Helicopter Money

Simon Wren-Lewis has a good description of Helicopter money but I think he may be missing a couple things.

First is the perception of a "tax cut" vs. "free money".  At one level, if everyone gets $1000 it is the same either way.  If it is a tax cut, however, there is a perception that people who pay more in taxes are getting less out of the deal, and also, people who have little to no tax liability may receive nothing, and those are often the people most in need and most likely to spend.  Additionally, people seem to act differently about free money (read: they spend it) compared to earned money (which a tax cut is returning).

The second thing is the targeting/distribution aspect.  Tax cuts get money to all tax payers/filers.  Helicopter money can get money to everyone.  It could also target specific [debt] problems that may be holding back the economy (student loans, credit cards, mortgages).  True the latter is not exactly the same as helicopter money, but it isn't the same as the current QE strategy either, and everything else he said about it applies equally.

Personally the way I would like to see "helicopter money" distributed is via debt reduction to real people.  I am particularly fond of the fed buying and torching student loan debt, but I could also get behind credit card debt (which I don't really have) or mortgages, though with that last one I think I'd prefer a partial rather than complete buyout (up to maybe $50k per primary mortgage).

There is a lot of fear and uncertainty remaining in the US, and having lots of debt is a real issue for it.  People don't feel as free to spend money if they have these huge responsibilities hanging over them.  Even a fairly generous helicopter drop (via tax cut) isn't directly addressing the debt issue, and probably won't do enough to boost the economy.

Free Money For Everyone

Sounds crazy but it would work.  Since it's really no less likely than fiscal stimulus (infrastructure spending please) pushing for it is not a bad idea.

Student Loans

I still think the Federal Reserve should use its awesome power to buy up all the student loan debt and make it go *poof*.  More money for mostly younger people who will tend to spend it, or maybe take the chance to strike out on their own.  Right now, it may mean extra presents for the holidays.

New Fed Chair

The debate is a little odd to me.  Picking Summers over Yellen seems monumentally pig-headed.  Still, for David Atkins to be this upset seems odd to me.  At some level, there just isn't likely to be any difference in desired monetary policy between them.  Style, yes, history, yes, qualifications, yes and all those things favor Yellen (which is why Summers is a stupid pick), but both are supporters of quantitative easing, and neither sees inflation as a problem (right now).  Summers may be a bit more likely to see asset bubbles as forming (now, not in the past) and Yellen has indicated in the past that she may be happier with a lower inflation target.  Both of those things are bad, and would imply too early cutoff of QE.

In the end, David's piece is just weird.  For all the reasons he gives for being disappointed in Obama about this pick could equally apply to Yellen.  If he really wants a different (more progressive) attitude at the fed than Summers would bring, then he should be talking up someone other than Yellen (maybe Christy Romer--though she's probably not very differnt from Yellen on monitary policy either--maybe one of the even more dovish Fed board members).