Again, that may sound crazy. But the idea is to address the lack of aggregate demand in the economy in the simplest, most mechanical fashion: if the economy needs more aggregate demand, you give people money to spend, since when people (especially non-rich ones) have more money, they spend more money, and therefore aggregate demand increases. People who don’t spend the money outright might choose instead to pay down debt, leaving them more willing to use credit for future spending, and people who worry that the policy will create inflation will move their money from cash and savings to spending on durable goods. (And, remember, the policy won’t create excessive inflation so long as there is slack in aggregate demand.) Free Money Drops
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Why? Because the economy has evolved to a point where it is vulnerable to mild depressions. In fact, the one we’re in now could persist for decades, as similar conditions have in Japan and other countries. In order to avoid that slow, painful outcome, we need a policy that will jump-start our economy. After three straight years of political gridlock it’s clear that Congress is not going to provide the fiscal stimulus we need, and while the tools the Federal Reserve has at its disposal have helped, they’ve not done enough. If Congress could be persuaded to give the Fed a new tool, one that would let it distribute purchasing power to the broad mass of the population—to “drop money from helicopters,” so to speak—it might be enough to help us escape the nightmare of slow growth and persistent unemployment we’re in now. Federal Grant Long Island
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