Cash ..
King..
Move over, the new king is in town.
Dateline BLOOMBERG BUSINESS.. . reporter Lorcan Roche Kelly authored a story getting huge play tonight about a CITI economist wondering aloud if it's time to end cash. To end the green.. to get rid of the paper notes--remember, they are simply 'notes' alleging worth of a certain degree..
Kelly writes this:
In a new piece, Citi's Willem Buiter looks at this problem, which is known as the effective lower bound (ELB) on nominal interest rates.Fundamentally, the ELB problem comes down to cash. According to Buiter, the ELB only exists at all due to the existence of cash, which is a bearer instrument that pays zero nominal rates. Why have your money on deposit at a negative rate that reduces your wealth when you can have it in cash and suffer no reduction?
Buiter goes on to say the best way to address the problem would be to 1) abolish currency, 2) tax currency, and 3) remove the fixed exchange rate between currency and central bank reserves and deposits...
You heard that first thing right. Abolish cash altogether..
Buiter acknowledges problems. Especially the pesky elderly who are trained to use cash instead of plastic.. But he also said one way to solve this 'problem' is to stop printing notes worth less than $5..
Bloomberg correctly finishes its article with jab that this Administration will not abolish cash.. And that is true. Perhaps the next one won't, either. One day, though, one may. One day sooner than a political position making the decision could be a bank doing it for them.
Or.....people doing it for themselves. Technology will advance.. so will the chances of people figuring out that cash can stay at home. Swipe the chip safely implanted in your arm. Bar code your brain..
Ditch the paper.
Cash was king.