06/13/2017 - Charles Hugh Smith: The Path To Inflation – “Helicopter Money”
“We all know real-world inflation for big-ticket expenses is far above the official rate of around 2% annually .. Yet conventional economists are virtually unanimous that deflation is the danger and inflation is a ‘good thing’ we need to spur so servicing existing debt becomes easier for debtors. Due to the deflationary pressures of technology and stagnant wages for the bottom 90%, the consensus sees low inflation as far as the eye can see. When the consensus is near-100% on one side of the boat, we can safely bet Reality will not conform to expectations. This leads to a question: what could cause official near-zero inflation to surprise the consensus and leap higher? One possible answer is ‘helicopter money’: money created by central banks that is distributed directly to households .. To fund ‘helicopter money,’ governments will have to borrow trillions more from central banks. If this flood of new money pushes inflation higher, the interest rates governments will pay on future ‘helicopter money’ will rise .. The general view in inflation is dead, essentially forever. Maybe. Maybe not.”
