With one exception, Tony Yates strikes me as being a very sensible and very good money/macro economist. But at the mention of "helicopter money", he seems to turn into an Old Testament prophet, or maybe Private Frazer from Dad's Army, saying "We're doomed, I tell ye!" (or maybe this longer video makes my point better). (That's my payback for Tony calling us Market Monetarists a bunch of trainspotting anoraks!)
Here's Tony: "I am left being prepared to concede that helicopter drops might generate inflation, but not that they would be beneficial, since they may lead to the steady destruction of that money altogether with all the attendant costs."
If we were indeed "doomed" by helicopter money, we would be long dead. In fact, we are doomed by not doing helicopter money. Doomed to communism!
Let's do a back of the envelope calculation. Assume 5% nominal interest rate, 5% NGDP growth (3% real plus 2% inflation target), and 5% currency/NGDP ratio. Ignore the costs of paper and ink, to keep it simple. Every year the central bank prints money equal to 0.25% of NGDP, and every year the central bank's profits are 0.25% of NGDP. And every year the central bank gives those seigniorage profits to the government.
What does the government do with those seigniorage profits? It spends them, of course. By having government spending 0.25% of GDP higher than it otherwise would be, or by having taxes 0.25% of GDP lower than they would otherwise be, or transfer payments 0.25% of GDP higher than they otherwise would be. But that is helicopter money!
What is the alternative to helicopter money? What would the government do with those central bank profits if it didn't (eventually) spend them?
Well, I expect it could save them instead. Use that 0.25% of NGDP to pay down the national debt, year after year. So every year the debt/GDP ratio falls by 0.25 percentage points. (Yes, NGDP is growing at 5%, but the stock of savings from central bank profits is earning 5% interest too, so that's a wash.) Until the national debt is negative, and the government starts buying assets from the private sector.
But I haven't seen that happening. So the government must have been doing helicopter money, for years, and centuries. And if helicopter money meant we're doomed, we would be long-dead.
Where will it end, if the government eschews "helicopter money" forever? It ends in communism, of course, because the government will eventually own everything!
If the government does not do helicopter money: we're doomed, I tell ye! Doomed to communism!