. Shooting down Helicopters | London Progressive Journal
A non-partisan journal of the left.

Shooting down Helicopters

Fri 27th Sep 2013

Money is the lubricant that permits the economic system to work. Goods and wealth that are produced, distributed, circulated, used and owned do so because of money.

It is a commodity but it has an important difference. As goods and services trickle their way around the different economic bases (in the baseball sense) of extraction/production and through the commercial system to eventual user or owner, at each stage a corresponding sum of money goes in the opposite direction. The merchandise, raw materials, partly produced goods, finished goods and services at every step, go from seller to buyer. The money goes from buyer to seller and this is the objective of a money orientated system.

The banks create this money, theoretically, in the face of demand from the economy. The private banks claim they have been doing this for centuries. They like us to believe they are the only responsible creators of money.

Over the last half century at least, the proportion of money going directly into the financial markets to the detriment of the real economy has had a negative effect on the wellbeing of the world's populations, putting pressure on wages, social services and the environment. When we see schools, hospitals, roads, parks and the countryside lacking repair and maintenance, this is the direct cause of money not going where it is needed. The same for the people in need: the underpaid, single mothers, the indebted, exploited immigrants. All these needs and people lack money because those who create it do not permit them access to it.

Many, close to most, of these problems would be resolved by doing otherwise. It is scandalous. Money should be a common good like air, water, land, the sea, the beaches between high and low tide, freedom of speech and many more common rights.

For a motor to work efficiently, all the parts must be correctly lubricated before it is set into motion. It must continue to be correctly lubricated to continue running without seizing up. What our eminent economists of all tendencies tells us is that money, our lubricating agent, must be directed towards the production part of the economic cycle and will, eventually, work its way down to the rest of the system in due course. This is not happening.

Money should be put, as it is created, directly where it needs to be and where it will be immediately spent and made to circulate. Starting by substantial increases in wages and benefits. The “needy” are so called because they are in “need” of commodities. Put more money in their pockets and they will immediately seek to satisfy their needs and desires. Money will then circulate in one direction and the merchandise will circulate in the opposite direction. If capitalist propaganda is true (i.e. that when people meet they naturally negotiate and exchange thus creating the market), then those who have the products the "needy" require will, to satisfy a market and make a profit, seek to satisfy their needs.

This is not a new idea, nor an absurd one. Many names have been given to these kind of propositions, one of which is helicopter money. This is a demeaning dismissal giving the image of a helicopter flying over a town throwing money down for the people to collect and put into circulation.

The economists, among others, scorn the idea of different ways of distributing money, but what are the shoot downs for helicopter money? If this vision really is flawed it must be discarded but convincing contradictory arguments from a credible source are difficult to come across so it may not be more absurd than the capitalist system.


When capital flees, production stops and lay-offs are not only imminent but may be backdated meaning some workers do not even get paid wages they have earned. Capital may flee rapidly in time of crisis, it may leave slowly, or it may simply not show up where it is needed. Whatever the reason, activity slows without the necessary capital. So money is the oil that lubricates the whole production, distribution and consumption system, on condition that it gets into the whole system.


Since money creation began the creators have always asked themselves "what is the right amount"? Theoreticians agree that the ideal amount of money in circulation is very close to the value of the goods to be distributed, or naturally becomes so. A wisely regulated increase in the money supply can stimulate production. If taking money out of the economy stops production and causes redundancies it is worth examining whether the opposite stimulates production and creates employment. In fact this is what investment, savings and FDI is supposed to be all about.

Evidently the right amount and method is that which permits the most goods to get to the eventual users. Working that out can be a series of trials and errors. Capitalism works like that so the capitalists would be badly placed to criticise the method.

Today there is no limit to the amount of money that is created but most of it goes to the financial markets thus starving (literally) the real economy. The problem is not to decide and eventually restrict the amount of money that is created. The problem is what to do with that money, where does it go, who gets the use of it? That is not an economic or financial question, it is a political one.


The democratically elected authorities must grab back the right to create money, and they know that, but this is not the prevailing political will ruling the world at this moment. The people must force this change and one of the essential elements of this movement is to have an understanding of the banking system.

If the people understood the banking system they would revolt” (Henry Ford).

Great! Let's try it then.

You must be logged in to post comments on the site or you can use Facebook above.

Site Comments

#632: Posted by Mike on Sat 5 Oct 2013 15:03

Hello GTE,
Thank you for taking a few pot shots at my helicopters.
Of course there are different financial/political options in money creation, Increasing productive capacity may or may not be a good thing, we can discuss this but it is not my point. My point is: what is wrong with what you call “creating demand” and what I would call “giving to the needy the means of having access to what they need”?
In the actual situation we are no longer “in circumstances of nearly full employment and the almost full use of pre-installed factory capacity”. If Keynesian economics had produced this result it was probably wrong to abandon them. This was probably done under idealogical pressure from the ruling classes annoyed by such general well being. The general population were not doubting the wisdom of these policies the moment they had jobs and hopes for the future. If you are of an age to remember those days you will recall that it was then the case. Today both of these positive social elements have withered away from society after over thirty years of restricting financial means from where they are most needed.
The usual free market drivel is that” today's profits are tomorrow's investments which create the following day's jobs”. The reality is that “today's profits are today's profits and the bucks stop there”. The market cannot and does not create jobs and in fact in seeking to reduce labour costs most often destroys them while share values rise at the announcements of redundancy plans. Production, and so the market offer, increases for productivity reasons at the same time as the jobs are destroyed. The working population, among others has a need, and must have a right, to replacement revenues here.
Most of the money circulating in society is in fact Helicopter money but there is not enough of it. Here are some examples.
A current example of helicopter money is the remittances by emigrant workers to their families in their countries of origin. In 2010 (latest World Bank figures in my possession) this amounted to $325 billion. The World bank is scandalised by the idea that this money escapes their control and contributes nothing to paying the national debt, especially as more than half is remitted without using the banks' excessively costly international transfer system. It is used to buy the necessities of living by those families that are glad to receive it and their butchers, bakers and candlestick makers are glad to get a share in their turn. This money arrives and is put into circulation in the way the people need to do it and that is what money creation, in the general interest, should be about. Permitting the people to satisfy their needs. Some Third World countries consider these remittances to be an important part of their resources.
Another great example is defence spending, close to 50% of Gross World Product is military spending. Without getting into militarist or anti-militarist arguments, any reasonable person hopes to hell that all that fire-power will never be used, or as little as possible. In the meantime all the soldiers, officers and contractors are making their livings, producing nothing tangible, and they spend their earnings with their butchers, bakers and candlestick makers, again sending money into its circuit, circulating commodities and financing universal social covers. In times of peace this can last for decades. When those regiments move and barracks close down local shopkeepers start to consider suicide.
Although goods need money to circulate, money does not need the goods to circulate. In the abstract form, if we can mentally disassociate day to day activities from the weekly or monthly pay packet – an easy thing to do – all, effectively spent, revenues can be seen as helicopter money. The idea of work takes on a different meaning, (David Graeber has recently written an article on this subject). Money must be considered on a wider basis than solely within the financial and economic framework. It is a social phenomena and its creation is a useful social tool.
Another example - the last - I promise.
In the history of the English poor laws the poor were the responsibility of the parish in which they lived. In some cases the parishes created work schemes so that the poor could earn some money. Ridiculous schemes like digging holes and filling them again just to make the labourer sweat. This was far from exceptional, similar kinds of unproductive schemes could be found all over the emerging capitalist world. Instead of laughing at the absurdity and going on to more intelligent considerations, Let's do like Marx and take the trouble to look to see what the absurd can show us.
Once the men, had dug their holes and filled them, had sweated and merited their pittance, they took it to the shop to buy some needs, the family was somewhat fed, the shopkeeper sold his wares and perhaps ordered more to replace his stock and so money circulated and put use values and exchange values into the places where they needed to be. As for the holes; they were still just as useless after the money had benefited the diggers and had circulated, as they were before. The advantages to the community of having useless holes dug and filled up again was as predicted, totally unproductive of anything other than sweat. Sweating is a disagreeable experience and the same advantages of the circulation of money could have been achieved by putting the money directly into the pockets of these these good members of community.
I am not saying that everybody in the country should receive a windfall, but if the needy had a little more they would put more pressure on retail outlet stocks. This would ripple through the distribution system which in its turn might stimulate production capacity, starting with currently idle capacity. Should this situation become stable the marketeers would find the way to meet the demand. No worry about that. That would be better than options which, as you say yourself, “[are] useless and ineffective as an instrument for improving national wealth”.
Nor am I saying that financial markets, industry and innovation should not be financed. I am saying that the population has as much, if not more, need, right and justification to be financed up to an optimum level in the general interest. I can quite understand that you think money creation should serve to stimulate production but I cannot agree that it should only serve to stimulate production.
As from the moment you say that “creating demand” should not be financed where do you put the moral cursor? Should a part of the population be left to suffer misery and where would that be a stimulant for productive capacity? The moral/hypocritical problem is that all the easing measures that are taken to bail-out the banks are used as excuses for attacks on social covers and labour laws, thus reducing the solvency of the weakest sectors of society. This is clearly a vicious circle.
In the general interest money must be more generously distributed to those who have to spend it so that they do spend it and if the whole money-go-round system is properly lubricated everybody gets their part and their collective profit. In brief prosperity is at the same time the result of and the cause of, among other things, people having money in their pockets. So why not put it there directly rather than hope it will trickle around the system to where it is needed?