Quantitative Easing (QE) has so far not produced the runaway inflation some predicted. But before you start feeling comfortable about fiat currency again, central planners have another trick in store, i.e. “helicopter money,” a term that’s back in vogue thanks to a country that has tried almost everything to stimulate its economy: Japan.
Also read: Foreign Investors Dump Japan Stocks as Economic Planning Fails
A more extreme policy than QE, helicopter money (for reasons given below) could eventually lead to hyperinflation or a complete loss of confidence in the existing fiat monetary system. Terrible news for the legacy system and economic status quo, but it could also spark new interest in monetary alternatives, like you-know-what.
What is Helicopter Money?
The term “helicopter money” comes originally from a thought experiment by famed economist Milton Friedman in his 1969 paper “The Optimum Quantity of Money.” The metaphor is easy to understand – imagine someone dropping bundles of cash from a helicopter to the people below in a one-off occurrence. Once in possession of all that extra money, the people spend it, thus stimulating the economy and raising prices.
In reality, distributing the money would be more subtle. The central