Railway Accounts Department Examinations

Saturday, April 11, 2020

Helicopter money






Helicopter money

«  It is a buzzing word during the Corona Crisis.

«  Meaning:  central banks (like RBI - Reserve Bank of India) printing money and making payments directly to the individuals or the private players.

«   First coined by Milton Friedman in 1969, when he wrote a story/parable of dropping money from a helicopter.

«  When:  When Interest rates near Zero and the Economy in rercession (i.e., in liquidity trap). Also to prevent deflation.

«  It is an alternative to the Quantitative easing (QE).  QE is a monetary policy whereby a central bank buys predetermined amounts of government bonds or other financial assets in order to add money directly into the economy.

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