Heresies for Lab Rats

Wheat and Chaff

Jan 09, 2025

∙ Paid

“These highs in the stock market may actually mark the lowest point for political morality and fiscal responsibility in our time.”

Alyosha

2015 Kansas City Fed paper on abolishing paper currency:

We're all just lab rats to these people.

“The most straightforward way to unencumber interest rate policy completely at the zero bound is to abolish paper currency.
In principle, abolishing paper currency would be effective, would not need new technology, and would not need institutional modifications. However, the public would be deprived of the widely-used bundle of services that paper currency uniquely provides—a generally accepted paper medium of exchange providing transactions services especially for low-value transactions; a readily accessible, safe liability of the central bank; a store of value; a degree of privacy in financial management; and the option to hold money outside the banking system and to withdraw deposits at par as paper currency in times of financial stress.
Hence, the public is likely to resist the abolition of paper currency at least until mobile access to bank deposits becomes cheaper and more easily available, ATM charges for access to paper currency become excessive, and/or electronic currency substitutes become widely available.”