Willem Buiter: Central Banks Need To Drop Money From Helicopters, And Perhaps ABOLISH CURRENCY COMPLETELY

"Citi's economist Willem Buiter has found the solution to the economic crisis: central banks need to print like mad.

Here's the nut of it:

We think central banks in the US, euro area, Japan and UK could and should do much more, including

– (i)reducing rates, first by lowering them all the way toz ero (UK and euro area),then by eliminating the effective lower bound on nominal interest rates (all four currency areas)

– (ii) carrying out more imaginative forms of quantitativeeasing (QE) & credit easing (CE), in all four currency areas, by focusing on outright purchases of and/or loans secured against less liquid and higher credit risk securities, subject to a sovereign guarantee (joint and several in the euro area) for all such risky central bank exposures

– (iii)engaging in helicopter money drops (all four currency areas): a combined fiscal- monetary stimulus

The idea of helicopter money is just that: Literally creating money out of thin air, and distributing it to people, and not sterilizing it with bond purchases or anything like that.

It would actually create inflation, help repair household balance sheets, and it would be better than QE because the cash would not get stuck in tehb anking system..."

at http://www.businessinsider.com/willem-buiter-central-banks-need-to-drop-money-from-helicopters-and-perhaps-abolish-currency-completely-2012-5#ixzz1uP24oqUq