Helicopter Money

Created by John Powe in H Glossary 22 Nov 2024

Helicopter money

Helicopter money is a monetary policy concept where a central bank distributes money directly to the public, usually by handing out cash or through a direct deposit into citizens' bank accounts. The term was popularized by economist Milton Friedman, who used it as a thought experiment to explain the impact of increasing the money supply on an economy.

Ben Bernanke, former chairman of the Federal Reserve, has been associated with the concept of helicopter money due to his suggestion that the central bank could use this type of policy to address economic downturns or periods of deflation. Bernanke suggested that, in a situation where traditional monetary policies are ineffective, the central bank could take aggressive measures such as distributing money directly to the public to stimulate economic growth.

In trader talk, helicopter money is also sometimes used to refer to quantitative easing.