Money from heaven can be real or fake and it can be dropped by trusted helicopter pilots or as Universal Basic Income

Sir, Robert Skidelsky writes: Because “there is no assurance that a lot of such helicopter money would not be hoarded…contemporary advocates of helicopter money like Willem Buiter and Adair Turner see it mainly in terms of monetary financing of additional government spending. The government should pay for, say, an investment programme not by issuing debt to the public but by borrowing from the central bank. This will increase the government’s deficit, but not the national debt, since a loan by the central bank to the government is not intended to be repaid. Thus the government acquires an asset but no corresponding liability.” “A tweak to helicopter money will help the economy take off” August 5.

Have these statists gone raving mad? “The government acquires an asset but no corresponding liability?” Is this a Ponzi fiscal revenue scheme?

Have these statists gone raving mad? In this world of cash-strapped citizens would they not know better what to do with their helicopter money than some bureaucrats with other people’s helicopter money?

And besides, helicopter money could be real money and it could be fake money… and only fiscal revenues Ponzi schemers would be thinking of dropping what’s fake.

And besides, helicopter pilots could be trusted, or only doing the drops on their favorite neighborhoods.

So, if you introduce a Pro-Equality tax, and drop all those revenues by means of a Universal Basic Income scheme equally to everyone, both the hoarding and the redistribution profiteering will be small.

Sir, if we are not expecting to profit on the redistribution, is that not what we, poor and rich, all want and need? 

@PerKurowski ©

To save Greece (and the Western World) we must call the Basel Accord a major historic mistake, and proceed accordingly.

Sir I refer to Willem Buiter’s “There is a way past the insanity over Greece” June 22.

Buiter’s proposal contains two elements that I have been arguing as essential for quite some time. First, making sure no more money is lent to the Greek government: “The ECB would bar Greek banks from making ne loans to the state”; and second, to recapitalize Greek banks so they can attend to the needs of the real Greek economy.

And that means throwing overboard all those Basel Committee’s portfolio-invariant-credit-risk-weighted capital requirements that have so distorted the allocation of bank credit. Not a second too soon for Greece… and not a second too soon for the Western World at large.

The Basel Accord principle of zero risk weight for the sovereign and 100 percent risk weight for the citizens and for instance their SMEs, pompously and odiously implied that government bureaucrats could use bank credit more efficiently than SMEs and entrepreneurs. Have you ever heard more self-serving communistic nonsense than that?

@PerKurowski

Debt restructuring will not suffice to save the euro. The immoral, useless and dangerous bank regulations must also be repelled.

Sir, William Buiter opines that “Only widespread debt restructuring can save the euro”, October 16. 

I agree that is indeed indispensable in order to take care of the past. But, to also offer a better future, the immoral, useless and outright dangerous bank regulations coming out of Basel must also be repelled. And I specifically refer to capital requirements with risk-weights based on ex-ante perceived risk. 

The way those regulations favor the access to bank credit of “The Infallible”, those already favored by markets and banks, and discriminate against that of “The Risky”, those already discriminated against by banks and markets… is immoral 

Those regulations are also useless, as never ever have those, ex-ante, perceived as risky caused a major bank crisis. 

Those regulations are also outright dangerous, as these completely hinder the banks from performing an efficient economic resource allocation. 

What more does the Eurozone, Europe, America and the rest need in order to repel these regulations completely?

Do not dangerously overcrowd the safe-havens.

Sir Willem Buiter in “The ‘submerging market’ crisis”, February 6, proposes that the US and UK Treasuries should cover the Fed and the Bank of England for the credit risks they take on when they purchase private securities. This is one good way of looking at it.

I would prefer the Fed and the Bank of England charging their respective Treasuries with a commission on all public debt issued. This way the Treasuries would know better that the benefits derived from safe-havens considerations is really not for them to keep; and also that it costs a bundle to keep ever more crowded safe-harbors safe.

That the markets trust Treasuries has more to do with the lack of alternative ports during a very difficult storm than with any intrinsic trust in the harbor chiefs. The governments need to humbly accept that before they and we are left with nothing.

Given the inevitability of the bust we need to make more of the boom

Sir Willem Buiter in “Welcome to a world of diminished expectations” August 6, takes the role of a neutral and detached observer when he rightly acknowledges the unavoidable boom-bust cycles in the economies around the world and looks into the future for clues. That is good, but how much better would it not be if he had dared to make some recommendations on how to go about to make the most of the boom-bust cycle itself. I mean, when I have a hangover, much of the way I feel about it, has to do with whether the party was worth it or not.

At this moment we live in a world where financial regulators are only concerned with avoiding the bust, but is it not time for them to start thinking more in terms of helping to make the most out of the boom? The worst part of today’s headache with the financial system, is that the party seems not having been that good, except of course for some of the financial intermediaries who enjoyed it enormously.

Liberty and security also requires consensus

Sir, although Willem Buiter might be fundamentally correct when he says “For the sake of liberty and security: legalise all drugs” August 8, he should also remember that for the sake of that same liberty and security he needs to frame his idea in such a way that it is acceptable for the majority. 

In this respect and making reference to Moisés Naim’s interesting book “Illicit: How Smugglers, Traffickers and Copycats are Hijacking the Global Economy”, (2005) and that reminded us of how much of the illegal world was interconnected, perhaps a more consensus reaching approach could be to identify the whole world market of illicit and legalize it at a rate of 5 per cent a year starting with the more digestible. 

Otherwise they way the world is going its illicit part is soon going to be wealthier and stronger than the licit… and that is more dangerous than hundred al-Qaeda put together. Also while discussing these issues let us never forget that strict social sanctioning is normally a far more efficient route to go than the strictest of the law enforcements.