Helicopter Money

Helicopter money is a reference to an idea made popular by the American economist Milton Friedman in the year 1969. In the now famous paper “The Optimum Quantity of Money”, Friedman included the following parable:

“Let us suppose now that one day a helicopter flies over this community and drops an additional $1,000 in bills from the sky, which is, of course, hastily collected by members of the community. Let us suppose further that everyone is convinced that this is a unique event which will never be repeated.”

The basic principle is that if a central bank wants to raise inflation and output in an economy that is running substantially below potential, one of the most effective tools would be simply to give everyone direct money transfers. For more details be sure to check out the video above.