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Jake Van Der Kamp

“We haven’t really studied [helicopter money] yet. It’s a very interesting concept that is now being discussed by academic economists and in various environments.”
Mario Draghi, president,
European Central Bank
AFP, SCMP, March 21
Simple. You put a whole lot of banknotes in a big bag with a drawstring, you tie the bag upside down under a helicopter, you fly over a crowd somewhere, you pull the drawstring, the money flutters down, the crowd spends the money and the economy flutters up.
The only thing I can’t figure is why you need the helicopter. It wasn’t part of this “interesting concept” when the western provinces of Canada repeatedly elected provincial governments that advocated it years ago.
Social Credit it was called and the idea was that you just handed the money out directly, no helicopters required, and very soon recession would be a thing of the past.
In power the Socreds were more known for handing out money to themselves and their friends, mostly through big infrastructure projects (now, why does that ring a bell here?), and for bluster and booze.
People are not economic buttons to be pushed for mechanical results
As a young reporter in Canada I recall being sent by the Vancouver Sun as an extra hand to cover the British Columbia legislature, which was holding evening sittings at the time so that its government backbench members could get back sooner to their preferred careers as car dealers.
It so happened that the press gallery was directly above the provincial Attorney-General’s desk in the legislative chamber, that the Socred AG was not the world’s most ardent advocate of temperance and that the Speaker of the house was blind.
One cynical member of the press gallery (not me, I swear it) brought in an old fashioned wind-up alarm clock with those big bells on the side, carefully lowered it on a string to the AG’s desk, who had passed out there as usual, and all the house then ignored the recitation of a bill under consideration to wait.
“BRRRNNGGG!”
The AG jumped like a popgun, but not faster than the clock was yanked back up to the press gallery, while the Speaker, peering about in mystery to find the source of the sudden ruckus, took to his gavel – “Order, order, order.” What frabjous joy. How heartily I miss the Socreds.
And how heartily I prescribe the alarm clock treatment for Mario Draghi and his crew at the European Central Bank, although I am not sure that anything can wake them up. Even our AG in his cups had at least long worked out that the basic Socred premise was false.
The economic cycle is a natural and healthy phenomenon. In boom times the emphasis is all on growth at full speed in the direction you have set for yourself and on staying ahead of the competition.
In recession you find out whether this was the right direction. If not, then you change direction and you take your losses, telling yourself, “Ow, this hurts” but doing it nonetheless because the marketplace is savage with people who refuse to admit their mistakes and insist on repeating them.
Social credit, quantitative easing, zero interest rate policy, helicopter money, name it what you will, it all comes down to the same thing. Its object is to reduce interest rates to insignificant levels on the reasoning that people will then borrow money to spend or invest and so stimulate the economy to a return to boom times.
But it does not work, has never worked. People are not economic buttons to be pushed for mechanical results. When times are tight individuals and corporations busy themselves with repairing their finances and redirecting their efforts. Only when this job is done can there be a return to boom times.
Trying to do it the easy way with artificially low interest rates only encourages massive speculation on financial markets, widens income disparity and delays recovery from recession.
It is all that Mario Draghi has brought Europe and now, in desperation, he is considering a new idea in black magic from his regular coven of witches – “a very interesting concept that is now being discussed by academic economists and in various environments.”
Repeat after me, Mario:
“Double, double toil and trouble;
Fire burn and caldron bubble.”


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President of European Central Bank Mario Draghi speaks during a press conference following a meeting of the governing council in Frankfurt, Germany, Thursday, March 10, 2016. The European Central Bank cut all its main interest rates, expanded its bond-buying stimulus program, and offered new cheap loans to banks, making an unexpectedly aggressive effort to boost inflation and economic growth in the 19 countries that share the euro. (AP Photo/Michael Probst)

A collection of 500-euro ($551) banknotes, known by its Spanish nickname the 'Bin Laden', sit in an arranged photograph in Madrid, Spain, on Sunday, Feb. 28, 2016. Rarely seen by ordinary citizens, and suspected by officialdom of aiding criminality and terrorism, the single currency's largest physical unit is slated for a potential phase-out by the European Central Bank. Photographer: Angel Navarrete/Bloomberg ORG XMIT: 607582527

The European Central Bank has plans for a helicopter money drop an says it has yet to study the concept. Photo: Bloomberg

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