Remember earlier this year when Mario Draghi said that the use of helicopter money was “a very interesting concept”? If not, rest assured that 18 members of the European Parliament do.
In an open letter to ECB president Mario Draghi, 18 members of the European Parliament’s social democrat, leftwing and green groups recommended that the ECB look into the use of helicopter money and buying bonds from the European Investment Bank “as possible solutions to enhance economic development through direct spending into the real economy” the FT reports.
The leader of parliament’s Green group, Philippe Lamberts, who is also one of the signatories, said that embracing helicopter money could make more sense than continuing with the ECB’s current quantitative easing policy, because “inundating a sick financial system under a tsunami of liquidity equates to pushing on a string”, adding that buying EIB bonds would be a “robust alternative to kick-start the EU economy.”
Fabio De Masi, a German lawmaker from the Die Linke party is pushing the ECB to consider alternative policy options because QE combined with austerity “will only inflate asset bubbles as nobody invests despite ultra-low interest rates”, adding “we hence need to spend directly into the economy. Funding public investment via EIB would be my preferred option but helicopter money to low income households would definitely work.”
Indeed, if by “definitely work” De Masi meant would completely ruin what little bit is left of a functioning capital market and create the need for a vault the size of Scrooge McDuck’s just to go purchase a loaf of bread, then yes, it would definitely work.
As far as potential legal obstacles, the MEPs have that all figured out as well.
From the FT
“You recently cited the potential legal obstacles to the deployment of helicopter money,” the MEPs say in the letter, which will be sent to Mr Draghi on Friday. “However, several eminent economists have already outlined how helicopter money could be distributed directly by the ECB, without going through government accounts and remaining in compliance with the EU Treaties.”
Not considering alternative policy options could leave the ECB “unprepared for a deterioration in economic conditions”, they say.
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While the ECB and the rest of the central planners around the globe continue to fail spectacularly, and as the global economy continues to slide further and further into recession, we truly have no doubt that helicopter money will be coming, it’s just a matter of when.
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