helicopter money

English

Etymology

Coined by Milton Friedman in 1969 using the metaphor of money being dropped from the sky (out of nowhere).

Noun

helicopter money (uncountable)

1. Money that is created and dispersed by the central bank.
   • 2006, Philip Arestis, Malcolm C. Sawyer, A Handbook of Alternative Monetary Economics, page ix:

     Money is endogenous and not exogenous money (represented by the usual textbook assumption of 'helicopter money').

   • 2018, Richard C. Koo, The Other Half of Macroeconomics and the Fate of Globalization:

     A more fundamental defect in the argument that helicopter money will always resuscitate the economy is that it focuses exclusively on the logic of buyers while totally ignoring the logic of sellers.

   • 2019, Jin Cao, Gerhard Illing, Money: Theory and Practice, page 273:

     In contrast to the case of QE, people might expect the increase in the monetary base to be permanent with helicopter money.

Usage notes

While very similar to quantitative easing (QE), helicopter money differs from QE in how the central bank creates money and who gets to spend the money that is created. With QE the central bank creates money by making a loan: buying bonds or some similar instrument, and then (usually) rebating the interest on that instrument. Ultimately, the money is repaid to the central bank, which produces a net increase in the monetary base. Helicopter money does not use any financial instrument. The net effect in both cases is that the central bank creates money, thereby increasing the monetary base. However, in the case of QE, the issuer of the bond (usually the central government) gets to spend the money, while with helicopter money, the central bank controls how the money is spent.