The term 'helicopter money' gained traction on social media in India after the fact checking unit of the Press Information Bureau (PIB) called out a graphic by a Karnataka-based news channel for their reporting on the economic concept.The Press Information Bureau, under the Ministry of Information and Broadcasting even served a show-cause notice to Public TV for their report - 'Helicopter Money - Helicopternalli Surithara Modi' (Helicopter Money - Will Modi drop money from helicopters?)
PIB under Ministry of I and B has issued a notice to Public TV for Violation of Cable Television Network (Regulation)Act and Codes by Broadcasting "Helicopter Money - Helicopternalli Surithara Modi".@PrakashJavdekar @MIB_India @PIB_India @PIBFactCheck @DG_PIB pic.twitter.com/KxYJ3LFAKY— PIB in Karnataka 🇮🇳 #StayHome #StaySafe (@PIBBengaluru) April 16, 2020
A short clip BOOM was able to find shows a discussion about the concept of helicopter money. However, it is unclear if the channel ran other broadcasts which suggested that the government was literally going to drop cash from helicopters. Their reporting in Kannada on the topic can be seen below.
Below is an excerpt from the video.
"What is Helicopter Money? Economist Milton Friedman coined this term. According to him, it is understood that from the sky, via helicopter, money will simply be thrown. This is called helicopter money. RBI will print currency notes and give it freely to the government. Helicopter money need not be returned to RBI. The government will then give it to the needy classes – coolie workers, factory workers, small businesses, medium scale enterprises, and farmers."
Before serving the notice, PIB Factcheck initially took to Twitter to call out a graphic from the broadcast as fake.
However, even Telengana's Chief Minister K Chandrashekhar Rao brought up this concept, where he urged the Reserve Bank of India to adopt 'helicopter money' to ease the financial duress and to adopt a quantitative easing policy.
BOOM tells you all you need to know about 'helicopter money.'
Will money fall from the sky?
During times of duress, 'helicopter money' does not literally denote that money will be thrown down from a helicopter. Rather, 'helicopter money' is an economic concept, whose coinage can be traced to American economist and Nobel laureate Milton Friedman. In his 1969 essay titled 'The Optimum Quantity of Money', he describes an unconventional and last resort policy tool driven by the increasing printing of money and distributing it openly to spur demand and inflation. This practice was similar to throwing money down from a helicopter.
"Let us suppose now that one day a helicopter flies over this community and drops an additional $1,000 in bills from the sky, which is, of course, hastily collected by members of the community"
From Ben Bernanke To 'Helicopter Ben'
Helicopter money as a tool to ease economic pain often crops up during times of severe economic downturn - along the lines of what the world is facing right now, as described by chief economist of the International Monetary Fund as the worst downturn since the Great Depression.
Earlier, in a 2002 speech, Ben Bernanke, then governor of the board of the Federal Reserve, likened the practice of money-funded tax cut in the US economy to Friedman's helicopter money adage. "The deflation speech saddled me with the nickname 'Helicopter Ben'", wrote Bernanke with the Brookings Institute in 2016. According to research by Netherlands-based Rabobank, the US was considering helicopter money by handing out $1,000 to its citizens. The Trump administration did announce a handout of $1,200 to lower and middle income Americans as part of its $2 trillion relief package.
Resorting to helicopter money is being seen in some form in Asia too, such as in the cases of Hong Kong, Macau and Singapore .In February this year, Hong Kong announced a flat disbursal of HK$ 10,000 ($1,200) to permanent residents above the age of 18. In Macau, handouts took the form of shopping vouchers to its residents to the tune of 2.2 billion patacas ($274.9 million), where each permanent resident would be given a card with a store value of 3,000 patacas, valid for three months. Singapore has announced one-time payouts between SG$100 - SG$300 for Singaporeans aged 21 in their budget in February this year.
Earlier, BOOM has done a story on all we know about the COVID-19 spreading through contaminated cash.