Launching money from helicopter A measure against Covid-19 pandemic economic crisis

Imagine that you are in your house quarantined by the coronavirus and suddenly you see a helicopter passing by that launches money.

Imagine that you are in your house quarantined by the coronavirus and suddenly you see a helicopter passing by that launches money. hat is the metaphor that economists use to refer to helicopter money, also known as monetary helicopter.
Coronavirus News Update: That is the metaphor that economists use to refer to "helicopter money," also known as "monetary helicopter."
It is about distributing free money to all people when there is a deep economic crisis with the aim of increasing people's consumption and reviving the economy.
Although that might seem similar to the financial aid that governments are giving people so that they can survive in the midst of the pandemic, it is not the same.
Proposed by Milton Friedman in 1969, helicopter money works like this: the central bank prints banknotes and the government spends them.
It is not debt to governments. It is, as the metaphor says, money fallen from the sky.
Economic theory presents this measure as the last available resource in a situation of extreme crisis.
And he has a very bad reputation. The first thing that comes to mind is the image of countries like Zimbabwe or Venezuela, where the uncontrolled printing of money ended up causing the banknotes to be worthless.
In developed countries that have a strong currency like the dollar or the euro, the idea of ​​a central bank printing banknotes by piece would be like a nightmare Crazy.
But the coronavirus pandemic has arrived and the idea of ​​the helicopter has begun to spin around among some experts who, under other circumstances, would never have considered it.
And everyone knows that it is extremely dangerous because it leads you to play with fire.

"A high-risk policy"

"The monetary helicopter has never been implemented because it is a high-risk policy. Central banks are afraid of it," Manuel Romera, director of the financial sector at IE Business School, in Spain, tells BBC.
"The problem is that when you inject money, if you spend a little bit and you mistrust that money, you can end up with hyperinflation."

The monetary helicopter seeks to increase consumption to revive the economy.

Is now a good time for helicopters to take off in the midst of the pandemic?
"I don't know if I would do it now," answers Romera.
"If a drug comes up to cure the coronavirus in a month and by the end of May we are already physically on the street, it wouldn't. It would be a mistake."
"But if the pandemic lasted for several months, it would."

"Now is the time"

In the current discussion, the monetary helicopter metaphor is being used in a broader sense.
While the original idea was to print banknotes and throw them out, some economists think that there are more flexible versions of this policy.

Some economists propose that now is the time to hand out money financed by central banks.

Although it is always an active central bank that finances emergency expenses, there are more complex mechanisms that allow liquidity to be injected into the system.
Some even believe that the measures currently being undertaken in the United States and Europe to mitigate the effects of the recession are, somehow, helicopter money because it is a tax incentive to increase consumption financed by central banks.
It all depends on the scope and flexibility that you want to give the concept.
And now that the epicenter of the pandemic has reached the United States, with forecasts of an increase in unemployment of between 20% and 40%, once again the sound of the propellers is heard.
"Now is the time to do it," Willem Buiter , a professor at Columbia University's School of Public and International Affairs and a senior researcher at the Council on Foreign Relations thinks, Ugobleno News .
The helicopter money, he explains, would be used to face "the extraordinary deficits of the governments that we will probably see as a result of fiscal measures to limit the economic damage that the pandemic is causing."

The idea of ​​apportioning money out of hand has been taboo, a policy that economists would not apply in any recession.

Jordi Galí, economist at the Center for Research in International Economics (CREI) and professor at the Pompeu Fabra University in Barcelona, ​​is another of the voices that advocates starting the engines.
"The time has come for the monetary helicopter," says Galí, understood as direct, non-reimbursable financing by central banks of governments' emergency plans in the midst of the pandemic.
If the idea of ​​distributing money from the air will end up prevailing in some countries, it will depend on how the health crisis evolves and how deep the global economic collapse is.
It is not known whether new waves of contagion will come after the curve of contagion and deaths flattens out, whether scientists will find a vaccine or treatment for covid-19, or how long quarantines will be extended to contain the spread of the coronavirus.
What experts agree is that the global recession will be very deep and that unemployment will escalate to record levels, leaving a trail of poverty and despair that countries will have to face with all the fiscal and monetary munitions at their disposal.
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