Helicopter Money


    ‘Helicopter money’ refers to the idea of the indiscriminate distribution of free money among consumers in an attempt to encourage spending and thereby spur inflation.

    The origins of the term

    The term ‘helicopter money’ was first introduced in 1969 by famous economist, Milton Friedman. In order to more effectively combat deflation, he suggested, somewhat bluntly, to fly over the community with a helicopter and pour money from the sky. The population would then have more money to spend, which in turn could drive inflation higher.

    How does helicopter money work in real life?

    In reality, the idea of helicopter money is prevalent more indirectly, through the actions of central banks: the institutions primarily responsible for setting monetary policy. Recently, many central banks around the world have essentially implemented the principle of helicopter money in the form of Quantitative Easing or (QE). This meant printing new money and pumping it into the economy through the purchase of government bonds or, in some cases, other securities.