Tuesday, May 31, 2016

Send People the Money

So I went to the bank
To see what they could do
They said
Son, looks like bad luck got a hold on you
--Simply Red

A question that seems to escape many people is this. If the goal of monetary policy is to stimulate economic growth, then why do so indirectly? Lower interest rates and quantitative easing (i.e., central bank bond buying) do not put money into people's hands directly.

On the contrary, these policies grant privilege to a select few who, because they are first to use what amounts to newly minted cash, derive the most benefit from it in terms of purchasing power.

If the goal is to stimulate growth in a manner where everyone has an equal chance to benefit from the stimulus, then why not simply send an amount, say, $10,000 to each US citizen? Such a policy should fairly distribute the inflation among the citizenry and grant 'equal opportunity' for all, right?

Why aren't champions for 'social justice' et al clamoring for a helicopter drop?

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