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Home > Money and Credit Conversion > About Money > Helicopter money: the question not asked

Helicopter money: the question not asked

FT, 4 August 2016, "A tweak to helicopter money will help the economy take off", by Robert Skidelsky - access requires a subscription

In this article, the author argues for a new economic strategy for Britain. The first element would be a £46bn "helicopter money" package with a twist: every one of the 46m Brits on the electoral register would receive a smart card with £1,000 on it, with the unspent balance to be reduced gradually every week. He calls this "Gesell money", after Silvio Gesell, and notes that "the tax on hoarding Gesell money would boost its multiplier effect."

In parallel, a £50 billion public infrastructure programme would be launched, one that would give preference to British firms. How this could be done while Britain is still in the EU is not explained.

Because "adding to the national debt by issuing government bonds for an infrastructure programme is likely to unsettle the financial markets", Mr. Skidelsky recommends that the government borrow from the central bank instead: "This will increase the government’s deficit, but not the national debt, since a loan by the central bank to the government is not intended to be repaid. Thus the government acquires an asset but no corresponding liability."

So there we have it, printed on light salmon pink paper: the old dream of borrowing without ever having to repay coming true. The key to a monetary horn of plenty from which one can take without limit and which will take care of all of Britain's economic woes.

By the way, if borrowing almost £100bn does not generate any liability, then why would the government not borrow £500bn instead? Any why not even more?

There remains one question not asked: why would the government not simply raise the money via taxation? It's the tried and tested method, and might even help alleviate the high and growing wealth disparity in Britain.