Must-Read: Willem Buiter: EU and China Ought to Use Helicopter Money

Must-Read: Willem Buiter: EU and China Ought to Use Helicopter Money:

Helicopter money is a coordinated monetary and fiscal stimulus…

It is a fiscal stimulus funded permanently by the Central Bank. There are obvious win-win situations that we could have. Restructuring of debt if possible, haircuts if necessary, and then a well-targeted fiscal stimulus funded ultimately through the European Central Bank (ECB), people’s helicopter money….

The Central Bank itself provides a fiscal stimulus by sending checks to every man, woman, and child of the country…. In a country like Germany where infrastructure investment is needed, the government announces and implements a large-scale investment program and indirectly sells the debt to fund this program to the central bank, which monetizes it…. [China needs] fiscal stimulus targeted mainly at consumption, not at investment. Some capital expenditure like social housing, affordable housing, even some infrastructure. But organization supporting infrastructure, not high-speed trains in Tibet. It has to be funded by the central government, the only entity with deep pockets, and it has to be monetized by the People’s Bank of China…

July 30, 2016


Brad DeLong
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