Reuters: Bill Gross: ‘Helicopter Money’ Is Coming in a Year or So

The following is an excellent article written by Jennifer Ablan on May 4, 2016 on the Reuters website titled “Bill Gross: ‘Helicopter Money’ Is Coming in a Year or So” and i quote:

“Janus’s Bill Gross: ‘Helicopter money’ is coming in a year or so”

The next big monetary and fiscal policy move should include an airdrop of “money from helicopters” to stimulate the U.S. economy and avoid an extended recession, says Bill Gross, a portfolio manager at Janus Capital Group Inc (JNS.N).

Gross may not be entirely serious about “helicopter money,” but in his latest Investment Outlook note published Wednesday, he said the Federal Reserve and U.S. Treasury should engage in another round of quantitative easing (QE), printing trillions of dollars to buy government bonds and thereby boost the economy.

“Drop the money from helicopters,” wrote Gross, manager of the $1.3 billion Janus Global Unconstrained Bond fund.

“There is a rude end to flying helicopters, but the alternative is an immediate visit to austerity rehab and an extended recession. I suspect politicians and central bankers will choose to fly, instead of die.”

“Helicopter money” is an idea made popular by the American economist Milton Friedman in 1969, when he suggested that dropping money out of helicopters for citizens to pick up was a sure way to restart the economy and effectively fight deflation.

Gross noted that the Federal Reserve, the European Central Bank, Bank of Japan, and the Bank of England have effectively bought bonds from their governments for six years and allowed them to spend money to support their sagging economies.

“They buy the bonds by printing money or figuratively dropping it from helicopters, expanding their balance sheets in the process,” said Gross.

“They then remit any net interest from their trillions of dollars or yen bond purchases right back to their Treasuries. The money in essence is free of expense and free of repayment as long as the process continues uninterrupted.”

Gross said he believed central banks would print more helicopter money via QE “perhaps even in the U.S. in a year or so and reluctantly accept their increasingly dependent role in fiscal policy.”

Such a move would allow governments to focus on infrastructure, health care, and introduce a “universal basic income” for displaced workers amongst other increasing needs.

Overall, Gross said the renewed QE from the Fed would lead to a less independent central bank, and a more permanent mingling of fiscal and monetary policy that has been in effect for over six years now.

“Chair (Janet) Yellen and others will be disheartened by this change in culture,” he said.

Gross said interest rates will stay low for longer, asset prices will continue to be artificially high, and at some point monetary policy will create inflation and markets will be at risk. He also said investors should be content with low single-digit returns.

(Reporting by Jennifer Ablan)”

[Helicopter money to bail out private equity and the hedge funds? We didn’t learn ONE THING from the 2008 bank bailout. It would be nice if the politicians running for office would talk about this but since the big bank lobby and the right-wing media controls everything, I doubt anything will be discussed until the next financial crash. THEN EVERYBODY WILL PLEAD IGNORANCE and ask for ANOTHER bailout.

LaVern Isely, Progressive, Overtaxed, Independent Middle Class Taxpayer and Public Citizen Member and USAF Veteran

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About tim074

I'm a retired dairy farmer that was a member of the National Farmer's Organization (NFO). Before going farming, I spent 4 years in the United States Air Force where I saved up enough money to get my down payment to go farming. I also enjoy writing and reading biographies and I write about myself as well as articles and excerpts I find interesting. I'm specifically interested in finances, particularly in the banking industry because if it wasn't for help from my local Community Bank, I never could have started farming which I was successful at. So, I'm real interested in the Small Business Administration and I know they are the ones creating jobs. I have been a member of Common Cause and am now a member of Public Citizen as well as AARP. I have, in the past, written over 150 articles on the Obama Blog (my.barackobama.com) and I'd like to tie these two sites together. I'm also on Twitter, MySpace and Facebook and find these outlets terrifically interesting particularly what many of these people did concerning the uprising in the Arab world. I believe this is a smaller world than we think it is and my goal is to try to bring people together to live in peace because management needs labor like labor needs management. Up to now, that hasn't been so easy to find.
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