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Don’t Fear the Helicopter Solution
Much-criticized modern monetary theory (MMT) and its next-of-kin, “helicopter money,” are the inevitable measures to resuscitate the economy in the crisis it faces. The tools utilized by the Federal Reserve in responding to the global financial crisis (GFC) in 2007-2008 may well shape the response to the COVID-19 pandemic. In September 2008, the Federal Reserve Bank of New York “created” $85 billion to bail out AIG, an insurance company with exposure to credit default swaps (CDS). Had the FRBNY chosen not to supply these funds, AIG would have been forced to declare bankruptcy, defaulting on its CDS ... (full story)