Bernanke’s Helicopter Drop Reality

Contrary to widespread popular belief, with special “thanks” to former Fed chair Ben Bernanke, central banks cannot hand out a “helicopter drop” of “free money”. 

What central banks do is cheapen the price of money by lowering interest rates to absurd levels, hoping that it will spur bank lending. Actual results speak for themselves. Central banks have created a series of asset bubbles, one right after the other, with increasing amplitude.

Free Money from Governments

In contrast to central bank methods, governments can and do hand out “free money”.

In the US, food stamps (now called SNAP), subsidized housing, earned income credit, disability payouts, and various subsidies such as Medicaid all constitute “free money”.

True “Helicopter Drop” Hits Finland 

Finland is about to take the “free money” approach to a true “helicopter drop” level.

Please consider Finland Government Officials Propose to Give Tax-Free Payout of $870 to Every Citizen Each Month.

 As a way to improve living standards and boosts its economy, the nation of Finland is moving closer towards offering all of its adult citizens a basic permanent income of approximately 800 euros per month.

The monthly allotment would replace other existing social benefits, but is an idea long advocated for by progressive-minded social scientists and economists as a solution—counter-intuitive as it may first appear at first—that actually decreases government expenditures while boosting both productivity, quality of life, and unemployment.

“For me, a basic income means simplifying the social security system,” Finland’s Prime Minister Juha Sipilä said last week.

Though it would not be implemented until later in 2016, recent polling shows that nearly 70 percent of the Finnish people support the idea.

According to Bloomberg, the basic income proposal, put forth by the Finnish Social Insurance Institution, known as KELA, would see every adult citizen “receive 800 euros ($876) a month, tax free, that would replace existing benefits. Full implementation would be preceded by a pilot stage, during which the basic income payout would be 550 euros and some benefits would remain.”