It Begins: Council On Foreign Relations Proposes That "Central Banks Should Hand Consumers Cash Directly"
... A broad-based tax cut, for example, accommodated by a program of open-market purchases to alleviate any tendency for interest rates to increase, would almost certainly be an effective stimulant to consumption and hence to prices. Even if households decided not to increase consumption but instead re-balanced their portfolios by using their extra cash to acquire real and financial assets, the resulting increase in asset values would lower the cost of capital and improve the balance sheet positions of potential borrowers. A money-financed tax cut is essentially equivalent to Milton Friedman's famous "helicopter drop" of money
- Ben Bernanke, Deflation: Making Sure "It" Doesn't Happen Here, November 21, 2002
The only question left was when would the trial balloons for such monetary paradrops start to emerge.
We now know the answer, and it is today.
Moments ago a stunning article appearing in the "Foreign Affaird" publication of the influential and policy-setting Council of Foreign Relations, titled "Print Less but Transfer More: Why Central Banks Should Give Money Directly to the People."
In it we read the now conventional admission of failure by Keynesians, who however, unwilling to actually admit they have been wrong, urge the even more conventional solution: do more of the same that has lead to the current financial cataclysm, only in this case the authors advocate no longer pretending that the traditional monetary channels work but to, literally, paradrop money. To wit:
To some extent, low inflation reflects intense competition in an increasingly globalized economy. But it also occurs when people and businesses are too hesitant to spend their money, which keeps unemployment high and wage growth low. In the eurozone, inflation has recently dropped perilously close to zero. And some countries, such as Portugal and Spain, may already be experiencing deflation. At best, the current policies are not working; at worst, they will lead to ...Zerohedge
We are already doing this exact "proposal" by different name(s): welfare, free medicine, food stamps, housing assistance and the list goes on. It does not work and will not work just because the fed does it, why? Because it does not get to the root problems we have created and perpetuate. We are misallocating resources by not purging failing businesses and non performing debts; we are not addressing problems of the medical monopoly or better cartel; we are encouraging sloth by paying more in welfare than a person entering the work force earns; we do not pay a decent rent on savings, namely interest so we have capital to invest and retired people who saved for retirement to have an income to spend; and the list goes on. Basically these folks think we can solve our problems by redistributing money from the folks that earn it to those that do not, or by punishing the work ethic and rewarding sloth. That is more of the existing problem! Good for PM's and PM stocks though.