Countries adopt "Helicopter Money" to prevent crash

Countries are flushing credit and money to the economy to prevent an economic crash. Besides, the government is also giving everyone cash, which is similar to the scenario of Basic Universal Income. Is this the beginning of the end?

The Covid-19 virus has changed many things. Social distancing, loan moratorium, movement control, etc are all the events that would reshape the world.

Another event that is shaping capitalism is happening despite no one is talking about it. That event is the adoption of Modern Monetary Theory or MMT.

Modern Monetary Theory (MMT) is a macroeconomic theory that describes the currency as overly restricting the utilization of resources and government should use fiscal policy to achieve full employment. Also, the government need not to collect money in the form of taxes or debt issuances to fund the government purchase.

In short, this theory advocates that the government should print money to stimulate the economy.

Besides maintaining the economic growth rate, this policy also comes with some positive implications.

1) Full employment can be guaranteed when the government is creating jobs. This could not be done via a free-market economy because the private sector treats labor as a cost to be minimized

2) Idle resources, mainly labor can be activated by money creation. Not acting to do so is immoral.

3) Demand can be insensitive to interest rate changes. This is exceptionally important when there is insufficient demand in the world despite most Central Bank has been adopting a Zero Interest Rate Policy.

4) Creating money does not cause inflation; spending it when the economy is at full capacity or above full employment can. This policy is taken to reflect the full potential of the economy, not competing for limited resources with the private sector when the economy is booming.

Economics is a topic that focuses on scarcity and allocation of resources. However, our modern technology has enabled us to live comfortably without having to sacrifice much.

Here are the 2 worlds where you can choose to live:

1) A world that is adopting the old economy theory where resources are unevenly distributed and inequality is a norm. In a foreseeable future, the adoption of AI, robots will make a majority of the population to left unemployed and living in poverty.

2) A world where that adopts a new monetary policy. Everyone in the society is receiving a Universal Basic Income, where the following benefits are seen:

a. Fighting technological unemployment

b. Ending workplace abuse

c. Expanding the middle-class

d. Ending poverty

e. Eliminating the need for social security

The changes will be huge for scenario 2, but which world would you like to live in it?

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