21st century worldwide financial experiments on the way.

October 2014 issue of Foreign Affairs magazine, published by Council on Foreign Relations(CFR), calls for a bold new financial experiment. CFR is the premier political think tank in US and where anybody who is somebody in the western world is a member including Federal Reserve chairs as well as high ranking politicians. Even our PM Modi gave a speech there during last visit to the US.

It basically says the money printing bond buying program of central banks since 2008 financial crisis hasn't been effective. This has created income inequality and banks who received the new money aren't loaning it out.

We now have slowing growth in EU, USA, Japan and even China.

So this is what the authors of the article suggest.

"Governments must do better. Rather than trying to spur private-sector spending through asset purchases or interest-rate changes, central banks, such as the Fed, should hand consumers cash directly. In practice, this policy could take the form of giving central banks the ability to hand their countries’ tax-paying households a certain amount of money. The government could distribute cash equally to all households or, even better, aim for the bottom 80 percent of households in terms of income. Targeting those who earn the least would have two primary benefits. For one thing, lower-income households are more prone to consume, so they would provide a greater boost to spending. For another, the policy would offset rising income inequality."

This seems not like a radically new idea. In history many empires have tried this before to grow by printing more money. I wonder if govts could print money and give it to the people, and everybody becomes well off, what would be the need to do any work? Anyway, here is what FA goes on to say further.

"Ideology aside, the main barriers to implementing this policy are surmountable. And the time is long past for this kind of innovation. Central banks are now trying to run twenty-first-century economies with a set of policy tools invented over a century ago. By relying too heavily on those tactics, they have ended up embracing policies with perverse consequences and poor payoffs. All it will take to change course is the courage, brains, and leadership to try something new."

If you understand how important CFR is, you would know what is coming in future.

Here is the full article.