The Fed should ‘give money directly to the people’: Economist

Yahoo Finance

For those who want the central bank to do more to try to boost the economy or think its current policies haven't been effective enough, here's a novel idea: The Federal Reserve could print money and give it away to the public. That's the provocative suggestion made in a new essay.

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In Foreign Affairs magazine, Mark Blyth and co-author Eric Lonergan write, "Governments must do better. Rather than trying to spur private-sector spending through asset purchases or interest-rate changes, central banks, such as the Fed, should hand consumers cash directly."

Related: Why Janet Yellen should ignore the Fed's hawks

Why? In the accompanying video, Mark Blyth, professor of International Political Economy at Brown University, talks about his idea.

He says while quantitative easing -- or mass asset purchases -- have cost basically $2.8 trillion dollars so far, if you divide that by the taxpaying population it would come to about $56,000 per household. "Imagine if that had just been given to households," he asks.

"So why not just give them a fraction of that directly, rather than trying to force all of that money through the banking sector altering asset prices, causing asset bubbles and distortions, and hoping that some of it causes real growth," he adds.

Related: Subprime car buyers fueling default surge

What about the consequences, like inflation, as some critics argue would occur? Check out the video to see how he responds.

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