the sky and blowing around. In a short period of time, some people become instant millionaires, others collect fifty thousand dollars without trying too hard, and most of the rest end up with an extra thousand or two just in the course of picking up trash in an effort to keep the city looking tidy. Between the moment the helicopters start dropping money and the moment they stop, nothing important happens to change the underlying physical picture regarding energy, other natural resources, solar energy flows, or technology. The predictable consequence of such helicopter money is a burst of consumption: new houses, cars and other big-ticket items for the new millionaires, and more discretionary purchases for the rest of the people in the city. This monetary injection quickly wipes out existing inventories of many products, exerts an upward pressure on the prices for goods and services, and bids up the prices of financial instruments as people try to invest their new cash. All of this sends a signal to manufacturers, importers and extractive industries that they should speed up production, because it looks like your society is going to need more of everything, including oil, coal, water, wood, copper, and fish oil capsules.
In this sense, our belief in money, in the form of fancy pieces of paper having value, does have real effects — but only due to burning resources faster. Helicopter money is just paper, but people accept it in exchange for real products. Where our money comes from, and how much of it there is at any given time relative to what
we can spend it on, has a large influence on our consumption habits. In essence, money only works well when it is plentiful enough to lubricate the wheels of commerce, but sufficiently scarce to hold its value over time. If in the autumn all the colorful leaves falling from all the deciduous trees were suddenly declared legal tender, how many leaves would you have to rake together to pay for a sandwich? That is why monetary authorities normally try to be careful in managing the money supply. But when resources run low and economic growth stalls, you can always bet that the monetary
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