Today’s exam question is set by Addison Wiggin:
Ten years ago today, a relatively unknown U.S. Federal Reserve governor named Ben Bernanke delivered what might be the most famous speech in the history of monetary policy. In an address to the National Economists Club, he said: “The U.S. government has a technology called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”
In the speech, Mr. Bernanke invoked Milton Friedman’s idea that the Fed and Congress could simulate dropping dollar bills from a helicopter to stimulate “aggregate demand.”
Ten years on, we pose a simple question, not to Bernanke, but to you: How’s it working out?
This question is worth ten marks. Please show all your working.