Wednesday, May 4, 2016

Failed Concepts of Helicopter Money or QE

Many view 'helicopter money' or QE, the central bank's ability to directly inject money into the economic and financial system, as inflationary. It's not inflationary as long as confidence the financial system and its leadership remains. Until then, QE simply is buying failed instruments, money already lost and the crap banks are eager to offload. Europe and Japan are showing the world right now, the velocity of money is shrinking even as the ECB and BOJ expand QE. While the concept of 'helicopter money' is little more than an urban legend of the financial world, do not be surprised to see it embraced again as liquidation tightens it grip on the global economy in 2017.

Headline: Janus's Bill Gross: 'Helicopter money' is coming in a year or so

NEW YORK (Reuters) - The next big monetary and fiscal policy move should include an airdrop of money from helicopters to stimulate the U.S. economy, says Bill Gross, a portfolio manager at Janus Capital Group Inc .

Gross may not be entirely serious about "helicopter money", but in his latest Investment Outlook note published on Wednesday, he said the Federal Reserve and U.S. Treasury should engage in another round of quantitative easing (QE), printing trillions of dollars to buy government bonds and thereby boost economic growth.



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