The media is now propagandizing for the possibility that government might have to create policies that confiscate cash in the next recession.
“Negative interest rates” will mean that the government policies will confiscate cash in a couple of ways. First, they will enable banks to confiscate cash from depositors. Second, they will confiscate cash by abolishing it or at least abolishing all but small bills.
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Notice that this hasn’t been tried before. The Federal Reserve has performed remarkable feats that weren’t as radical, and it led to the weakest “recovery” since World War II. It is a criminal robbery of the poor to enrich the wealthy.
So why would doubling down on this insanity produce better results?
According to the Australian reporting on the Federal Reserve’s meeting at Jackson Hole, Wyoming [emphasis added]:
It was Friday morning, quite early on in the two-day conference, when Carnegie Mellon University Professor Marvin Goodfriend was slogging through a paper entitled “The Case for Unencumbering Interest Rate Policy at the Zero Lower Bound”.
And then towards the end he would have jerked heads up from mobile phones with the words: “Abolish paper currency”.
Professor Goodfriend was actually the first economist, in 1999, to suggest that zero is not a lower bound, and that negative interest rates were an option, way ahead of his time.
In his Jackson Hole paper on Friday he went a step further: “The most straightforward way to unencumber interest rate policy completely at the zero bound is to abolish paper currency.”
That’s so people wouldn’t be able to take their money out of the bank to escape negative interest rates — that is, paying the bank to hold the money for them, as digital records — and instead to hoard it as paper cash. He didn’t say “under beds”, but that’s what he meant.
In theory, a negative interest rate would mean that banks would pay the Fed interest on money they kept. This would supposedly encourage the bank to loan money out at extremely low interest rates—perhaps even at zero or “negative” interest. They might pay you to borrow money.
But during a recession, banks can’t find people to loan to. So they will have to resort to charging depositors. Naturally, people will take their money out of banks if they can. So abolishing paper currency is the only way to make the policy “work.”
The media is acting like this is a daring and brave idea rather than mass kleptomania.
The U.S. needs regime change! So does the rest of the planet. We need to abolish central banks that damage our economies and then fund idiots to develop rationalizations for doing more damage.