Dear Prof. Prokopowicz,

It seems you have developed a blind fan in me. But just to perform my intellectual duties, something I can do to some extent, let me try to answer your question. By substituting high interest rate and high SLR backed money by currency of higher denomination and low interest rate and high multiplier Econophysical efficiency (Mallick (1993, 1994), Mallick, Sarkar, Roy, Duttachaudhuri & Chakraborty (2007), Mallick, Hamburger & Mallick (2016)) although of lower exchange value (Economical) the Emerging Economy of India has achieved lower inflation, higher growth rates and slower depreciation of exchange rates, thereby showing that the Lucas helicopter drop intrepretation through the mechanism of asset markets can indeed achieve DGE net efficiency in the long run. This proves the long run efficacy of the Indian Emerging Markets indirectly by quantitative easing also in terms of International Currency Asset Markets and thereby open stock and bond markets. This also proves that subsidies and efficiency shocks to the developing economies are better realised in terms of Pareto Optimality dominance through rational expectations driven (endogenously Mallick et. al.) competitive asset markets and money markets by helicopter drop of money instead of helicopter drop of weapons.

Soumitra K. Mallick (CA),

for Soumitra K. Mallick, Somak Raychaudhury, Sandipan Mallick and others,

of The RHMHM School,

US, Japan, India

The concept of helicopter money is essential to the basic tenet of Monetarism. Money affects price with very little effect or virtually no impact on output. If money were viewed as credit, the rise in money supply would be associated with capital formation and hence output. Helicopter money enhances consumption and demand with only indirect impact on output growth which is small or zero with labour market being in equilibrium.

Dear Prof. Chattopadhyay,

In times of growth of Emerging Indian Economy from a 700 B USD GNP to 2.3 T USD Economy in about three decades with periods of high inflation in high double digits and the more than trebling of the BSE Sensex with the Globalisation Regime in place coincidentally with the Emerging Economy Classification, it would be difficult to figure out a way without resorting to Rational Expectations Dynamic General Equilibrium in the medium to long run for the Markets of forecasting trends. What better macroeconomic model under Rational Expectations exist than the Lucas Helicopter drop model with Asset Markets built in. We have developed a model for the Planning Commission of India endogenising percapita growth over time of planning periods with Bombay Stock Exchange, National Stock exchange and RBI and Plaanning Commission of India, which implicitly is a perfect setup for the Lucas Helicopter drop open economy RE Macroeconomic model except that we have also built in historical (information database systems cointegrated) adaptive expectations, and have discovered the convergence paths with DGE R-squares with industrial portfolio trading, and with a highly selective "staying-with-the winner" portfolio of stocks of companies with P/E ratios greater than 10, we have achieved R-squares as high as 0.78. This type of ARIMA Analysis has also revealed a CARA Class investor database (as has been found in an Econometrica paper to be group homologous with other industrialised economies) hence we are really successfully finding a hybrid rational expectations-adaptive expectations for the Emerging G-10 Indian Economy. This has been extended by Sarkar, Chakraborty & Sen in a JAM paper to include FE Markets with similar results (and no Emerging Markets schlerosis!!!). So if for such a ten year database study experiment we can find the rational-adaptive expectations systems classification and systems integration model doing well (Mallick (1993,2014), Mallick, Hamburger & Mallick (2016, 2017, 2018)) Prof. Lucas's teaching in terms of openness and cointegration with optimal growth rates and money as determined by this market microstructure approach is structurally determinstic and well calibrated endogenously. So I don't see why Lucas helicopter drop model with the Lucas critique built in cannot solve the production engineering problem for efficient markets in DGE, even for developing countries like India. The important lesson is to sustain this openness.

Soumitra K. Mallick (CA)

for Soumitra K. Mallick, Somak Raychaudhury, Sandipan Mallick and others,

of The RHMHM School,

US, Japan, India

It all depends on the quantity of pilots and aircrafts available; you will need a huge global armada of helicopters to save monetarist doctrine. Also money has a price and costs something. It is a nice metaphor for the alchemy and omnipotence fantasies of finance in the last ~40 years, since Nixon closed the yellow brick road; https://en.wikipedia.org/wiki/Nixon_shock Mr.Friedman offered a monetary policy, which did fill a political gap for operating the total fiat monetary system. A citizen's dividend is principally a good idea, but it would require to capture economic rent as public revenue. The early Friedman was a radical economist, later on he learned to sell ideas to the public. However, his 4 categories of money remain an important contribution to monetary thought.

https://www.youtube.com/watch?v=5RDMdc5r5z8

What category is helicopter money?

I think that the concept of Helicopter Money is too timid. I would rather propose that the current form of creating money through loans with interest be totally be abolished. Money should be supply by banks to organisation (group of individuals) based on estimation of the benefits and risks on a competitive basis. Such estimation would have to be based on major guidelined democratically debated on the different sectors of needs of the whole societies. It woud also be based on information monitoring of the actual activities and competence available in the society. The total amount of money that can be allocated by the banks in any sector would have to be limited by limitations of the labor forces. As much money as to occupy all the work forces based on the societal needs ad determined the democratic political process. This new system where no loans and no interests can be collected would effectively eliminate the financial parasitical class as well as structural unemployment.

I do not know how we should call this type of banking and money.

I am totally against the idea of giving helicopter money to individuals. Individual should earn their living (money) through their active working contribution to society. Any donation of money to individual without a demand of work would tend to create a parasitic class. The last thing any society need. Getting rid of the financial parasitic class is not enough, any form of parasitism should be discourage. There will always be a number of individual either totally unable to work or for whatever reason determined in not working. Money should not be given to them but to shelters and other organisations providing their most basic needs in the most human way but in a limited fashion to discourage parasitism.

Dear Prof Soumitra K. Mallick,

Am happy to know that you have contributed to the macro-econometric modelling resorted to by the erstwhile Planning Commission of India.

The model may have delivered results but I remain skeptical about the validity of the underlying assumptions of a model no matter what the results are. I disagree with Friedman type of argument which undermines the assumptions of a macro model but assigns weights to the results or predictive capacity. For a developing country like India with huge informal sector and low levels of education, I am not sure whether people in general know much about the macroeconomy and form their expectations and that too rationally. I am not sure either whether the markets function freely without hindrances. I take interest in the area of the macroeconomics of the black economy in the context of India. Any macroeconomic analysis of the Indian economy would remain partial if the black/shadow economy is not taken into account because (I) the size is substantial wrt GDP (II) it is not a parallel economy but deeply intertwined with the reported economy.

I think the recent debate about the autonomy of the Reserve Bank of India is related to the concept to the concept of money. It is endogenous or otherwise and its role. The nature of the labour market and output. Money gets injected into the system through credit and hence it does contribute positively to the economic activity of the country.

Dear Prof. Chattopadhyay,

I am for quite sometime heavily invested in Econophysics research and trying to shift focus from economic solutions to physical solutions for Economic and Financial problems. We are more interested in synthesizing the two vast fields to get something really new in education and research in the new Millenium. In the new Millenium we foresee fewer wars and more social bonding in human societies like ant societies and clouds in Nature and we believe that we will be able to invent many new instruments and methods which will increase the space of efficiencies thereby providing employment to more and more people and more incomes to the populations across the board. This will mean also more schools, more latrines, more hospitals, more dispensaries, more mines, more stethoscopes, more homes , more electrical connections, more telephones, more food, more computer networks. We understand all this will cost more money and more resources so we are also trying to build "sustainable" models including space and the environment with a bigger heart-mind turpike for our evolvingly ncreasingly rational human actors. Just last week Prof. Sir Ramakrishnan presented his talk at Presidency University and I was lucky to attend and discussed with him the problem of genetic codification which as we have established through research also affects our discovered "market strings" in keeping with a long forgotten tradition of Indo-Chinese tradition of Confucion-Buddhist thought of the cascading hierarchy of the mind and heart , as progress takes place. History says, although I am not too sure on this, that the travails of Marco Polo, Huen Tsang, Christopher Columbus which happened in vastly different times in History, were all attracted towards this understanding of what we may call "market strings" today, the Physics and Genomics interaction picture through modern architecture of electronic markets. No wonder we needed to find a physical structure of AGGNN Networks to solve all the Millenium Mathematics Prize problems. (Millenium Mathematics Mini Prizes (Mallick, Hamburger & Mallick (2016, 2017, 2018)) and may win the Nobel Prize amongst Mallick Raychaudhury, Mallick and others(2018) with the kindness of Dr. Hamburger and our other collaborators, who much to our happiness is democratically fairly representative of the directions of the earth (the fundamental axiom of roundness of the atom which can be only generated by points organised into lines with no width but length - Euclidean Topology you may say). Macroeconomic modelling of emerging markets of India holds a lot of relevance for questions about the universe, being an integrated Edgeworth and Shroedinger Box to run experiments. Hence it is this Experimental Science of India which we are exploiting. Macroeconomic questions can also be answered by our Research Methodology we believe.

S.K.Mallick (CA)

for S.K.Mallick, S.Raychaudhury, S.Mallick and others,

for The RHMHM School,

US, Japan, India

In a downturn, the central bank may try to stimulate private expenditure by increasing money supply (that is: money circulating among private firms , banks, families). It can do it in many different ways.

The standard way is called "open market operations" where the central bank buys (government, and eventually other) bonds in the financial markets in exchange for money. However, this may not be enough; in a downturn typically firms and families don't borrow, so the money supplied stays dormant as commercial banks reserves. Alternatively, you may just give away money to the people. (By throwing it down from an helicopter, or by crediting the government, for distribution) : since it is not borrowed money, families and firms are more likely to spend it. But if they are scared of the future, and are not ‘cash-constrained’, they might instead save it.

The subtle point of modern thinking about helicopter money is that once you've poured money from the "helicopter" you cannot take in back. Thus the central bank ties its hands, burns the bridges behind, and by doing so makes credible its eventual promise of engineering a future (temporary but prolonged) burst of inflation, after the downturn is over. If private agents today do believe that, in the future, the central bank (contrary to its mandate and economic wisdom) will truly let the economy run into a period of (excess: say 3-4%) inflation, then they have an incentive to spend now. Which is precisely what is needed to overcome the downturn. If however the central bank increases money supply through open market purchases of public bonds, once the downturn is over, and before inflation picks up, the central bank not only has an incentive to betray its past promises of (temporary) higher inflation, but can indeed betray its promise, by selling back the bonds to the private sector (in exchange for money), stopping the nascent inflation. Since the private sector today knows that this is the most likely course of events, they will not spend, and the economy will remain depressed.

So helicopter money is one - albeit imperfect - way to solve the "time inconsistency" problem of the central bank.

Sir Soumitra Kumar Mallick

I am really very impressed with the kind of work you are doing. In my university, Prof Anirban Chakraborti takes interest in the area of Econophysics. I come from a social science perspective to understand Economics. To me, corruption and the failure of the institutions, low tax-GDP ratio, unproductive investments due to leakages from the economy, the intertwined nature of the black economy pose immediate problems. pathetic quality of education is a major challenge for India. Reaping the benefits of demographic dividend is of utmost importance. Jobs are few. Society is breaking apart in the wake of individualization. Anyway, I am happy to know your interest and we need a major structural break with empowerment of people to attain sustainable development.

Sir Soumitra Kumar Mallick Saumen Chattopadhyay

Pietro giorgio Gawronski

Louis Brassard Stephen I. Ternyik

Thank you all for sharing your thought on the subject.

I found more of similar to quantitative easing practices that various central banks adopt special when they feel that external stimulus required to bring economy back on growth track.

If anything more kindly share, Thank you

Dear Colleagues and Friends from RG, In 2020, due to the development of the Covid-19 Coronavirus pandemic, the global economy will slow down its economic growth by at least a few percent. in relation to 2019. In the context of these very general estimates, the following question appears below. Well, the above discussion inspired me to formulate the following question: Are the anti-crisis, interventionist programs supporting economic processes, economic entities, citizens, maintaining liquidity in the state's financial systems, etc. currently launched by national governments and central banks, a practical implementation of the concept of "Helicopter Money" by Milton Fredman?

What do you think about this topic?

What is your opinion on this topic?

I am asking for an answer and invite you to a discussion.

Thank you very much.

Best wishes.

Dariusz Prokopowicz

The concept of helicopter money or very high level of monetary expansion may be the need or compulsion for central banks/governments during extra ordinary times like covid-19, however more such occasions would reduce or eliminate the gap in capitalist and socialist systems of economies. It would eventually lead to high inflation if central banks are unable to implement 'beautiful deleveraging'. It is on lines with monetary policy 3 as per Ray Dalio which can be considered only when monetary policy 1 and 2 fails to revive economy.

Dear Rajesh Ramchandani,

Thank you for your participation in the discussion and for explaining your position on the issue the concept of helicopter money invented by Milton Friedman. Yes you are right. The use of anti-crisis monetary policy based on the concept of helicopter money should be applied in a thoughtful manner and under control in order not to lead to a strong increase in inflation that could run out of control. Then one economic crisis would be replaced by another crisis.

Best wishes,

Dariusz Prokopowicz

Taking into account the scale of purchases of treasury bonds by central banks in some countries, it is justified to formulate and verify the research thesis, according to which the applied interventionist, anti-crisis, lenient monetary policy in conjunction with budget policy draws inspiration from Milton Friedman's concept of helicopter money.

Regards,

Dariusz Prokopowicz

In 2020, the federal government of Canada imposed a lock down for Covid in the Spring and then imposed a lot of sanitary restrictions which mostly impacted small business such as restaurants and all those that cannot be done online. This created also a lot of unemployments especially on the youth working in these business. On the other hand the federal government printed a lot of money and give it in the forms of unemployment checks to these lay off workers. Some of them actually received as much from these generous unemployments programs as they were making working at near the minimum salary. So they could pay their rent and eat and continue spend in the economy as before without themself working in this economy. At least this type of helicoptere money given to these layed off workers did prevent a cascading effect. Without it, those renting would themself be bankrupt if they had a large mortage, then the government would have to organise shelters and food for these people that would become homeless. Most of these programs have been stopped now since small business hiring at low wage would have no chance to attrack these well compensated unemployeds. But a lot of small business are now backrupt and are not going to re-open. Monetary measures can alleviate just a few of the collateral damage of these excessive sanitary measures but most of the damages will be permanent and very beneficial to big online business which are taking all the places eft vacant by these extreme measures.

Regards,

- Louis

Dear Louis,

Thank you very much for your response. Thanks to your answer, now we can talk about the comparison of the applied anti-crisis interventionist instruments in the individual countries in which we operate. In the country where I operate, very similar anti-crisis solutions have been applied. There has also been specific government financial support in the form of state aid in the formula of what is referred to as Milicopter Friedman's Helicopter Money. However, I notice one difference in terms of the comparison of the applied instruments for activating economic growth during the recession. The one difference is how you put that extra money into the economy. Well, instead of vouchers for people who lost their jobs, they went into unemployment due to lockdowns imposed on individual service sectors, subsidies for employees' wages and financial subsidies transferred directly to companies. These subsidies were conditional on maintaining employment even in the event of a significant reduction in economic activity due to the introduced lockdown. Thanks to this, in 2020, despite the SARS-CoV-2 (Covid-19) coronavirus pandemic, the increase in unemployment recorded by labor offices was very limited, it was relatively small. The economy is currently recovering from recession quickly and according to the latest forecasts by many research institutions that have been published in the media in the past few weeks, economic growth is forecast at the end of this year at between 5 and 6%. GDP above zero. When we add the base effect, i.e. the 2020 recession, the scope of this increase from the previous year's recession will be greater by an additional 2% on a year-to-year basis. Such a level of economic growth for this type of developing economies is considered optimal. The question arises under which internal (domestic economic policy) and external determinants (international trade, cross-border capital flows, globalization processes) will such a level of economic growth be maintained in the next few years?

Thank you, Best wishes,

Dariusz