectuals, including publicist Daniel Straub, former federal government spokesman Oswald Sigg and Zurich rapper Franziska Schläpfer (known as “Big Zis”), the SDA news agency reported. Personalities supporting the bid include writers Adolf Muschg and Ruth Schweikert, philosopher Hans Saner and communications expert Beatrice Tschanz. The group said a new survey showed that the majority of Swiss residents would continue working if the guaranteed income proposal was approved.

'The argument of opponents that a guaranteed income would reduce the incentive of people to work is therefore largely contradicted,' it said in a statement quoted by The Local.

 

However, a third of the 1,076 people interviewed for the survey by the Demoscope Institute believed that 'others would stop working'.

 

And more than half of those surveyed (56 percent) believe the guaranteed income proposal will never see the light of day.

The initiative’s backers say it aims to break the link between employment and income, with people entitled to guaranteed income regardless of whether they work.

Or put another way - break the link between actually having to work for anything ever again... but maybe this "group of itellentuals" should hark Margaret Thatcher's words that "eventually you run out of other people's money!!"

*  *  *

As we previously detailed, support is growing around the world for such spending to be funded by “People’s QE.” The idea behind “People’s QE” is that central banks would directly fund government spending… and even inject money directly into household bank accounts, if need be. And the idea is catching on.

Already the European Central Bank is buying bonds of the European Investment Bank, an E.U. institution that finances infrastructure projects. And the new leader of Britain’s Labor Party, Jeremy Corbyn, is backing a British version of this scheme.

 

That’s the monster coming to towns and villages near you! Call it “overt monetary financing.” Call it “money from helicopters.” Call it “insane.” 

 

But it won’t be unpopular. Who will protest when the feds begin handing our money to “mid- and low-income households”?

Simply put, The Keynesian Endgame is here... as  the only way to avoid secular stagnation (which, for the uninitiated, is just another complicated-sounding, economist buzzword for the more colloquial “everything grinds to a halt”) is for central bankers to call in the Krugman Kraken and go full-Keynes.

Rather than buying assets, central banks drop money on the street. Or even better, in a more modern and civilised fashion, credit our bank accounts! That, after all, may be more effective than buying assets, and would not imply the same transfer of wealth as previous or current forms of QE. Indeed, ‘helicopter money’ can be seen as permanent QE, where the central bank commits to making the increase in the monetary base permanent.

 

Again, crediting accounts does not guarantee that money will be spent – in contrast to monetary financing where the newly created cash can be used for fiscal spending. And in many cases, such policy would actually imply fiscal policy, as most central banks cannot conduct helicopter money operations on their own.

 

...

 

So again, the thing to realize here is that this has moved well beyond the theoretical and it's not entirely clear that most people understand how completely absurd this has become (and this isn't necessarily a specific critique of SocGen by the way, it's just an honest look at what's going on). At the risk of violating every semblance of capital market analysis decorum, allow us to just say that this is pure, unadulterated insanity. There's not even any humor in it anymore.

 

You cannot simply print a piece of paper, sell it to yourself, and then use the virtual pieces of paper you just printed to buy your piece of paper to stimulate the economy. There's no credibility in that whatsoever, and we don't mean that in the somewhat academic language that everyone is now employing on the way to criticizing the Fed, the ECB, and the BoJ.

And it will end only one way...

The monetizing of state debt by the central bank is the engine of helicopter money. When the central state issues $1 trillion in bonds and drops the money into household bank accounts, the central bank buys the new bonds and promptly buries them in the bank's balance sheet as an asset.

 

The Japanese model is to lower interest rates to the point that the cost of issuing new sovereign debt is reduced to near-zero. Until, of course, the sovereign debt piles up into a mountain so vast that servicing the interest absorbs 40+% of all tax revenues.

 

But the downsides of helicopter money are never mentioned, of course. Like QE (i.e. monetary stimulus), fiscal stimulus (helicopter money) will be sold as a temporary measure that quickly become permanent, as the economy will crater the moment it is withdrawn.

The temporary relief turns out to be, well, heroin, and the Cold Turkey withdrawal, full-blown depression.

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Fri, 01/29/2016 - 20:46 | 7116135 Budnacho
Budnacho's picture

D'oh!

Fri, 01/29/2016 - 20:49 | 7116142 unrulian
unrulian's picture

Beginning of the end; there's no coming back from this shit

Fri, 01/29/2016 - 20:53 | 7116155 813kml
813kml's picture

The Swissies are yodeling past the graveyard.

Fri, 01/29/2016 - 20:55 | 7116172 summerof71
Fri, 01/29/2016 - 21:05 | 7116205 willwork4food
willwork4food's picture

If they introduce negative interest rates @ the banks, then deposit a large sum to each person "to help mitigate" the NIR, it would indeed increase spending. And inflation. A LOT of inflation. If they did that here I would buy a new truck and order a nice new 24x24 work shed, get my roof redone, and all the windows in the house converted-even if I had to charge it all.

Fri, 01/29/2016 - 21:06 | 7116207 NoDecaf
NoDecaf's picture

Eerily, all at once across Europe every rapefugee stopped in silence....and looked toward Zurich.

Fri, 01/29/2016 - 21:07 | 7116214 COSMOS
COSMOS's picture

Hey at least the Swiss citizens are getting the money instead of Goldman Suks and the clan.

Fri, 01/29/2016 - 21:24 | 7116276 jeff montanye
jeff montanye's picture

in one form or another it will come to the u.s. unless the economy recovers, which it won't.

better that than world war, imo, but that's just my opinion.

Fri, 01/29/2016 - 21:31 | 7116295 Stackers
Stackers's picture

Holland as well

http://qz.com/437088/utrecht-will-give-money-for-free-to-its-citizens-wi...

people will receive the unconditional basic income and won’t be subject to any regulation, so even if they get a job or find another source of income, they will still get their disbursement, explained Nienke Horst,

Fri, 01/29/2016 - 21:31 | 7116304 Son of Loki
Son of Loki's picture

If someone paid me $2500 a month for free I'd still work ... but not much!

Fri, 01/29/2016 - 21:53 | 7116375 Croesus
Croesus's picture

I'd be buying more PM's, more guns, and more ammo.

Use their paper against them.

Fri, 01/29/2016 - 22:03 | 7116408 remain calm
remain calm's picture

This is Crazy and Stupid. Who in their right mind thought 2500 was the right amount. It should be at least 5000, I hate when these intellectuals show how absolutely ignorant they are. Moar is better. 

Fri, 01/29/2016 - 22:34 | 7116523 Donald J. Trump
Donald J. Trump's picture

I like Swiss cake rolls.

Fri, 01/29/2016 - 22:39 | 7116535 Boris Alatovkrap
Boris Alatovkrap's picture

Socialist plan is full of hole, more hole than cheese.

Fri, 01/29/2016 - 23:44 | 7116703 johngaltfla
johngaltfla's picture

Hookers

for

ALL!

 

Works for me.

Sat, 01/30/2016 - 00:07 | 7116759 Pairadimes
Pairadimes's picture

".....break the link between employment and income...."

 

I'll be damned. I honestly never thought I'd ever read a statement like that in print. Full Retard, meet Swiss intellectuals.

Sat, 01/30/2016 - 01:37 | 7116887 COSMOS
COSMOS's picture

With that money each Swiss male can buy a hot Ukrainian wife, if they are already married they can get a second wife hahha.

Sat, 01/30/2016 - 01:58 | 7116920 Motasaurus
Motasaurus's picture

Be a slave to a corporate machine that every year makes you poorer

Get a guaranteed income and do whatever you want 

Sat, 01/30/2016 - 03:56 | 7117056 Father Thyme
Father Thyme's picture

F R E E   S H I T   A R M Y

Sat, 01/30/2016 - 11:22 | 7117596 Took Red Pill
Took Red Pill's picture

Just like Swiss cheese, this plan is full of holes

Sat, 01/30/2016 - 11:42 | 7117651 surfsup
surfsup's picture

So Khaddafy gives out 50k for each newly wed couple and he gets whacked...  Disconnect somewhere in this...

Sat, 01/30/2016 - 12:06 | 7117718 Oracle of Kypseli
Oracle of Kypseli's picture

The genie is out of the bottle. You going to need a bigger bottle to contain it, if you can find one.

 

Let it rain money and as soon as you get it, buy only necessities and PM's immediately. The faster you do that, the better the outcome in your favor.

Sat, 01/30/2016 - 20:12 | 7119388 Stainless Steel Rat
Stainless Steel Rat's picture

If I were just starting out and had the option not to work, I would be self-employed and working 120 hour weeks.  Why so much?  Because I would know that all the time I invest goes to me and not some slob with an MBA and a starched shirt.  I would be writing novels, plays, software (not music anymore :-/) or anything else that has the potential to sell millions of copies.

Sat, 01/30/2016 - 00:17 | 7116776 Okienomics
Okienomics's picture

Hookers for all?  Better think that through, Johngaltfla,

 

With a guaranteed income from the state, the hookers could finally give up their day jobs servicing nasty johns like you.

Sat, 01/30/2016 - 01:49 | 7116907 jerry_theking_lawler
jerry_theking_lawler's picture

Yep. With that much free money, watch a loaf a bread quickly go up to $2500.

Sat, 01/30/2016 - 04:34 | 7117099 COSMOS
COSMOS's picture

Yeah that is about what the price pension funds had to pay per stock after Goldman Suks got that money instead and inflated the market.  At least the bakers get richer and the farmers instead of the middle'man's

Sat, 01/30/2016 - 09:05 | 7117320 GoldSilverBitcoinBug
GoldSilverBitcoinBug's picture

One could travel to other countries to get beautiful Ukrainian Hookers...

Sat, 01/30/2016 - 01:15 | 7116852 The Merovingian
The Merovingian's picture

Don't forget the kiddos! Throw in a couple 3-4 kids and Bingo! .. you have $4-5k/mo. Hell, if Ol Bernie gets his way, and has this kind of free shit to peddle that would definitely sell to the FSA, EBT, SNAP coalition.

Once the masses recognize they can vote themselves money, the shit show is up! We are wholly and truly fucked if the Swiss let this shit pass.

Fri, 01/29/2016 - 21:58 | 7116392 SixIsNinE
SixIsNinE's picture

i was last there exactly 10 years ago - in Basel - the prices were CRAZY high = just for a slice of pizza and a beer was $35 at a fast food joint on the hauptstrasse. 

So it's about time they got their act together - the locals were getting screwed just as much - 

good for them and let's make it happen here too !

 

Sat, 01/30/2016 - 01:46 | 7116900 stacking12321
stacking12321's picture

i stopped in at a starbucks in zurich just to use the wifi.

it was $8 just for a regular coffee, not even a latte or anything fancy

Fri, 01/29/2016 - 22:44 | 7116554 tmosley
tmosley's picture

If you want a woman you will work. "Bare minimum" isn't somthing that attracts high quality mates, mate.

Sat, 01/30/2016 - 11:39 | 7117641 skinwalker
skinwalker's picture

Speak for yourself. I don't work and I've got the best woman in the world. 

Sat, 01/30/2016 - 13:13 | 7117885 TheReplacement
TheReplacement's picture

That depends on how you define a high quality mate.  Mine is not materialistic but down to earth, pragmatic, and full of life and love.  

Fri, 01/29/2016 - 22:38 | 7116531 kerfuffled
kerfuffled's picture

"A group of people already receiving welfare.."

I never trust the criteria for these test groups, I've seen comitees discussing this on tv, its a bunch of leftists who preselect a test group, they should instead offer this to random 1000 people in the municipality, Then compare to random control group later. Also their tests will always be skewed since the rest of society isn't on basic income at the same time.

Fri, 01/29/2016 - 21:26 | 7116285 tmosley
tmosley's picture

Dear Tyler:

You morons said this before, but a UBI is NOT helicopter money unless they are just printing it and handing it out. If it is funded by tax money, then it is fine, it's just a more fair version of welfare.

That said, the amount here is so huge, that they are almost certainly printing money to fund it, or they are going to raise taxes to catastrophic levels.

A UBI works very well at $6-1200 a month. For those who can't or don't want to work, or who are devoting all of their time to some project, you can take on roommates and live just as well as college students.

Fri, 01/29/2016 - 21:45 | 7116352 insanelysane
insanelysane's picture

What you do is give everyone a country debit card.  You get $2,500 a month but the balance can never be more than $2,500.  So you force the people to spend that $2,500 a month every month.  It is what government departments do at the end of the fiscal year, they spend the budget because if you don't spend your full budget you get less the next year.

Fri, 01/29/2016 - 22:23 | 7116495 Cruel Aid
Cruel Aid's picture

Where did the trillions go here. should have handed it to non bankers. We'd be full tilt gdp now china style.

Sat, 01/30/2016 - 01:51 | 7116910 jerry_theking_lawler
jerry_theking_lawler's picture

That's part of the problem with governmental budgets and spending other peoples money. When its your money or you are in a private business this doesn't happen.

Sat, 01/30/2016 - 14:59 | 7118346 DetectiveStern
DetectiveStern's picture

Also a huge problem that the amount they steal off people is less than they spend meaning they have to borrow and then steal more of your money to pay the interest.

Fri, 01/29/2016 - 21:54 | 7116379 nmewn
nmewn's picture

"If it is funded by tax money, then it is fine, it's just a more fair version of welfare."

Nope. Don't see ANY PROBLEM here whatsoever. Nope. None at all.

I say we tax each other into prosperity for all!!! ;-)

Fri, 01/29/2016 - 22:20 | 7116483 tmosley
tmosley's picture

IE it is not something that causes hyperinflation, as is implied by the "helicopter money" trope, something which is an outright lie by fucking idiots or those who wish to manipulate you into some system that is worse, like the current one, where means tests exist to ensure that those getting money don't do anything productive, and that huge bureaucracies exist to enforce that outcome at taxpayer expense.

Fri, 01/29/2016 - 22:37 | 7116529 nmewn
nmewn's picture

I hardly no where to start, you're saying, issuing everyone a $2,500 check guarantees their productivity AND the very ones who have brought about the current lack of productivity have the ability to somehow "means test" anyone?

They can't even means test themselves, they've now resorted to dropping money on people in the hope that they'll spend what they haven't earned.

I can hardly wait for the "enforcement bureaucracy/mechanism" to kick in when they catch them saving some of it ;-)

Fri, 01/29/2016 - 22:45 | 7116544 tmosley
tmosley's picture

Are you fucking retarded? Do you know ANYTHING about current welfare systems? Or the English language (it's "know" you fucking idiot, not "no")?

And I have said in THIS VERY THREAD that $2500 is too high, and it should be more like $600 or $1200 at most. The US can afford about $800 according to my calculations, by getting rid of SSI, medicare, etc. This is accompanied by removing minimum wage and many other bullshit regulations on business, especially small business.

Fri, 01/29/2016 - 23:34 | 7116686 nmewn
nmewn's picture

You know, the first competent, rational act is to stop digging right?

"And I have said in THIS VERY THREAD that $2500 is too high, and it should be more like $600 or $1200 at most."

So, no problem with some technocrat somewhere, fat & happy with his/her salary, well taken care of by their medical plan, expecting the Gravy Train to keep running, right on into THEIR retirement on a government pension...dictating who should recieve what...FROM SOMEONE ELSE?

You all good with that?

Or...are we strictly talking...JUST HAVE CENTRAL BANKS BACK GOVERNMENT DEBT...PRINT THE SHIT UP AND DROP IT and we should just STFU about it?

Sat, 01/30/2016 - 00:38 | 7116810 tmosley
tmosley's picture

>An idea is bad because it came from somewhere bad, even if it came from somewhere good originally.

Right. Rothbard was an evil statist too. And other strawmen that make no sense.

Eat penguin shit, you ass spelunker.

Sat, 01/30/2016 - 09:07 | 7117327 nmewn
nmewn's picture

lol...I'll ask an uber-statist to pick me up some penguin shit the next time they get stuck, in the ice pack, in Antarctica, trying to prove how incredibly stupid they are, it's rare in Fla.

The idea, the unbelievably idiotic concept under discussion here T is...

1...the inherent weakness of democracies) The notion, even the premise of, having "a vote" on whether or not to give yourself a raise at the expense of your neighbor...I think we both know what the outcome will be.

2...the corrosive ideology of socio-economics laid bare) When you give someone something for doing nothing, they DO NOT BECOME MORE productive, they become less productive by rewarding their non-productive habits.

3...the vision of benevolent governance must grow ever stronger during weakness) When all past policy decisions have failed, the statist mind must turn to growing the peoples faith in .gov's ability to efficiently & evenly distribute the successful serfs excess productivity (with the appropriate tax handling fees deducted by the bureaucracy in question, of course) or they have proven themselves yet again, failures.

Sat, 01/30/2016 - 13:18 | 7117905 TheReplacement
TheReplacement's picture

You remind me of that horrible little manchild Krugman.

Sat, 01/30/2016 - 02:04 | 7116930 sun tzu
sun tzu's picture

You're fucking stupid. Who gets the $800/mo? Is it everybody? 

 

So now no more welfare and medicare. The old and sick people who really do need assistance are supposed to live on $800/mo to pay their rent, food, and healthcare? LMAO!!!

Sat, 01/30/2016 - 11:42 | 7117650 skinwalker
skinwalker's picture

A UBI is far more fair than our current system. Of course everyone should get it. And it is quite possible to live on 800 a month if you live with a couple other people. I know loads of people who make about that much and they do alright. 

Sat, 01/30/2016 - 13:23 | 7117919 TheReplacement
TheReplacement's picture

So what do you do when a majority of people decide to live on $800/month and quit being productive? 

What will YOU do when a group of armed men come to your house with a rope because they are sick of infantile little pricks telling everyone they should work harder to pay more taxes so you and your circlejerk friends can live like college students without putting forth any effort whatsoever to provide for yourselves?  I only ask because the day is coming where that scenario is going to play out and your kind is going to face a rope, a blade, or a bullet.

If I've learned anything from history it is that almost nobody learns from history.

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