Helicopter Money

So the questions I had in my previous blog post turned out to be similar questions other bloggers have asked in the past. In fact, two years ago the Financial Times had a post about this exact scenario: What would happen if central banks cancelled government debt? What would ensue? Why hasn't this happened before? What are the pros and cons of such a move? Why would something so radical ever take place? 

 This article does a decent job at explaining the economics behind such a hypothetical policy move: http://blogs.ft.com/gavyndavies/2012/10/14/will-central-banks-cancel-government-debt/?

Additionally, our old friend Paul Krugman has written an op-ed about this topic: (http://krugman.blogs.nytimes.com/2011/03/25/deficits-and-the-printing-press-somewhat-wonkish/?_r=0 ) 
Even he, the Nobel-prize winning economist, concludes that "the idea that deficits can never matter, that our possession of an independent national currency makes the whole issue go away, is something I just don’t understand". 

Knowing this wonky hypothetical makes him feel uneasy makes me feel easy. Everyone seems confused, but maybe that's because no one has any idea what would happen if someone tried such a move.

Building off that confusion, Martin Wolf--our other friend--also has an opinion about "helicopter money". In an incredibly surprising opinion, he is fully in favor of the central bank financing government debt:( http://www.ft.com/intl/cms/s/0/045aab84-e61c-11e0-960c-00144feabdc0.html#axzz29GQeK8oI ) To be honest, I'm not really sure I understand the reasoning behind his opinion (he literally says, and I quote: "No automatic link exists between central bank money and the overall money supply".) 
If he is right about that, I have been lied to for the past 4 years at college--that would kind of suck. There seems to be something "off" about everyone's arguments when it comes to just cancelling debt and I can't really put my finger on it. Maybe it's just such a radical move that literally nobody has any idea what would happen.

Anyway, what I've taken away from my pseudo-research is that nobody has any clue what would happen if a central bank tried this policy move. Some people are scared of inflation, some are terrified of deflation, but everyone shits their pants when they think of depression--so the conclusion is always something should be done. 

Crazy stuff. 

all for now.