{"id":15528,"date":"2014-08-27T14:20:39","date_gmt":"2014-08-27T12:20:39","guid":{"rendered":"http:\/\/praag.org\/?p=15528"},"modified":"2014-08-27T14:21:19","modified_gmt":"2014-08-27T12:21:19","slug":"central-banks-should-hand-people-cash","status":"publish","type":"post","link":"https:\/\/praag.org\/?p=15528","title":{"rendered":"Central Banks should hand people cash"},"content":{"rendered":"

A very unusual article<\/a> appeared in the “Foreign Affairs” publication of the influential and policy-setting Council of Foreign Relations, titled “Print Less but Transfer More: Why Central Banks Should Give Money Directly to the People.” <\/p>\n

To some extent, low inflation reflects intense competition in an increasingly globalized economy. But it also occurs when people and businesses are too hesitant to spend their money, which keeps unemployment high and wage growth low. In the eurozone, inflation has recently dropped perilously close to zero. And some countries, such as Portugal and Spain, may already be experiencing deflation. At best, the current policies are not working; at worst, they will lead to further instability and prolonged stagnation.<\/p>\n

Governments must do better. Rather than trying to spur private-sector spending through asset purchases or interest-rate changes, central banks, such as the Fed, should hand consumers cash directly. In practice, this policy could take the form of giving central banks the ability to hand their countries\u2019 tax-paying households a certain amount of money. The government could distribute cash equally to all households or, even better, aim for the bottom 80 percent of households in terms of income. Targeting those who earn the least would have two primary benefits. For one thing, lower-income households are more prone to consume, so they would provide a greater boost to spending. For another, the policy would offset rising income inequality.<\/p>\n

Distinctions between monetary and fiscal policies are a function of what governments ask their central banks to do. In other words, cash transfers would become a tool of monetary policy as soon as the banks began using them.<\/p>\n

Critics warn that such helicopter drops of cash could cause inflation.<\/p>\n

By depositing the funds directly into millions of individual accounts – spurring spending immediately – central bankers wouldn\u2019t need to print quantities of money equivalent to 20 percent of GDP.<\/p><\/blockquote>\n

Source: Foreign Affairs<\/p>\n","protected":false},"excerpt":{"rendered":"

A very unusual article appeared in the “Foreign Affairs” publication of the influential and policy-setting Council of Foreign Relations, titled “Print Less but Transfer More: Why Central Banks Should Give Money Directly to the People.” To some extent, low inflation reflects intense competition in an increasingly globalized economy. But it also occurs when people and … Continue reading “Central Banks should hand people cash”<\/span><\/a><\/p>\n","protected":false},"author":2961,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5,3],"tags":[9094,9834,9835,9833,8937],"class_list":["post-15528","post","type-post","status-publish","format-standard","hentry","category-business-and-finance","category-news","tag-central-banks","tag-failing-economy","tag-keynes","tag-money-printing","tag-qe"],"cc_featured_image_caption":{"caption_text":false,"source_text":false,"source_url":false},"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/praag.org\/index.php?rest_route=\/wp\/v2\/posts\/15528","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/praag.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/praag.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/praag.org\/index.php?rest_route=\/wp\/v2\/users\/2961"}],"replies":[{"embeddable":true,"href":"https:\/\/praag.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=15528"}],"version-history":[{"count":2,"href":"https:\/\/praag.org\/index.php?rest_route=\/wp\/v2\/posts\/15528\/revisions"}],"predecessor-version":[{"id":15530,"href":"https:\/\/praag.org\/index.php?rest_route=\/wp\/v2\/posts\/15528\/revisions\/15530"}],"wp:attachment":[{"href":"https:\/\/praag.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=15528"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/praag.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=15528"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/praag.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=15528"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}