Buiter defended his "controversial" call for a ban on cash, as Bloomberg reports:
“The world’s central banks have a problem. When economic conditions worsen, they react by reducing interest rates in order to stimulate the economy. But, as has happened across the world in recent years, there comes a point where those central banks run out of room to cut — they can bring interest rates to zero, but reducing them further below that is fraught with problems, the biggest of which is cash in the economy.
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? Cash therefore gives people an easy and effective way of avoiding negative nominal rates. Buiter’s note suggests three ways to address this problem:
Abolish currency.
Tax currency.
Remove the fixed exchange rate between currency and central bank reserves/deposits.
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4 comments:
The elitists want total control over us and this is the way they will do it.
How the hell do you pay your credit card bill with corn?
This is probably part of the Trans-Pacific Partnership deal our 'working for the people and not BIG BUSINESS' Republican controlled Congress is just itching to get passed.
Parts of the 'secret negotiations' have leaked and one of the chapters deals with removing a participating nation's right to regulate banking.
Mind you that's just one of the chapters.., do a little searching to see all of the other 'goodies' these red eyed with greed mega-multinational corporations have in mind for you.
Current TPP negotiation member states are the United States, Japan, Mexico, Canada, Australia, Malaysia, Chile, Singapore, Peru, Vietnam, New Zealand and Brunei.
Obama is the one pushing for this.
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