Citi Economist Says It Might Be Time to Abolish Cash.....this is just priceless

[Twisted Titan]

http://www.bloomberg.com/news/articles/2015-04-10/citi-economist-says-it-might-be-time-to-abolish-cash



I cant cut and past this article....can anybody help...thanks.



The mental gymnastics and migetry is nothing short of breathtaking

[monty]

http://www.bloomberg.com/news/articles/2015-04-10/citi-economist-says-it-might-be-time-to-abolish-cash



I cant cut and past this article....can anybody help...thanks.



The mental gymnastics and migetry is nothing short of breathtaking


Citi Economist Says It Might Be Time to Abolish Cash - Bloomberg Business

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.


Yes, Buiter's solution to cash's ability to allow people to avoid negative deposit rates is to abolish cash altogether. (Note that he's far from being the first to float this idea. Ken Rogoff (http://www.ft.com/intl/cms/s/0/c47c87ae-e284-11e3-a829-00144feabdc0.html#axzz3Wv1IqI3L) has given his endorsement to the idea as well, as have others.)
Before looking at the practicalities of abolishing currency, we should first look at whether it could ever be necessary. Due to the costs of holding large amounts of cash, Buiter puts the actual nominal rate at which the move to cash makes sense as closer to -100bp. So, in order for a cash abolition to become necessary, central banks would need to be in a position where they wished to set nominal rates much lower than that.
Buiter does not have to go far to find an example of where a central bank may have wanted to set interest rates much lower to -100bp. He uses (a fairly aggressive) Taylor Rule to show that Federal Reserve rates should have been as low as -6 percent during the financial crisis.
http://media.gotraffic.net/images/ikYds6LRFISg/v1/-1x-1.pngIt seems Buiter is correct: Sometimes strongly negative nominal rates are called for.
Buiter is aware that his idea may be somewhat controversial, so he goes to the effort of listing the disadvantages of abolishing cash.



Abolishing currency will constitute a noticeable change in many people’s lives and change often tends to be resisted.



Currency use remains high among the poor and some older people. (Buiter suggests that keeping low-denomination cash in circulation — nothing larger than $5 — might solve this.)



Central banks and governments would lose seigniorage revenue.



Abolishing currency would inevitably be associated with a loss of privacy and create risks of excessive intrusion by the government.



Switching exclusively to electronic payments may create new security and operational risks.


Buiter dismisses each of these concerns in turn, finishing with:
In summary, we therefore conclude that the arguments against abolishing currency seem rather weak.

Whatever the strength of the arguments, the chances of an administration taking the decision to abolish cash seem vanishingly small.

[Neuro]

The economy isn't growing, not because interest rates are too high, but because virtually every economic policy is there to take wealth and livelihood from common man and give it to those who make the laws...

[Horn]

Its only used by the old and poor people, let's get rid of it. Lol

Entire sections of this city, say 50% would fall offline.

[Neuro]

Thinking about it. It would actually be good if cash was abolished altogether. Very soon bartering and later alternative currencies would become popular, and the banksters would have a smaller part of the economy... Bring it!

[Horn]

he must be missing some mind in his own theorems,

demands and change for larger denominations are a major source of inflation.

[expat4ever]

Since even the largest banks cant protect their account holders I dont see this going anywhere. It also poses a problem when the power goes out, accounts get hacked ect.. Then of course the CIA has all those drug p[rofits in cash and lots of arms deals that are under the radar.
I have no doubt this is coming in the future but we are 30 years away at least.

[Ponce]

Like I have been saying now for a longgggggg time......all that you earn will go into one card and all that you spend will come out of the same card......they will take out your taxes (for your convenience) from it and any "loan" that they will want to give themselves...at the end you will depend 100% in what the government gives you.......... today's coins will be invaluable in the future, make your piggy bank FAT.

V

[Spectrism]

The biggest crime of the brave new future will be illegal exchanges / illegal transactions.

[Sparky]

Let's see, he recommends going cashless to prevent people from avoiding negative interest rates.

They don't even try to hide any more whose side they are really on.

[mick silver]

only in a world were all the people needs will be filled once we cut the herd

[palani]

This is the Age of Aquarius. People who worship cash cows (aka 'the BULL') belong in the Age of Taurus. Personally I am tired of the BULLsh*t. If it is paper be sure to carry a scissors with you.

[Horn]

Looks like the bankers here took his advice, nothing more than queer $4 bills at the atm

[Twisted Titan]

Let's see, he recommends going cashless to prevent people from avoiding negative interest rates.

They don't even try to hide any more whose side they are really on.


Yep banker and their whore political hacks got us neck deep in this shit and they are trying to push our faces in it to suffocate.

And somehow they are deluded that no one is going to lash out.