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Citi's Buiter On Plan Z: Unleash The Helicopter Money

Tyler Durden's picture




 

All is (once again) failing. What to do? Much more of the same of course. Only this time whip out the nuclear option: the Helicopter Money Drop. This is the logical next step that Citigroup's Willen Buiter sees as "Central Banks should also engage in 'helicopter money drops' to stimulate effective demand" - temporary tax cuts, increases in transfer payments, or boosts to exhaustive public spending - all financed directly by the willing central bank accomplice in the monetization gambit. In his words: "This will always be effective if it is implemented on a sufficient scale." It is not difficult to implement, would likely be politically popular (nom, nom, nom, more iPads), and in his mind need not become inflationary. He does come down to earth a little though from this likely-endgame scenario noting that "helicopter money is not [however] a solution to fiscal unsustainability." It is just a means of providing a temporary fiscal stimulus without adding to the stock of interest-bearing, redeemable public debt. Any attempt to permanently finance even rather small (permanent) general government deficits (as a share of GDP) by creating additional base money would soon – once inflation expectations adjust to this extreme fiscal dominance regime - give rise to unacceptably high rates of inflation and even hyperinflation. His estimate of the size of this one-off helicopter drop - beyond which these inflation fears may appear - is around 2% of GDP - hardly the stuff of Keynes-/Koo-ian wet dreams. The fact that this is being discussed as a possibility (and was likely always the end-game) by a somewhat mainstream economist should be shocking as perhaps this surreality is nearer than many would like to imagine.

 

Citigroup's Willen Buiter: Helicopter Money

In cooperation with the fiscal authorities, the central bank can engage in helicopter money drops, as described by Milton Friedman (1969, p. 4). This is a temporary tax cut, increase in transfer payments or boost to exhaustive public spending (including infrastructure investment), financed through a permanent increase in the monetary base. This will always be effective if it is implemented on a sufficient scale. Consider the thought experiment where the Chancellor of the Exchequer sends a £1000 cheque to every man, woman and child in the UK and funds this by borrowing from the Bank of England, which monetises the debt and commits not to reverse this ever. Now consider the following negative economic environment: the British public has become Teutonic in its attitudes towards thrift or caution and decides to save the entire windfall. The solution is simple. Repeat the exercise with a £10,000 cheque for one and all and keep going adding zeros until the consumer cries uncle and starts spending. Ben Bernanke (2002), citing Milton Friedman’s original helicopter money drop parable, listed helicopter money drops (aka money-financed tax cuts) as one of the options open to the monetary authorities at the zero lower bound – as any well-informed monetary economist would have done. He was riled with the epithet “Helicopter Ben” as a result, and has not discussed the merits of the proposal since then, unfortunately.

...It may well be the most effective form of stimulus currently, in particular if directed towards public investment which has taken the brunt of public spending cuts in those countries that have begun fiscal consolidation in earnest (i.e. not the federal government of US or Japan). If the helicopter money were at the pure discretion of the central bank (it could simply say ‘no’), it need not imply weaker incentives for governments to manage their own finances prudently.

...A helicopter money drop is not difficult to implement. It would most likely be politically popular. It just requires cooperation between the central bank and the Treasury. In the US and the UK, helicopter money may in fact turn out to be the true face of the QE we are supposed to have seen these past years. If the asset purchases and monetisation are not reversed at some point in the future, QE will turn out to have been helicopter money after all, if either it brought down government borrowing rates in the primary and secondary markets or if it just provided a subsidy to government funding in the primary markets. Unless the central bank makes a credible non-reversal commitment today, however, the asset purchases and monetisation may be interpreted as temporary – as QE - and their effectiveness therefore less than would have been the case had it been recognised for what it is (or may be) – helicopter money.

Helicopter money, even in huge amounts, need not become inflationary ever. The increase in the government deficit associated with the fiscal stimulus is temporary because the fiscal stimulus is temporary. The associated increase in the size of the central bank’s balance sheet may be large, but it is finite. As long as the current quasi-liquidity trap, high leverage for sovereigns, banks and households endure, much of the money transferred to households (should they be the primary beneficiaries of the helicopter money drop) could well be saved by households, to be deposited in banks who add it to their excess reserves. Should consumers get their confidence back and decide to spend the part of the helicopter money drops they initially saved, fiscal tightening is the solution. Should banks get their confidence back and decide to push their excess liquidity towards the private sector by offering loans on irresistible terms, any inflationary increase impact of the enlarged stock of base money on the stock of bank credit or broad money can be neutralised either by raising bank reserve requirements, or by raising the remuneration rate on excess reserves held by banks with the central bank to levels that would induce banks to keep their money at the central bank rather than lend it out to the private sector.
 
In Japan and in the euro area, central bank independence tends to be interpreted by the central banks as not answering the telephone when the fiscal authorities call. Such a rejection of cooperation between monetary and fiscal authorities and of coordination between monetary and fiscal policies reflects an elementary but damaging misunderstanding of the meaning of independence, in our opinion. If an escape from this self-imposed state of impotence is deemed to require an amendment of the Bank of Japan Law and of the European Treaties, then we would encourage it. We actually believe that the European Treaties, including Article 123, permit the funding of sovereigns by the ECB and the national central banks in the secondary sovereign debt markets. That’s good enough to make helicopter money drops feasible even in Euroland. In any case, good monetary and fiscal policy should not be blocked or inhibited by a blanket or even a partial prohibition of the monetisation of public debt and deficits. If done properly, and subject to the consent of the monetary authority, a monetary authority which we can presume to take its price stability mandate seriously, it would not cause inflation. Instead, we think it would help prevent inflation falling below the level deemed consistent with price stability in the medium term, or even deflation, and the risk of recession or even depression.

Finally, helicopter money is not a solution to fiscal unsustainability. It is just a means of providing a temporary fiscal stimulus without adding to the stock of interest-bearing, redeemable public debt. Any attempt to permanently finance even rather small (permanent) general government deficits (as a share of GDP) by creating additional base money would soon – once inflation expectations adjust to this extreme fiscal dominance regime - give rise to unacceptably high rates of inflation and even hyperinflation. Our estimates of the maximum general government deficit for the euro area and the US that can be financed without a surging rate of inflation are around 2% of GDP at most – hardly the stuff of which permanent monetisation dreams are made. Although unanticipated inflation can reduce and, at the extreme, wipe out the real NPV of servicing a given stock of domestic currency debt, once inflation becomes embedded in expectations, the ability to extract additional real resources through the anticipated inflation tax is very limited.

 

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Wed, 05/09/2012 - 14:38 | 2410744 markmotive
markmotive's picture

Need a real antidote? Then support Dr. Ron Paul.

Ron Paul on Gold Standard vs Paper Money Moral Hazard:

http://www.planbeconomics.com/2012/04/24/ron-paul-on-gold-standard-paper-money-moral-hazard/

Wed, 05/09/2012 - 14:39 | 2410785 Fukushima Sam
Fukushima Sam's picture

Fuck yeah, bitchez, helicopter money time!  Keep the gold under wraps until the meltdown occurs!

Wed, 05/09/2012 - 14:44 | 2410811 Gully Foyle
Gully Foyle's picture

Fukushima Sam

"Keep the gold under wraps until the meltdown occurs!"

Do you live in Utah? Maybe some RPG world?

After the crash bottle caps may be just as valid a currency as Gold.

 

Wed, 05/09/2012 - 14:53 | 2410840 Dicite justitiam
Dicite justitiam's picture

Whatever...money is what the sovereign's guns and courts say the money is...this won't change (only the sovereign may change).

Wed, 05/09/2012 - 15:02 | 2410894 Winston Churchill
Winston Churchill's picture

Until you try to  pay the police and army with bottlecaps.

Water,food,ammo,gold and silver,then bottlecaps.

Hope you've got a lot of bottlecaps, how many to the ton ?

How manys tons=water  and one meal ?

Good luck with that.

Wed, 05/09/2012 - 15:41 | 2411051 Matt
Matt's picture

canning jar lids might be a better investment than already-used bottle caps.

Wed, 05/09/2012 - 16:49 | 2411285 Jack Napier
Jack Napier's picture

Gully Foul, just because an episode of Duck Tales had some indigenous people go money crazy over Scrooge's bottle caps doesn't mean that real life will work that way. Don't you remember the moral of that one? He dumped a plane load of bottle caps on them and devalued the currency. Nobody wants bottle caps except maybe you and people who just figured out how to make a wheel.

Thu, 05/10/2012 - 00:26 | 2412234 FEDbuster
FEDbuster's picture

You can keep your bottle caps.  Buckets of food and bullets are in my barter bank (no counterparty risk).

Wed, 05/09/2012 - 15:05 | 2410906 Paul Atreides
Paul Atreides's picture

Money is what the people say is money, there is no stopping the return of precious metals as currency and anyone not paying attention is missing the opportunity to enter the next paradigm very well off.

P.S. bottle caps don't have intrinsic value...

Thu, 05/10/2012 - 09:44 | 2412896 Carl Spackler
Carl Spackler's picture

Awful idea. Frought with enexpected consequences.

This will end up like, well.... the Helicopter Frozen Turkey drop episode on "WKRP in Cincinnati"  (one of the all-time great episodes of any sit com)

"As God is my witness, I though turkeys could fly!"

Wed, 05/09/2012 - 14:55 | 2410854 Fukushima Sam
Fukushima Sam's picture

I'm sure you're right, Gully, gold will never be valuable again!  That and ammo and food.  Those will never be valuable either.  I'd better liquidate now while I still can!  Thank you for opening my eyes, sir!  ZH I'm outta here, you people are nutz!

Wed, 05/09/2012 - 14:59 | 2410877 Michael
Michael's picture

I hope The Bernank stretches the rubber band a little further so it hurts a lot more when it snaps.

Wed, 05/09/2012 - 16:16 | 2411204 Bansters-in-my-...
Bansters-in-my- feces's picture

Gully Fool,I thought they did not come any dumber than Mitt romney,then you opened your mouth.

Wed, 05/09/2012 - 17:16 | 2411358 AGuy
AGuy's picture

"After the crash, <strike>bottle caps</strike> Canning lids may be just as valid a currency as Gold."

Fixed that for you!

 

 

Thu, 05/10/2012 - 01:17 | 2412304 The Navigator
The Navigator's picture

Google reusable canning lids - for those that haven't canned lately, lids are usable once - reusable lids cost more but can used for years.

Wed, 05/09/2012 - 14:51 | 2410835 FreedomGuy
FreedomGuy's picture

This is the fiat currency equivalent of alchemy and turning lead into gold. They will turn linen and paper into real value.

Wed, 05/09/2012 - 21:17 | 2411884 CPL
CPL's picture

Yup...and pensions into ashes nearly instantly.  Nobody can move the interest rate because if they do their debt obligations eat them alive.  So the helicopter drops the money bomb...zimbamwe time.

 

Alternatively market drops like a stone and margin bubbles pop all the way back to 1978 and pension values are reduced to the investment values.

 

Damned if you do, damned if you don't.  At this point bull or bear, completely fucked binary sum game situation.  Either option results in the destruction of value because of more worthless capital by proxy every credit market as well.

Wed, 05/09/2012 - 14:55 | 2410848 FreedomGuy
FreedomGuy's picture

This is the fiat currency equivalent of alchemy and turning lead into gold. They will turn linen and paper into real value.

Wed, 05/09/2012 - 15:15 | 2410942 Id fight Gandhi
Id fight Gandhi's picture

I'm voting for Paul even if I have to write him in.

I HOPE he decides to break away to a third party and let the others shit themselves.

Wed, 05/09/2012 - 15:49 | 2411085 shuckster
shuckster's picture

Reverting to the gold standard will cause a huge contraction (and starvation)

Wed, 05/09/2012 - 19:38 | 2411672 hamurobby
hamurobby's picture

And staying on the current path will eventually create an even larger starvation and contraction, worldwide revolutions, wars, and a dawning of a new dark age.

Wed, 05/09/2012 - 21:34 | 2411915 lasvegaspersona
lasvegaspersona's picture

if by 'gold standard' you mean that in which the government tells people how much gold is worth...I agree...didn't work before and will not even be tried again.

Wed, 05/09/2012 - 15:53 | 2411113 Thomas Anderson
Thomas Anderson's picture

Can Uncle Ben please make it rain so the party can start???

Wed, 05/09/2012 - 17:24 | 2411381 max2205
max2205's picture

Ben give me money. I will pay off all my debt, promise.

Thu, 05/10/2012 - 10:07 | 2412078 JeffB
JeffB's picture

Don't you get it. That's a form of saving... the exact opposite of what he wants you to do.

He wants you to SPEND the money, and borrow some more when you run out of that. He has plenty more. Be happy!!!! Don't worry!!!

Saving, AKA "hoarding" is the root of all evil, and the cause of our economic crisis!

Sheesh! Zero interest rates haven't gotten people to spend us out of this mess, so now they're going to have to do the darn helicopter drop.

When's that election anyway?

 

 

Wed, 05/09/2012 - 14:35 | 2410750 GeneMarchbanks
GeneMarchbanks's picture

Notional GDP targetting. End of story. 'Boom' times are ahead.

Wed, 05/09/2012 - 14:38 | 2410777 markmotive
markmotive's picture

Is that sarcasm?

Wed, 05/09/2012 - 14:45 | 2410817 GeneMarchbanks
GeneMarchbanks's picture

Dead serious.

Wed, 05/09/2012 - 14:55 | 2410859 falak pema
falak pema's picture

you're the pope!

Wed, 05/09/2012 - 14:37 | 2410760 Bastiat
Bastiat's picture

Do I hear the whine of turbines?

Wed, 05/09/2012 - 14:41 | 2410790 NotApplicable
NotApplicable's picture

I can hear the rotors starting to turn.

QE...QE...QE...QE...QE...QE...

Wed, 05/09/2012 - 14:44 | 2410814 derek_vineyard
derek_vineyard's picture

drop us shares of FB

Wed, 05/09/2012 - 14:59 | 2410884 Sudden Debt
Sudden Debt's picture

Just a one off event... Just once... Than we'll stop... Promise.... Pinky swear...

Wed, 05/09/2012 - 15:56 | 2411102 LouisDega
LouisDega's picture

Na, That was me.  I just fucking farted

Wed, 05/09/2012 - 18:06 | 2411488 Bananamerican
Bananamerican's picture

"get to da choppa"

Wed, 05/09/2012 - 14:38 | 2410768 Moneyswirth
Moneyswirth's picture

Speaking of helicopter money (ie Obamabucks), in other off-topic, but not so off-topic news:

FHA New Foreclosures Jump As Modified Loans Default

The number of Federal Housing Administration-insured home loans entering foreclosure jumped in March after half the mortgages it modified to ease repayment terms were in default again a year or more later. [...]

Borrowers with mortgages for homes bought in 2010, the FHA’s peak lending year, now owe almost 7 percent more than their homes are worth if they used the minimum down payment, according to S&P/Case-Shiller home price index data. [...]

Lenders initiated foreclosures on 36,400 FHA-backed mortgages, twice the number in April 2011, according to Lender Processing Services. The increase for Fannie Mae and Freddie Mac loans was 13 percent.

Cue up the printing press, there's an election to be won!

Wed, 05/09/2012 - 14:47 | 2410823 DosZap
DosZap's picture

Moneyswirth

Too bad for them, if their loans were Robo signed w/ SChityBank, they could have lowered their purchase prices up to $150,000........................Handed over FREE.

I cannot fathom a tax cut on Prop taxes, and a lowered pricipal pmt, if my home was given a 150k freebie.................what a Country.

What a BANK!!!!!!!!!..............WOW!!!

(trying to get real SIGNED contracts this is bait.

LOL

Wed, 05/09/2012 - 14:49 | 2410830 FreedomGuy
FreedomGuy's picture

Unemployed and underemployed cannot pay any note at any price.

Wed, 05/09/2012 - 14:55 | 2410857 DosZap
DosZap's picture

Unemployed and underemployed cannot pay any note at any price.

They dont have to.

If they are in Robo signed mansions, their living there free already for 2-3 yrs.

 

Wed, 05/09/2012 - 14:43 | 2410772 FinalCollapse
FinalCollapse's picture

They tried to give money to corporations and it didn't work out. The next step is to give money to people to stimulate the demand.

This will not work as well. The money will go into consumer products which are made in China. It will be straight pass through to Chinese. I am sure the goverment of China is already sending their lobbyist to Washington DC to support this idea.

Demand is dead for other reasons that economists like Krugman or politicians just cannot understand.

Ron Paul 2012. 

Wed, 05/09/2012 - 15:16 | 2410948 catacl1sm
catacl1sm's picture

Or into deleveraging. That's where I'd put it. Oh, and grub, gold, and guns.

Wed, 05/09/2012 - 15:22 | 2410961 Stuck on Zero
Stuck on Zero's picture

Ben's idea of a money drop is a bit one-sided.  He keeps damn thing hovering over Wall Street.

Wed, 05/09/2012 - 15:47 | 2411074 buzzsaw99
buzzsaw99's picture

Bingo!

Wed, 05/09/2012 - 15:55 | 2411117 Benjamin Glutton
Benjamin Glutton's picture

should I paint a bulls-eye on the roof or build a landing pad?

Wed, 05/09/2012 - 15:48 | 2411075 Matt
Matt's picture

But the Chinese will then take that money and buy UST. Basically, this plan lets citizens replace the Primary Dealers in the QE model. Which would you rather have, an iPad, or what you get when the Fed does QE and the bankers get bonuses? 

Plus, it helps get Obama re-elected, and it gives people choices on what trinkets they will buy. win-win-win! Except the stimulus cards will have to be run through Goldman Sachs, Bank of America, et al to ensure they get their slice of the pie, or it wouldn't be fair!

Wed, 05/09/2012 - 19:46 | 2411686 hamurobby
hamurobby's picture

Yes we can!

And then we can change our currency and do it all over again and evwy one will be happy.

Wed, 05/09/2012 - 17:41 | 2411433 Iwanttoknow
Iwanttoknow's picture

i READ SOMEWHERE THAT CLUNKERS FOR CASH IDEA  came from the Chinese embassy in Washington.They needed the steel.

Wed, 05/09/2012 - 14:39 | 2410775 slaughterer
slaughterer's picture

I have my bushels ready to scoop up the helicopter money from my lawn.

I will take it immediately to the gold shop to buy more gold.

 

Wed, 05/09/2012 - 14:39 | 2410781 DarthVaderMentor
DarthVaderMentor's picture

Unleash the Fraken Kraken!

Wed, 05/09/2012 - 14:41 | 2410788 slackrabbit
slackrabbit's picture

dear god,

please let ben printer remain in good condition and allow ben to not change his mind

please let this charade go on for another year....another year where we may all stack, save, prep and be silently amused when our friends, family and neibours thingk we are all nuts. 

amen

 

Thu, 05/10/2012 - 01:50 | 2412334 The Navigator
The Navigator's picture

Except for the obvious trolls (HammyWanger, MillionDollarBlowJob, DrBendOver) there are a great group of people here on ZH; some really imaginative, intellegent people and I don't have to read more than 2 or 3 articles to laugh my gut out.

On a serious note, this is my nightly prayer, 'Just 1 more year' - 'cus I feel it deep in my bones that some serious shit is coming.

And my wife is either going to have me committed to a mental hospital, or, OR, she'll have me sainted for building one of the best prepped Arks 2nd only to Noah's.

Just 1 more year - then bring on the rain and the floods.

Semper Paratus, The Navigator

Wed, 05/09/2012 - 14:40 | 2410789 bkrolik
bkrolik's picture

Reminds me of Bush tax rebates... Clearly not enough.

Wed, 05/09/2012 - 14:42 | 2410797 Cone of Uncertainty
Cone of Uncertainty's picture

Instead of a money drop, how about a duce drop.

 

Wed, 05/09/2012 - 14:42 | 2410799 NEOSERF
NEOSERF's picture

Sounds like he is throwing his hat in the ring to be next Fed Chief.  Also, sounds like the kind of noises a 63 year old would spew as he would rather not see the world end and his favorite golf courses close..

Wed, 05/09/2012 - 14:44 | 2410803 NotApplicable
NotApplicable's picture

We're all going to be millionaires! W00t!

Zimbabwe all up in this bitch!

Wed, 05/09/2012 - 14:57 | 2410866 victor82
victor82's picture

Post of the day, sir!

Mugabe for Fed Chair!

Thu, 05/10/2012 - 02:02 | 2412345 The Navigator
The Navigator's picture

Was at the local coin shop today buying some small stacks and saw the Zim 100 Trillion on sale for $7.50.

Just in case of USD failure, I bought several 100 stacks of these on ebay for $150/each stack ($1.50 each) several years ago.

Actually bought them to give away as gifts/gags to tell the inflation story to friends and hopefully alert them to possibilities.

But now, you never know, why bother printing a US 100 Trillion note when we could just adopt Zimbabwes. Front run that cocksucker Ben.

Wed, 05/09/2012 - 14:45 | 2410805 j12t
j12t's picture

So why does the consumer eventually cry uncle?

Easy: they just inflated his savings away and threaten to do more of it in the future. And that is a solution for which problem?

Wed, 05/09/2012 - 15:51 | 2411107 Matt
Matt's picture

what savings?

Wed, 05/09/2012 - 14:45 | 2410807 Shizzmoney
Shizzmoney's picture

The helicopter is actually a ROFLcopter.....and it's not Plan Z. 

Plan Z is killing off the 99%.

Do you think Ben plays this when he runs his CTRL+P program?

http://www.youtube.com/watch?v=tHnA94-hTC8

Wed, 05/09/2012 - 15:05 | 2410911 slackrabbit
slackrabbit's picture

no

i think Ben is more The Impossible Dream...watch as his printers gets faster and faster....

http://youtu.be/fB_1gPRCLCo

 

Wed, 05/09/2012 - 15:12 | 2410930 Spastica Rex
Spastica Rex's picture

No, I don't.

Wed, 05/09/2012 - 15:53 | 2411114 Matt
Wed, 05/09/2012 - 14:44 | 2410808 e_goldstein
e_goldstein's picture

Dear Chairsatan, please hold off on your launch until I get a chance to make it to the coin shop and the gun store.

Thanks, e_

Wed, 05/09/2012 - 14:52 | 2410839 DosZap
DosZap's picture

Dear Chairsatan, please hold off on your launch until I get a chance to make it to the coin shop and the gun store.

Thanks, e_

 

Dude, if you haven't made it both numerous times, your in for a RUDE awakening.

Wed, 05/09/2012 - 15:34 | 2411024 e_goldstein
e_goldstein's picture

I just wanted to top off.

Thu, 05/10/2012 - 02:08 | 2412351 The Navigator
The Navigator's picture

It's Christmas buying season in May (or whenever silver goes to $29.25) - and my favorite Xmas gift recipient is.......... ME!!!

Like the Mogambo Guru used to say "Whee..... this investing stuff is easy"

I miss the Mogambo Guru and hope he's on his beach sipping Mai Tai's - He was predicting this long before silver hit $10

Wed, 05/09/2012 - 14:44 | 2410809 Hedgetard55
Hedgetard55's picture

This putz Buiter has been a complete fucking moron for a long time now. What a douche.

Wed, 05/09/2012 - 14:44 | 2410812 azzhatter
azzhatter's picture

Should I just stand out in the yard and wave my arms?

Wed, 05/09/2012 - 14:44 | 2410813 CvlDobd
CvlDobd's picture

Long TXT bitchez!

Wed, 05/09/2012 - 14:46 | 2410816 jus_lite_reading
jus_lite_reading's picture

A close friend of mine called me yesterday to complain about his rising health care costs... I had to listen to his 30 minute rant about how everything is corrupt and how pissed he was... 

His premium went from $270 to $360 and the state approved the increase... 

I did a quick google search and found that the CEO made $102 MILLION in BONUS MONEY in 2009 and for 2011 he will receive a 24% INCREASE in his bonus from last year...

http://ctwatchdog.com/health/102-million-payout-to-united-healthcare-ceo-draws-outrage

http://www.washingtonpost.com/business/industries/insurer-unitedhealths-ceo-compensation-grows-24-percent-in-2011/2012/04/26/gIQAvTYmjT_story.html

Well guys... he is switching providers and will launch a viral compaign to call out these fuckers...

 

Wed, 05/09/2012 - 14:53 | 2410847 Silver Dreamer
Silver Dreamer's picture

Three years ago my Cigna plan paid 100% for almost everything.  Two years ago that changed to 90%.  One year ago it was 80%.  Now it is 80% with a 2500 deductible.  Seriously, WTF? I have four children and a wife with major medical problems, so I'll take what I can get.  To the government: eff you for messing with my insurance company to raise their costs, which of course raised mine.  /rude

Wed, 05/09/2012 - 15:33 | 2411019 Chupacabra-322
Chupacabra-322's picture

Medical Control, Medical Corruption

Then the council's secretary N.P. Colwell helped plan (and some say write) the famous 1910 report by Abraham Flexner. Flexner, the owner of a bankrupt prep school, had the good fortune to have a brother, Simon, who was director of the Rockefeller Institute for Medical Research. At his brother's suggestion, Abraham Flexner was hired by the Rockefeller-allied Carnegie Foundation so that the report would not be seen as a Rockefeller initiative. And Carnegie, whose main goal was to "rationalize" higher education, that is, replace religion with science, saw the AMA cartelization drive as useful. Claiming to have investigated nearly every school in the country, Flexner rated them on suitability. Schools he praised received lush grants from the Rockefeller and associated foundations, and almost all the medical schools he condemned were shut down, especially the "commercial" institutions. AMA-dominated state medical boards ruled that in order to practice medicine, a doctor had to graduate from an approved school. Post-Flexner, a school could not be approved if it taught alternative therapies, didn't restrict the number of students, or made profits based on student fees.

Why the opposition to for-profit schools? If an institution were supported by student fees rather than philanthropic donations, it could be independent of the foundations. The Rockefeller family had invested heavily in allopathic drug companies and wanted doctors to use their products.

http://www.lewrockwell.com/rockwell/medical.html

Wed, 05/09/2012 - 14:47 | 2410822 mammoth mo
mammoth mo's picture

What's the problem? 

Debt.

What is your proposed solution? 

More Debt.

Wed, 05/09/2012 - 15:58 | 2411136 Matt
Matt's picture

Actually, I think the proposed solution with the helicopter money is to put more money into circulation without increasing the total amount of debt. We'll grow (code for "inflate") our way out of this crisis!

Wed, 05/09/2012 - 14:48 | 2410825 TheEmperor
TheEmperor's picture

Yes, this new proposal is radical and potentially destablizing...I, of course, approve

<incessant cackling>

Wed, 05/09/2012 - 14:49 | 2410826 Village Smithy
Village Smithy's picture

Is this guy actually suggesting that money be given to the middleclass and not allowed to trickle down from the top? He'll never get a decent Tee-off time again.

Wed, 05/09/2012 - 14:49 | 2410828 q99x2
q99x2's picture

100 stacks of 100s please.

Wed, 05/09/2012 - 14:48 | 2410829 The worst trader
The worst trader's picture

BTFD

Thu, 05/10/2012 - 02:31 | 2412363 The Navigator
The Navigator's picture

Did so at $29.25 - not alot, but working on filling number "x" pelican box - pelican boxes cost a bit but stack well in a rifle safe, water tight, handle won't break carrying 100+ pounds.

Damn good advice TWT, buy the fucking dip - the world has gone mad and the insane Central Bankers will out-print Zimbabwe's central bank governor Gono making him look like an amateur.

One day, we'll look back at gold for $1,550/oz and silver at $29.25/oz and wonder WTF we were thinking, not trading in everything to buy real assets when everything else was falling in price.

Could be wrong, and Mileage May Vary - do your own research and bet on yourself.

Wed, 05/09/2012 - 14:50 | 2410834 Milton Waddams
Milton Waddams's picture

If they're going to go full retard... Take the average debt load per household and send every household a check for that amount... on one condition, that those households that are in a net deficit position must use the windfall to pay down / pay off the debt. At least this way the prudent are not rElatively punished.

Wed, 05/09/2012 - 16:18 | 2411206 iDealMeat
iDealMeat's picture

That would suck for me..  I'm prudent, and solvent..

 

Wed, 05/09/2012 - 14:51 | 2410836 resurger
resurger's picture

Dead but Stable

Wed, 05/09/2012 - 14:53 | 2410842 The worst trader
The worst trader's picture

Strawberry fields forever............

Wed, 05/09/2012 - 14:54 | 2410846 flacorps
flacorps's picture

The Egyptians put everyone to work constructing pyramids. Damn things just sat there after that, though.

We could work on evacuated tube transport on an intercontinental basis.

We could begin to exploit outer space.

But what I think is going to happen is the usual: War.


Wed, 05/09/2012 - 15:01 | 2410881 dwdollar
dwdollar's picture

If humans were ever able to escape Earth the demigods wouldn't be able to assert their complete control over all of humanity. Best to squash manned space technology early and hard.

Wed, 05/09/2012 - 14:55 | 2410852 azengrcat
azengrcat's picture

Anybody got a 3X printer ETF out there?

Wed, 05/09/2012 - 15:04 | 2410907 optimator
optimator's picture

Too much to print, and not a big enough helicopter either.  The FED just wires around money that hasn't even been created yet, to their buddies.  Maybe we should all get dual citizenship like Michele Bachmann.

Wed, 05/09/2012 - 14:55 | 2410861 oleander garch
oleander garch's picture

It is always wise to take advice from someone who works for an instiutution which four years after the blow-up and after having received several hundreds of billions in bailouts and Fed giveaways and while still on the Fed gravy traini remains the only major TBTF unable to pass the easiest stress test ever divised just three months ago.

 

Wed, 05/09/2012 - 14:58 | 2410874 Boilermaker
Boilermaker's picture

REITS are up again today. Man, that's some funny shit right there.  I don't care who you are.

Somebody is pretty damn serious about keeping those POS stocks up in the stratosphere.

Wed, 05/09/2012 - 15:00 | 2410876 Troy Ounce
Troy Ounce's picture

 

 

I believe it is easier to stimulate the clitoris of a 75 year old prostitute with 55 year work experience than this economy with money bombs.

Wed, 05/09/2012 - 15:03 | 2410903 Metalredneck
Metalredneck's picture

"What about a kiss, boy?"

Thu, 05/10/2012 - 02:33 | 2412365 The Navigator
The Navigator's picture

LOL - BRILLIANT!!!

Wed, 05/09/2012 - 15:02 | 2410895 urbanelf
urbanelf's picture

Disney Dollars!

Wed, 05/09/2012 - 15:05 | 2410905 spooz
spooz's picture

In your thought experiement there were no restrictions on how the Peoples Bailout could be spent.  A rule that first funds had to be used to repay debt, and the rest, on a debit card, has to be spent in a certain time period would fix that.  No savings allowed.

"the British public has become Teutonic in its attitudes towards thrift or caution and decides to save the entire windfall."

Wed, 05/09/2012 - 16:01 | 2411154 Matt
Matt's picture

Or you issue the money with a negative interest rate on it; you have a card with $1000, but after one week, whatever is left on that card loses 10 percent. repeat each week until the card has $0 on it.

Wed, 05/09/2012 - 16:39 | 2411262 RichardENixon
RichardENixon's picture

Correct me if I'm wrong, but I think that policy has been in place since around 1913.

Wed, 05/09/2012 - 15:08 | 2410908 Sudden Debt
Sudden Debt's picture

Fuel the chopper : check!
Load up the money: check!
Start theme song: check!
http://www.youtube.com/watch?v=HBd6ighzqYA&sns=em
START!!!!

I LIKE THE WAY YOU MOVE! Tatatata ta tatata ta!

Wed, 05/09/2012 - 15:18 | 2410952 optimator
optimator's picture

But........take your time on the Pri-Fly Bennie!  Don't rush! 

http://www.youtube.com/watch?v=q3idQKi5EqM

 

Wed, 05/09/2012 - 15:39 | 2411043 Revert_Back_to_...
Revert_Back_to_1792_Act's picture

LOL @ Airwolf. 

Can you say "International Money Speculators" like Nixon

http://www.youtube.com/watch?v=iRzr1QU6K1o

This speech is just surreal given what has happened.

 

Wed, 05/09/2012 - 15:06 | 2410909 Bastiat009
Bastiat009's picture

Sell your gold if you need money. No need for QE. Gold is losing value faster than the euro these days.

And for those who don't make the difference between a fact and opinion check out charts about the euro and gold since the beginning of the year.

Wed, 05/09/2012 - 15:13 | 2410932 Spastica Rex
Spastica Rex's picture

Keep hope alive, brother.

Wed, 05/09/2012 - 15:24 | 2410978 TWSceptic
TWSceptic's picture

Do you understand correction vs secular bull market?

 

"No need for QE" is like saying "Bernanke will be able to stop printing and everything will be just fine" do you really believe this? If so I have a bridge to sell you.

Wed, 05/09/2012 - 15:31 | 2411005 Bastiat009
Bastiat009's picture

My point was that banks don't need another round of QE as they are selling gold. Why do you think gold is crashing faster than the euro when the euro might not finish the year?

It's time to get real folks. Don't be like Bernanke when he said that house prices couldn't go down across the country.

Wed, 05/09/2012 - 17:03 | 2411338 TWSceptic
TWSceptic's picture

I'm not buying gold right now but not expecting a big crash. I think it is close to the bottom for this year.

Wed, 05/09/2012 - 15:04 | 2410910 tu-ne-cede-malis
tu-ne-cede-malis's picture

Print baby print

Wed, 05/09/2012 - 15:07 | 2410914 Seasmoke
Seasmoke's picture

this would be Golden !

Wed, 05/09/2012 - 15:06 | 2410916 Bam_Man
Bam_Man's picture

OK, so now we know why they've been smacking down Gold and Silver non-stop for the past 2 months. When the Gold price goes back to $1900/oz the day after they announce this plan, they can say "it's not a big deal".

Wed, 05/09/2012 - 15:11 | 2410923 Vince Clortho
Vince Clortho's picture

The people?  What about the bankers?

Nobody ever thinks of those poor dudes sweating it out for pennies.

Wed, 05/09/2012 - 15:11 | 2410925 Likstane
Likstane's picture

The coin shop is a callin', my fiat keeps on fallin' .My garments keep gettin' fatter,  with shiny metal clatter.

Benny's gonna do it, He'll print 10 trillion units,... till the Barbarians expose warrens tunic...

Uncle ron and Mr.T keep smackin'..

"Haters keep on hatin', Stackers keep on stackin'"*

*credit FUU

 

 

Wed, 05/09/2012 - 15:12 | 2410928 optimator
optimator's picture

I hope this isn't a trial balloon.  If it follows that all the printing is not inflationary, then perhaps he can explain why the price of almost everything is skyrocketing?

Wed, 05/09/2012 - 15:17 | 2410949 Spastica Rex
Spastica Rex's picture

My brother in law is the Director of Finance at Microsoft. The state is in the process of tolling the 520 bridge across Lake Washington. Do you think he gives a shit at the "skyrocketing" cost of travelling in to Seattle? 

Wed, 05/09/2012 - 15:26 | 2410984 falak pema
falak pema's picture

does he like purple prose? I could sell him my book! Microsoft...has two names..micro and soft...My book is macro and hard! It has to be its about the Crusades! But sometimes opposites attract. You kno...Marilyn and Arthur Hitman...So who knows life is full of surprises. I'm not a microsoft man but I'd love to sell a 'chef d'oeuvre' to one of them, all tongue and no cheek! Like Einstoned dead! 

Wed, 05/09/2012 - 16:55 | 2411319 Spastica Rex
Spastica Rex's picture

Your's so funny. +1

Wed, 05/09/2012 - 15:12 | 2410929 Vince Clortho
Vince Clortho's picture

And immediatley the cost of milk goes to $50/gal

Wed, 05/09/2012 - 15:12 | 2410931 Plymster
Plymster's picture

Helicopter drop of 2% of GDP?  That's $300 billion.  The market would guffaw at that.  The US Government pisses away more in two months.  This is the most timid "Helicopter Drop" that I've heard since 2008.  This guy is practically a sound money advocate.

Thu, 05/10/2012 - 02:50 | 2412377 The Navigator
The Navigator's picture

But remember, govt lies - when they say 2% or $300 Billion, they always come back later (when you disremember) and say "no no, we said 20% or $3Trillion, you just disremembered".

And nobody remembers.

Does anyone remember the $2.3 trillion lost being investigated in 'that part of the Pentagon' (that got vaporized during 9/11) - 11 years ago, no one remembers.

Meantime, we are getting fucked up the ass by some really big fucking numbers.

Wed, 05/09/2012 - 15:13 | 2410937 navy62802
navy62802's picture

Am I surprised? Nope. This line of thought is precisely why people like me own physical gold and silver, as well as guns and ammunition.

Wed, 05/09/2012 - 15:14 | 2410939 the not so migh...
the not so mighty maximiza's picture

Ben ordered 10 choppers but they delivered 10 slap chops,, we are screwed.

Wed, 05/09/2012 - 15:13 | 2410940 SeanJKerrigan
SeanJKerrigan's picture

Remember in 2008 when bush gave everyone that $600 stimulus check and all the economist complained that it was spent deleveraging? Pretty funny looking back on it now.

I say, if we're gonna go out, why not have one last blowout.  Sounds like a good plan, and I can probably spend some of this on silver.

Wed, 05/09/2012 - 15:17 | 2410950 misnomer
misnomer's picture

These band-aid solutions feel great when first applied (along with lots of QE salve), but when you gotta rip the band-aid off - it really hurts!

 

 

Wed, 05/09/2012 - 15:21 | 2410960 Tenshin Headache
Tenshin Headache's picture

"The increase in the government deficit associated with the fiscal stimulus is temporary because the fiscal stimulus is temporary."

FULL STOP.

The fiscal stimulus is never temporary.

Wed, 05/09/2012 - 15:22 | 2410971 Nachdenken
Nachdenken's picture

Helicopter or refurbished B52 fleets.  The money returns directly to the banks, and we are where we were. The  private and household debt levels are too high, and money handed out does not help any more.

Already said here in different forms: every dollar more is a lesser dollar all round.  Numerical dollar growth is not real growth. Hark  Hear the roters roar.

Wed, 05/09/2012 - 15:26 | 2410991 i_call_you_my_base
i_call_you_my_base's picture

What these guys never address is that all that public investment goes to Asia in the form of product and the middle east for energy. The nature of the US economy is such that everything bleeds out. When Friedman and co theorized these ideas these economies actually made products and citizens bought them. I'm not saying the whole thing isn't conceptually flawed, but they don't even recognize this obvious fact.

Wed, 05/09/2012 - 15:28 | 2410996 Al Capowned
Al Capowned's picture

Buying gold is so uncivilised and barbaric. The only people that buy gold do it for tradition or are repressed Jews in 1939 that sow it into there garments some have it put in there teeth but that's about it,

Civilised people throw fiat money out of choppers that is real progression

In fact as the world implodes due to trillions of printed fiat currency the best thing is to liquidate all you gold and buy 30 year T.Bonds at real adjusted coupon rate of -5% .

Sarc off /

Wed, 05/09/2012 - 15:32 | 2411010 BTHB
BTHB's picture

"Short term fiscal stimulus", aka, methadone for the credit addicted and solvency challenged.

Wed, 05/09/2012 - 15:32 | 2411011 topshelfstuff
topshelfstuff's picture

remember in early 2009 a Bill to Audit The Fed started to get taled about, and what followed in March...could be a repeat in progress, especially think possible because its being Kept Off the Newz

proposals-to-reform-or-abolish-federal-reserve

http://www.dailypaul.com/230864/ron-paul-subcommittee-to-examine-proposals-to-reform-or-abolish-federal-reserve

The six proposals that will be discussed by the Subcommittee on Tuesday are:

  • H.R. 245, introduced by Rep. Mike Pence
  • H.R. 1094, the Federal Reserve Board Abolition Act, introduced by Rep. Paul
  • H.R. 1401, the Democratizing the Federal Reserve System Act, introduced by Rep. Marcy Kaptur
  • H.R. 2990, the National Emergency Employment Defense Act, introduced by Rep. Dennis Kucinich
  • H.R. 3428, introduced by Rep. Barney Frank
  • H.R. 4180, the Sound Dollar Act, introduced by Rep. Kevin Brady

The Subcommittee’s hearing will take place on Tuesday, May 8 at 10 a.m. in room 2128 Rayburn House Office Building.

Wed, 05/09/2012 - 15:37 | 2411031 samsara
samsara's picture

So what is the Trend Line on the Velocity of Money Graph?

Ya can't push a string.

Wed, 05/09/2012 - 15:36 | 2411034 Jo
Jo's picture

Buiter just got added to my 'no trial; straight to execution' list.

Wed, 05/09/2012 - 15:45 | 2411057 mt paul
mt paul's picture

get out the hard hats

..

we want helicopter

gold and silver

 

maybe an occasional walrus or two...

Wed, 05/09/2012 - 15:47 | 2411071 shuckster
shuckster's picture

US will never be Weimar. Why? We're not German. Anglo society has always veered toward austerity and frugality in the face of economic hardship. History is a better indicator in this case than anything else

Wed, 05/09/2012 - 16:53 | 2411310 RichardENixon
RichardENixon's picture

Yep, those Germans have always been known as a bunch of free spending, irresponsible layabouts.

Thu, 05/10/2012 - 02:55 | 2412387 The Navigator
The Navigator's picture

Fuck off Troll - you cheap-ass pathetic Bull Shit don't sell here.

Wed, 05/09/2012 - 16:02 | 2411152 James
James's picture

Guess it'over

call it a day

sorry that it had to end this way

no reason to pretend

we knew it had to end

someday

someway

Wed, 05/09/2012 - 16:38 | 2411257 Bicycle Repairman
Bicycle Repairman's picture

Crash the stock and commodities markets and raise taxes.  However much money gets lost in the markets or raised by taxes, print it up and hand it out for immediate expenditure.

Wed, 05/09/2012 - 17:20 | 2411363 Ted K
Ted K's picture

IF..... I say IF ZeroHedge was as accurate as it likes to portray itself, and not the tree clubhouse for gold whoring, instead of showing a helicopter dropping money there would be a caricature of Bernanke putting money into a vacuum tube going directly to broker/dealers.

Wed, 05/09/2012 - 17:21 | 2411370 AGuy
AGuy's picture

"In cooperation with the fiscal authorities, the central bank can engage in helicopter money drops"

Buiter: "Just be sure to make drops near the residences of bankers and the select few that make up the financial elite. We'll make good use of the that money by doing God's work!"

 

Wed, 05/09/2012 - 17:21 | 2411374 Escapeclaws
Escapeclaws's picture

It's magic!  --Keynes

Wed, 05/09/2012 - 17:24 | 2411379 Sandmann
Sandmann's picture

temporary tax cuts, increases in transfer payments, or boosts to exhaustive public spending

 

Why not simply buy up Credit Card Receivables and cancel them ?  Then have an interest rate cap on Consumer Credit to encourage better lending practices

Wed, 05/09/2012 - 17:39 | 2411428 Dre4dwolf
Dre4dwolf's picture

No need to fear Helicopter Ben if you live in New York, because the bloomburgler bought up an entire arsenal of anti-aircraft equipment after 9/11 , we got helicopters with sidewinders and gatling guns mounted up here in the big apple.... no way in hell a "helicopter ben attack" would ever get through.

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