Deputy Minister suggested “Helicopter Money” to save the Economy
Deputy Youth and Sports Minister, Wan Ahmad Fayhsal Wan Ahmad Kamal, had in a recent interview with BFM, suggesting “debt jubilee” or “loan forgiving” is something that can be considered to jump start Malaysia’s economy. Furthermore, Wan Fayhsal also suggested that BNM can print money can give it to the citizens of Malaysia to spend it.
To get an idea of what was suggested, it’s new money being printed and injected into the economy to improve the liquidity, and in short “Helicopter Money”.
This had sparked a number of critics and had been the hot topic of Malaysians for some day. To clear things up, let us first understand what “Helicopter Money” is and it’s effect on the larger economy.
So what “Helicopter Money” does it that it creates more liquidity without increasing debt and interest rate. This is done to boosts spending and economic growth as citizens now have more money to spend. However, this might not translate directly into consumer spending as consumers could have debt to be repay. Furthermore, it could possibly brings irreversible effects like hyperinflation and currency devaluation, depending on how it was being done.
On the other hand, we have “debt jubilee” or “loan forgiving”, which is partial or total forgiveness of debt and it is targeted to slow or stop debt growth, owed by individuals, corporations, or nations. This method too indirectly boosts economic spending and will cause inflation and devaluation of our currency.
As commented by Wan Fayhsal, we all know that the economy of Malaysia is in a contraction phase and there is not enough liquidity in the economy. To battle this downturn, both methods can be a possible policy that will address this matter.
However, it is not a new thing to have cash handouts in Malaysia and there could be several other effects other than the financial ones. A consistent annual cash handout can make people lazy and expects that they are entitled to this without doing anything. This makes things more complicate when we were to abolish the handouts.
Hence, the important thing to address now is to reverse the negative multiplier effect which we are experiencing now. Printing money and debt forgiving may not be a bad idea as more money flowing into the economy will temporary solves the problem we are facing, and of course, these policies would need to be well-managed so it would not be wasted on targeting those who do not need these assistance.
Here’s some articles for you to understand both methods better.
Given all those information, do you think that the suggested policies will help the citizens of Malaysia? Drop us a comment below!