Justin Fox: Helicopter Ben

Here we go. Finally action on a scale that might be a third as big as will ultimateby be needed.

Justin Fox:

Helicopter Ben finally hauls out the helicopter: The Federal Open Market Committee, that group whose interest rate decisions we used to care about back before the Federal funds rate settled down around 0.15%, moved markets this afternoon with its announcement that it was going to buy lots more mortgage securities (up to $750 billion more) and start buying long-term Treasuries (up to $300 billion worth) for the first time in a very long time.... [T]hr Fed's move into the long-term Treasury market is a momentous and somewhat unsettling one. As the federal government issues trillions in new debt to finance stimulus spending and the daily operations of government, the quasi-governmental Fed will now be buying hundreds of billions of it, in the process creating new money.... It's a very weird, somewhat circular transaction, and it was last done in a big way during World War II.... Milton Friedman described this kind of transaction as the functional equivalent of a "helicopter drop" of money, and after Ben Bernanke mentioned this in a speech in 2002 he became known as Helicopter Ben. Now he's finally living up to the name.

Will it work?...

I say yes--but needs to be done on a larger scale.