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Monetary policies, helicopter money: China, USA and Europe

The Chinese authorities are often accused of being irresponsible or opportunist regarding their monetary policies. According to an article written in the Financial Times by Arthur Budaghyan, from BCA Research, China has chosen the path of unrelenting monetary stimulus.

“Over the past 10 years, Chinese banks have been on a credit and money creation binge. They have created Rmb144tn ($21tn) of new money since 2009, more than twice the amount of the money supply created in the US, the eurozone and Japan combined over the same period. Continue reading “Monetary policies, helicopter money: China, USA and Europe”

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Helicopter Money is different from Quantitative Easing

Quantitative Easing: a policy whereby a Central Bank, such as the FED or the ECB or the Bank of Japan, purchases existing government bonds in order to pump money directly into the financial system; the ultimate goal is to solve banking problems and to promote consumption and investment. 

Helicopter money: the creation of money by central banks and its distribution for free to taxpayers in order to solve unemployment and economic problems. Continue reading “Helicopter Money is different from Quantitative Easing”

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Coronavirus pandemic is showing that strong central governments are as important as strong markets

Consider what Fareed Zakaria wrote this week, in the Washington Post, about the American government and its poor performance in controlling the Coronavirus outbreak.

“The United States is paying the price today for decades of defunding government, politicizing independent agencies, fetishizing local control, and demeaning and disparaging government workers and bureaucrats.”

Continue reading “Coronavirus pandemic is showing that strong central governments are as important as strong markets”

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Coronavirus pandemic, gold and human foolishness

“Gold is a relic!” Maynard Keynes, the famous British economist of the twentieth century wrote.

Yes. Gold is a strange relic – one that continues alive in the minds of billions of people. In normal times, millions of poor people – mostly Asian, some very poor, resort to gold as a storage of value. An example: there are dozens of thousands of poor Indian widows applying their meagre savings in gold.

Continue reading “Coronavirus pandemic, gold and human foolishness”

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Coronavirus pandemic: the end of globalization as we know it?

David Frum wrote in The Atlantic that the coronavirus pandemic can bring enduring barriers to international trade, travel and investment.

“Countries may decide they dare not rely on imported medical equipment, or imported antibiotics and vaccines, or other people’s air carriers. Soon we may revert to the day when each country tried to do as much as possible for itself, regardless of cost and rationality.” Continue reading “Coronavirus pandemic: the end of globalization as we know it?”

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What are the alternatives to the stay-at-home coronavirus pandemic policies?

The stay-at-home-social-distancing coronavirus policies are being supported by financial packages of billions or trillions of dollars.

And also by active monetary policies taken by the central banks: the injection of money in the economy through loans at zero interest rates (or even negative interest rates) or quantitative easing policies: the purchasing of bonds and other debt instruments. Continue reading “What are the alternatives to the stay-at-home coronavirus pandemic policies?”

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Reopening the economy despite the coronavirus pandemic?

According to an article published in the New York Times, in 23/03, “President Trump was considering reopening the economy, over health experts’ objections”.

“Our country wasn’t built to be shut down,” President Trump has said in a briefing. “America will, again, and soon, be open for business. Very soon. A lot sooner than three or four months that somebody was suggesting. Lot sooner. We cannot let the cure be worse than the problem itself.” Continue reading “Reopening the economy despite the coronavirus pandemic?”