The piece is about the Reserve Bank of Australia but its discussion of quantitative easing via a central bank buying government bonds has wider applicability.

Its not overly detailed, but it does cover the essential very well and understandably.

Something to read over the coming few days of market holiday perhaps?

  • The government issues bonds, banks buy those bond and the Reserve Bank then buys those same bonds off the bank.
  • So, for practical purposes, the RBA now owns those bonds and will receive coupon payments from the government ... and you could draw a line from the RBA to the government in terms of money flows.
  • The government then uses that money to pay for JobKeeper payments and the like - money directly into workers' pockets.
  • That sounds an awful lot like helicopter money.

Link is here

You can thank this guy for popularising the term 'helicopter money'

The piece is about the Reserve Bank of Australia but its discussion of quantitative easing via a central bank buying government bonds has wider applicability.