CDZ Federal Reserve Planning to Implement Electronic Helicopter Money

[JimBowie1958]

They should go to a currency based on ETFs for various commodities, securities and crypto, instead they plan to just give money away during recessions.

Zerohedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

The response was striking: the two propose creating a monetary tool that they call recession insurance bonds, which draw on some of the advances in digital payments, which will be wired instantly to Americans.​

​

As Coronado explained the details, Congress would grant the Federal Reserve an additional tool for providing support—say, a percent of GDP [in a lump sum that would be divided equally and distributed] to households in a recession. Recession insurance bonds would be zero-coupon securities, a contingent asset of households that would basically lie in wait. The trigger could be reaching the zero lower bound on interest rates or, as economist Claudia Sahm has proposed, a 0.5 percentage point increase in the unemployment rate. The Fed would then activate the securities and deposit the funds digitally in households’ apps.​

​

As Potter added, "it took Congress too long to get money to people, and it’s too clunky. We need a separate infrastructure. The Fed could buy the bonds quickly without going to the private market. On March 15 they could have said interest rates are now at zero, we’re activating X amount of the bonds, and we’ll be tracking the unemployment rate—if it increases above this level, we’ll buy more. The bonds will be on the asset side of the Fed’s balance sheet; the digital dollars in people’s accounts will be on the liability side."​

​

Essentially, the Fed is proposing creating a hybrid digital legal tender unlike reserves which are stuck within the financial system, and which it can deposit directly into US consumer accounts. In short, as we summarized "The Fed Is Planning To Send Money Directly To Americans In The Next Crisis", something we reminded readers of on Monday:​

 

[Manonthestreet]

Yeah ...no

 

[JimBowie1958]

Yeah ...no

You have no right to say no to your superiors, peasant.

Get back in line and pull.

 

[the other mike]

Pushing $27 trillion (actual total debt $82 trillion)

https://www.usdebtclock.org/

 

[JimBowie1958]

Zerohedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

Just two weeks ago, Cleveland Fed president Loretta Mester hinted at just how close the US is to a comprehensive overhaul of the entire fiat system when she said that "legislation has proposed that each American have an account at the Fed in which digital dollars could be deposited, as liabilities of the Federal Reserve Banks, which could be used for emergency payments."​

​

This, together with an August Bloomberg interview with Simon Potter, who led the Federal Reserve Bank of New York’s markets group for years, and Julia Coronado, who spent eight years as an economist for the Fed’s Board of Governors (the two are among the innovators brainstorming solutions to what has emerged as the most crucial and difficult problem facing the Fed: get money swiftly to people who need it most in a crisis), in which the duo suggested depositing digital dollars directly in households’ apps, prompted us to write two weeks ago that "In An Unprecedented Monetary Overhaul, The Fed Is Preparing To Deposit "Digital Dollars" Directly To Each American."​

​

Yet when it comes to clogged funding pipelines and a slow monetary transmission mechanism, while the Fed may be slow in responding to the collapsing monetary velocity the ECB is absolutely glacial, largely due to the fact that while the Euro area shares a monetary regime it still has independent fiscal regimes.​

​

Which may explain why while the digital dollar is still in its development stage (the Fed is currently conducting joint research with MIT on whether and when to launch it), Europe is far closer to hitting the "green"​

button on a digital currency: on September 22 the ECB quietly filed to trademark the term "digital euro" (which appropriately enough abbreviates to DE to instill a sense of German patriotism when officials push Europe's most conservative society into the great monetary unknown) as disclosed by the website of the European Union Intellectual Property Office, as European officials are preparing to release an assessment of the benefits and drawbacks of creating a digital version of the currency.​