What if Japan had helicopter-dropped money on its economy?
Bernanke in his famous deflation speech made reference to “helicopter drop” of money. This “helicopter drop” though was defined by Milton Friedman, it was Bernanke that came to be known as Helicopter Ben . What does Helicopter drop mean? It simply means that in times of deflation, Government can simply print money and drop via helicopter to the public (implying throwing monies to public). The excess money would create demand, leading to higher inflation. This is the simple way but economists don’t like things to be that simple. Infact I learnt there are 2 ways one can transfer money to the public.One way is money financed and other is bond financed. • Money Financed or Helicopter drop. In this government raises money by issuing bonds which are subscribed by the central bank. The Central bank in turn prints money and passes to the government and government passes the stimulus to the public. This is also called monetisation of deficit • Bond Financed. In this government simply raises mon
