Era of ‘helicopter money’ has landed, time for alarm

There are some strange things going on in financial markets around the world at present. In Japan, they are thinking about issuing bonds from the government to finance infrastructure. That, in itself, is not unusual but the drop dead point is that these bonds will be purchased by the Japanese Central Bank on a non-redeemable basis. In plain language that means they need never be repaid. It is the best example I can find of so-called ‘helicopter money’ which is effectively free finance.

Central Banks remain wedded to having interest rates close to — if not at — zero. This, too, is generating odd developments such as banks charging customers to hold their deposits. If you have a million quid on deposit with some German and Irish banks at year end they will charge you for the privilege.

All of this is yet another wake up call for those who think normality has returned to the global economy after the shocks of the financial crisis in 2008.