What's up with helicopter money? Videos from gardening leave

Helicopter money is a concept invented by Milton Friedman, suggesting that governments could increase inflation by dropping money onto the heads of their population.

Helicopter money differs from quantitative easing because it increases money supply in a permanent way, while quantitative easing is a temporary measure to bring the economy back into balance.

Helicopter money presents three challenges. First, there is no flexibility to reverse it if money demand reduces in the future. Second, it poses the risk of inflation or hyperinflation getting out of control. Third, raising inflation of prices may not be beneficial in certain economic circumstances.

Raising inflation expectations further through helicopter money could be damaging, especially in a country like Japan where consumers already have high inflation expectations and an expectation of falling income.

The desired outcome is wage inflation, not just price inflation.

While helicopter money may sound like an elegant theory in an academic journal, in the real world as we live today, there are doubts about its effectiveness.