You'll have to sign in to see this documentary, The Man Who Souled the World, there's something in it to offend pretty much everyone. But at 1:16:51, if you look quick, or pause it, you can see a guy literally throwing money out the window of a helicopter to people in bleachers below. That guy is Steve Rocco, owner at the time, and CEO of World Industries Skateboards. The crowd the money is landing people near the skateboard vert ramp at the 1999 X-Games in San Francisco. That X-Games is best known for this, which happened on that ramp about 30 minutes later.
The metaphor of "Helicopter Money" is used when some entity gives free money, (or loans at super cheap interest rates) to people or businesses. It is unearned, undeserved money. Free money.
Free money feels good to receive. I happened to be on the pier at the X-Games when Steve Rocco threw the money in the video above out of the helicopter. I walked away with $4 of that money, each dollar bill stamped with one of the World Industries characters, Flameboy or Wet Willie.
In the Big Picture these days, our entire economy has been running on "helicopter money," almost entirely, for a little over a year. The Federal Reserve, who prints the money (technically it's unconstitutional since 1913) the United States uses, has been throwing out "helicopter money" at the banking system and large corporations, to try and revive the U.S. economy after the initial Covid-19 business shutdowns in the Spring of 2020. In extreme cases, like 2020, there is good reason to do this, for a short period of time. The rise in the stock markets since, and the surging real estate prices during a recession (actually a depression), that's all due to The Fed's helicopter money.
Our economy is not actually growing organically, we're completely dependent on The Fed continuing to add new money to the banking system right now. If they stop, the economy crashes, stock markets crash, and real estate goes into a serious (and to be honest, needed) downturn.
The thing is, there's a downside to helicopter money. If The Fed keeps printing physical money, and creating digital money, the total money supply increases, which makes each dollar worth less. That's inflation, and in everyday life, that's why the prices of pretty much everything, are going up right now. This is the delayed result of The Fed increasing the money supply by about 25% in the first year after Covid-19 hit our shores, and them keeping dropping helicopter money.
So we are in for high inflation, rising prices, for at least 2-3 more years to come, in my opinion. If The Fed increases the money supply at a continuing ridiculous level, like they are now (they loaned the banking system $998 Billion, LAST NIGHT, in reverse repo operations) then we hit hyperinflation. That's when prices literally go up every week or every day, even hour by hour in the worst cases. Eventually the currency, in our case, the U.S. Dollar (Federal Reserve notes) loses all its value, and becomes worthless over 2-3 years. We don't want that to happen.
So that's where we are now. If The Fed stops adding new money, we crash back into serious recession, if they keep increasing the money supply, which is what they are doing, we get continuing high inflation, rising prices, but wages will not go up as much. Maybe it gets out of control and becomes hyperinflation.
This is why "helicopter money" matters, if it keeps happening. This continuing helicopter money by The Fed is propping up the financial markets, and the overall economy right now. To get back to a healthy economy some day, we need actual growth, which is lots of businesses creating new products and services, and those getting bought by real, everyday people, on a continuing basis, to grow the total economy. That has to happen at a level where The Fed can stop adding money, and raise interest rates to a more historically normal level. We are a long way from that scenario. This is the back drop to the current economic picture, as businesses try to work thought the latest Covid-19 surge, and get back to "business as normal."
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