Thursday, July 08, 2010

Helicopter Drop

I'm not especially convinced that a commitment to a moderately higher target inflation would really do the trick. It would be better than nothing, but there's no way the Fed will commit to high enough inflation to lower the real interest rate significantly.

At this point, the Fed should do the act which gave Helicopter Ben his nickname, and shower free money on all of us. They won't do that either, both because they're allergic to invisible inflation and because some of that money might flow into the nasty hands of the great wretched masses. But it just might work!