German Central Bank Head Warns About “Helicopter Money” (He Really Means “Helicopter Money”)

I am constantly skeptical of the term “helicopter money” as bandied about by the average economic writer. “Free cash” is what I consider helicopter money.

The typical headline reference to helicopter money is some sort of discussion about QE, monetary printing, central bank asset purchases, etc., not free money.

Today, Jens Weidmann, head of Deutsche Bundesbank, Germany’s central bank warns about helicopter money, and he really means helicopter money, as in “free cash”

“Helicopter Money” Hurts Banks

Bloomberg reports “Helicopter Money” Hurts Banks, ECB’s Weidmann Tells Newspaper

European Central Bank Governing Council member Jens Weidmann warned against starting a discussion about handing out cash to stimulate growth, Funke Mediengruppe reported, citing an interview.

“Helicopter money isn’t manna falling from heaven, but would rip huge holes in central bank balance sheets,” Weidmann, who heads Germany’s Bundesbank, said, according to the newspaper. “The euro area states and taxpayers would pay the bill in the end.”

“Instead of suggesting ever more reckless monetary policy experiments, it would make sense to pause,” Weidmann was cited as saying in German. “Monetary policy is not a panacea, doesn’t replace the necessary reforms in individual countries and won’t solve all of Europe’s growth problems.”

Weidmann was also cited as saying he was not convinced on the whole by the measures the ECB announced this month. “I’ve always said the effect of ultra loose monetary policy gets weaker the longer it lasts. At the same time, the more you put your foot on the gas, the bigger the risks and side effects become,” Weidmann said.

Separately, Weidmann said he doesn’t think that eliminating the 500 euro note would “noticeably” reduce criminal activity. Such a move would also present a logistical challenge, he said, according to Funke.