As is inevitable, when negative interest rates aren’t enough, the next phase of Keynesian madness is to simply give people money in the hopes they will spend it to boost an economy. And while former Fed Chairman Ben Bernanke intimated this program in a speech many years back, it is Finland, not the United States, that is first to bring about this hyper-monetary scheme.
On Dec. 6, Finnish financial authorities announced they are getting ready with a plan to transfer nearly $1000 per month to all citizens, while at the same time cutting off older welfare benefit models. This equitous plan of providing an equal amount to everyone in the country, no matter how rich or poor they are, is a final stage of desperation that will likely create the inflation Finnish administrators want, but at the cost of higher prices in the general economy, thus negating the effects of the free monthly subsidy.
Over the last few months, in a prime example of currency failure and euro-defenders’ narratives, Finland has been sliding deeper into depression. Almost 7 years into the the current global expansion, Finland’s GDP is 6pc below its previous peak. As The Telegraph reports, this is a deeper and more protracted slump than the post-Soviet crash of the early 1990s, or the Great Depression of the 1930s. And so, having tried it all, Finnish authorities are preparing to unleash “helicopter money” to save their nation by giving every citizen a tax-free payout of around $900 each month! – Zerohedge
Shortly after the 2008 credit crisis, President Bush signed legislation allowing for between $600 and $1200 to be given out to every American in the form of tax rebates to help stimulate the economy following the financial crisis. This money did little to stop America going into a major recession, and it was only after the central bank ushered in Quantitative Easing to the tune of trillions of dollars dis the hemorrhaging stop, and Wall Street slowly began to recover. (The American people however, did not)
‘Helicopter money’ is simply another form of corporate welfare, with money given to consumers with the expectations that they will buy more stuff, and help re-energize corporate bottom lines. But like we will see in Finland in the very near future, when you increase the money supply in an economy, as well as increase the velocity of money by consumers, the end result is more debt to the government, and prices rising higher to where a few months later, even more subsidies are required just to pay for the same goods and services people were buying before the wondrous Keynesian ‘gifts’.
Kenneth Schortgen Jr is a writer for Secretsofthefed.com, Examiner.com, Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.