Good to see Mr. Adair Turner beginning to harbour some misgivings on helicopter money. To that extent, one must credit Raghuram Rajan with some success for having induced Mr. Turner to look at the behavioural and psychological elements that come into play in the central bank induced fiscal policy or simple credit to people’s accounts directly. There is ample scope for unintended consequences.
When Mr. Turner posed the question, “can we design a regime that will guard against future excess, and that households, companies and financial markets believe will do so?”, he must have figured out the answer himself because the evidence is staring us all in our faces.
John Cassidy in “New Yorker” has a good summary of Raghuram Rajan’s views espoused in a lecture at the London School of Economics.