I think so called "helicopter money," whereby monetary stimulus is directed into the economy, bypassing T-bills and expanding the debt is a superior approach. First of all, it gets more immediate stimulus traction. Up till now, much of the stimulus has not reached the segment of the money supply which circulates in the economy, creating jobs, and spurring jobs and expansion. Second, instead of that stimulus being on the balance sheet of the treasury and an obligation of the treasury, thus tax payers (our children and grandchildren), it goes on to the balance sheet of the Federal Reserve, off the budget. Thirdly, it is less likely to be used for governmental operations, thereby discouraging growth of our government. The Federal Reserve has a greater opportunity to direct those funds to where they will do the most good. Most previous Fed's stimulus has primarily driven down interest rates and forced investors to chase yield in riskier assets. This has resulted in greater income inequality.
Some friends know I've been hoping for this approach for a long time! If BoE and follows the BoJ lead we may find out if I was right. I have trouble imagining our Fed will get on board. But maybe in some ways they way. At this point our economy is moving forward, but one has to wonder if "helicopter stimulus" could have introduced earlier in the Great Recession for the better.
