Posts tagged 'Zero lower bound'

Buiter on the death of cash

We’ve spilt a fair few pixels on the potential limits of negative rates and proposals to get around the pesky zero lower bound. Citi’s Buiter has weighed in on this for some time and has done so again on Thursday.

To wit:

We present three practical ways to eliminate the ELB: i) abolish currency, ii) tax currency or iii) remove the fixed exchange rate between zero-interest cash currency and central bank reserves/deposits denominated in a virtual currency.

There’s more in the usual place for those who want it but, for now we thought we might just pull out his list of disadvantages to getting rid of cash Read more

Breaking through the ZLB with virtual currencies

Here’s a crazy thought to start the New Year year with. What if virtual currencies were born less of an organic anti-government peoples’ movement and more of extreme unconventional monetary policy by the state? The ultimate central bank Jedi mind trick if you will, which takes easing to levels that conventional policy just cannot go.

But even if it’s not a plan hatched directly by monetary bodies to serve the interests of the state, there’s still a strong argument to be made that virtual currencies could be doing the Fed, the BoE and even the ECB a big favour. Read more

Gold, paper, scissors, lizard, e-money

Miles Kimball, economics professor at the University of Michigan who blogs at Confessions of a Supply-Side Liberal, is fast becoming the poster child for the movement to introduce an e-money solution to overcome the ZLB problem.

He’s not the first to have raised or promoted the idea, but he’s doing a very fine job at spreading the word on account of his objective reasoning. Read more