Monday, April 20, 2009

Harvard economics professor's solution

It May Be Time for the Fed to Go Negative (New York Times)

in order to encourage more spending. According to the professor, we may have to figure out a way to make holding money less attractive. His suggestions are:

  • Pick a digit from 0 to 9, and announce that all currency with serial number ending with that digit will not be legal tender any more. Effective 10% negative return on holding the currency. (To be sure, it is his graduate student's idea, not his.)
  • Produce significant enough inflation so that the real interest rate as measured by purchasing power becomes negative.

And here's hoping it's a delayed April Fools Day joke:


Post a Comment