The following is the definition as found in Wikipedia. (There’s actually a lot more. Quite interesting).
Helicopter money is a proposed unconventional monetary policy, sometimes suggested as an alternative to quantitative easing when the economy is in a liquidity trap (when interest rates near zero and the economy remains in recession).
Although the original idea of helicopter money describes central banks making payments directly to individuals, economists have used the term ‘helicopter money’ to refer to a wide range of different policy ideas, including the ‘permanent’ monetization of budget deficits – with the additional element of attempting to shock beliefs about future inflation or nominal GDP growth, in order to change expectations.
A second set of policies, closer to the original description of helicopter money, and more innovative in the context of monetary history, involves the central bank making direct transfers to the private sector financed with base money, without the direct involvement of fiscal authorities. This has also been called a citizens’ dividend or a distribution of future seigniorage.
The phrase “helicopter money” was first coined by Milton Friedman in 1969, when he wrote a parable of dropping money from a helicopter to illustrate the effects of a monetary expansion.
The concept was revived by economists as a monetary policy proposal in the early 2000s following Japan’s Lost Decade. In November 2002, Ben Bernanke, then Federal Reserve Board governor, and later chairman, suggested that helicopter money could always be used to prevent deflation.
We were reminded of this concept by the recent government decision to send a cheque to all those who work.
Now there is a lot to say about the decision and its motivation. Some ask, for instance, why were pensioners excluded when they are most at risk of poverty?
The above quote from Wikipedia shows there can be a positive interpretation of such a move. When other expedients are listed, such as tax rebates and the like, a helicopter drop is more immediate, and cuts through the red tape that a tax rebate would involve.
However, according to the definition of the concept as reported earlier, its use is recommended in cases of a recession, which is not the case here, or a liquidity trap, the monetisation of budget deficits and the like.
The government explains this is giving back part of the surplus to
A second set of policies, closer to the original description of helicopter money, and more innovative in the context of monetary history, involves the central bank making direct transfers to the private sector financed with base money, without the direct involvement of fiscal authorities. This has also been called a citizens' dividend or a distribution of future seigniorage
the people who created the surplus in the first place – the workers. We say a helicopter drop would have been fairer if given to those at the risk of poverty. For these people, such an unexpected gift would have been a real and positive surprise and possibly help where real help is needed.
But the government, it seems, still cannot perceive the real pain such people are suffering. The blank response which a participant at this week’s presentation of the Pre-Budget document got when he spoke of the suffering of such people is quite indicative.