He's not going to be invited to the meetings an.y.more.
From Positive Money:
Translation of the original German article on helicopter money by Michaël Malquarti, senior vice-president at Geneva-based SYZ Asset Management, published in German in the Neue Zürcher Zeitung on 16th of February 2015. An abbreviated version of the article was published in French in the Le Temps. Republished with permission from the author.
Since the outbreak of the 2008 financial crisis, central banks have carried out unprecedented measures to avoid a systemic melt-down and to fight deflation. While a collapse of the system has been avoided, the peril of deflation remains. It is interesting to note that the actions taken so far have been restricted to conventional fields only: fixed income markets, to stimulate investment, and foreign exchange markets, to stimulate net exports. These measures are therefore exceptional because of their sheer scale, rather than because of their originality. They are also controversial: there are doubts with regards to their effectiveness, they create distortions in the allocation of resources and they require macro-prudential measures – which can be unfair and restrict individual freedom – in order to mitigate undesirable side-effects, such as financial and property bubbles.
Investment and net exports usually account for only a relatively small proportion of gross domestic product (GDP), around 23% and 12% respectively in Switzerland in 2013. Central banks have no control on the other two components of GDP, namely current government spending (11% of GDP) and more importantly private consumption (54%). While the monetisation of public spending can be politically contentious, it can only be due to a sheer lack of imagination that no action has been taken over private consumption.
In order to prevent the risk of deflation, I propose to act directly on consumption by providing the central banks with a new monetary policy tool: the distribution of an individual monetary ration. This basically implements Milton Friedman’s famous helicopter money drop – in a thought experiment he suggested to fight deflation by throwing banknotes from a helicopter. So far this concept has mainly been mentioned in connection with the monetisation of public debt. Here the idea is radically different: in practice each resident would directly receive from the central bank a lump sum of money, the size and distribution frequency of which would be decided independently from government and for monetary policy purposes only.
This is not about introducing an unconditional basic income, which is a fiscal policy instrument aimed at redistributing wealth. Also, this distribution must not lead to a loss for the central bank, since that would turn it into a form of covert budgetary policy measure. So, the payment would have to be offset on the balance sheet of the Swiss National Bank (SNB) by creating an asset, for example a high denomination coin or an unredeemable zero-coupon bond.
The monetary ration instrument is liberal because you can use it any way you want. Moreover it is fair, because although its marginal utility differs from one person to another, it has the same impact for all. It increases households’ purchasing power and tax revenues without raising labour costs or taxes. It boosts consumption and reduces debt. Unlike other solutions, such as the monetisation of public debt, the temporary distribution of a monetary ration does not lead to any moral hazard, as the central bank acts independently. In particular, this instrument keeps the need for budgetary discipline unchanged....MOREHT: Mike Norman Economics