[JumpCrisscross]

> Why wouldn't helicopter money solve the liquidity problem?

One, it is not targeted. The Fed can pump vast quantities of liquidity into the heart of the credit markets in a way private actors aren't set up to.

Two, it is not fast enough. Companies will go bust while waiting for politicians to authorize a cheque, the Treasury to cut it, investors to cash it and then to identify and decide upon an investment.

Three, it isn't reliable. Investors trust the Fed's discount window will be open in a crisis. That knowledge, itself, stops many runs before they start.

Four, it's riskier. Helicopter money cuts cheques. Once it's done, the money is out the door. The government is never getting it back. If they sent out too much, we'll have inflation. Monetary policy involves collateralized loans. The collateral limits downside. And unwinding a loan is easier than raising taxes to drag surplus cash out of the economy.

[burroisolator]

I think if there was proper planning in place, you could have money sent out to people in a day, especially the demographic that would most likely be investing the extra cash. People already electronically pay their tax returns. Payments are taken up by the next day if you so specify; there is no reason to believe the same thing can't be done in the reverse direction. You don't need to physically cut checks for everyone, only those who specify or can't be reached with other means. Betting against investors to be able to quickly find investments is almost like betting against capitalism itself. If you're slow to invest, then you'll lose out on making money. Additionally most people while thinking of something more specific to invest in will probably be depositing this money into a generic savings accounts at first: while this happens, banks will be able to reallocate this capital to fit their needs.

If I knew that the policy was going to be that every time there is a liquidity crisis people will be getting checks (or electronic payments), then I wouldn't be scared of any runs in the same way. Again, is the argument that the Fed is better than private households in being a distressed investor?

Helicopter money can be taxed back. I know that is unlikely but so is the probability that the Fed's balance sheet going to zero: https://fred.stlouisfed.org/series/WALCL.