Rescue Helicopter Arrives…

We flagged some months ago to keep an eye out for “Helicopter Money” entering the ‘what next’ space as the world’s economy continues to languish.  Some would argue Helicopter is not really any different to the Quantitative Easing we have seen in the US and still seeing in Japan, Eurozone, and UK.  Some argue it injects the freshly ‘printed’ money more directly into the public than via the financial institutions.  It is almost a mute point as it is still monetary debasement accumulating more and more debt.  It is still a desperate attempt to get you into risk-on investments, out of saving, and create inflation to erode debt that they know cannot otherwise be repaid.

Earlier this week, on our own shores in Australia, one of the members of the US Fed’s rate setting committee (the FOMC) Loretta Mester, had this to say:

“We’re always assessing tools that we could use….In the US we’ve done quantitative easing and I think that’s proven to be useful.

So it’s my view that [helicopter money] would be sort of the next step if we ever found ourselves in a situation where we wanted to be more accommodative.”

This came in the same week Japan is set to unleash an additional $130b in such stimulus to already the world’s most aggressive monetary stimulus program… that is not working.

That a known ‘hawk’ (anti stimulus) as Mester is talking openly about the possible need for this in a US economy that the Fed’s own ‘Beige Book’ economic summary this week described as ‘recovering modestly’ indicates they know all is not well.

The markets’ response?  The S&P500 rallied so hard this week it is now as overbought as at any local high in the last year.  What could possibly go wrong?  That gold and silver have held firm whilst this is happening may well be the answer…