Sunday, April 12, 2015
Mark of the Beast?
** Actually money the medium of exchange is continually being used for both political gain and power! The big plan is to remove and control the common people through total control of the currency and how it is used... A system which controls who buys and sells - with only special codes or passwords "Mark of the Beast " ... Money will be gone!
This is from a report by - Willem H. Buiter. Global Chief Economist, Citi. New York City. Webpage: http://
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Cash 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 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.
It 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.
*** Notice on who's watch the rates hit Zero? {BO}
*** Notice on who's watch the rates hit Zero? {BO}
- 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.
