June 14, 2011
Famous conservative economist Milton Friedman used to compare an expansionary monetary policy to the government (the Fed in this case) dropping dollar bills from a helicopter. As it is well known, that led many to call Ben Bernanke “Helicopter Ben” because of the large increase in the monetary base that he has presided over to prevent a more serious credit crunch and to save the big banks from themselves.
Nowadays many analysts, including Mr. Larry Summers, think that not much more can be achieved with expansionary monetary policy. The U.S. economy is badly in need of a new fiscal stimulus. There is a great economic, political and ideological debate over whether a new stimulus would be necessary, efficient and/or politically acceptable in the present circumstances.
Many conservatives are very much against a new stimulus, almost as much as they one day were in favor of the second war against Iraq. Perhaps it would be easier to convince them to support a new stimulus by reminding them of a little-known but quite interesting fiscal stimulus operation that happened during the Bush Administration.
It appears that during May 2004 the U.S. government sent to Iraq military cargo planes full of U.S. dollars in cash to help with the “recovery” of the Iraqi economy. It is reported that 21 flights of Hercules C-130 planes full of 100-dollar bills took place. The amount of the “stimulus” appears to have been something like 12 billion dollars. The money was distributed widely among U.S. “contractors” and Iraqi ministries. It seems also that of that money, about 6.6 billion dollars has vanished without a trace and remains unaccounted for even today.
Now that must have made the operation particularly stimulating, especially for American “contractors.” It seems that it is time to relive this operation. Bring on the C-130 planes. Forget “Helicopter Ben.” What we need now is “Hercules Geithner.”
