Comments on: When banknotes expire

By: William Ortel

William Ortel — Fri, 24 Apr 2009 02:14:19 +0000

Might i suggest we use snakes instead of either? Since they need to be fed, they have the same benefit of increasing aggregate demand as both solutions, but they need to be fed always as opposed to simply on one expiration date.

So rather than a boom in aggregate demand or a rush from large denomination bills at a fixed date we just get all of the benefits.

except your money might kill you.

By: mtm

mtm — Thu, 23 Apr 2009 17:22:20 +0000

in zim’s case, the expiry date seems to be associated with a complete suspension of the currency, with USD taking its’ place until further notice.

April 22 (Bloomberg) – “Zimbabwe stocks more than doubled in value in the first two months of trading since the market reopened after shares were re-denominated in dollars… The gain of more than 120 percent is bigger than the advance of any of 88 equity markets tracked by Bloomberg. “In an economy which continues to be devoid of dollar liquidity the rise has come as a surprise… Interestingly there is still no evidence of significant foreign portfolio inflows, and much of the trade can be attributable to locals.”.. Gains have been led by Innscor Africa Ltd., producer of crocodile skin for Gucci Group NV and Prada SpA, Delta Corp., Zimbabwe’s largest beer and beverages maker, and Econet Wireless Holdings Ltd., the country’s biggest mobile-phone operator… Stocks may fall over the next few weeks as companies report earnings in dollars for the first time since the formation of the coalition government, which has all but abandoned the wrecked Zimbabwe dollar. Zimbabwe won’t reintroduce the Zimbabwe dollar for at least another year…” http://www.bloomberg.com/apps/news?pid=n ewsarchive&sid=aCRG2yBg_8xQ

By: Matthew

Matthew — Thu, 23 Apr 2009 12:19:24 +0000

Or Ecudaor, perhaps.

By: Matthew

Matthew — Thu, 23 Apr 2009 12:18:40 +0000

This is surely simply a default by the Treasury which would have untold repercussions and is rather similar to what you’re criticising in Peru.

By: Charles Thevnin

Charles Thevnin — Thu, 23 Apr 2009 05:39:59 +0000

The more we exercise irrational bearish attitude every time economic indicators like housing and constructions and or consumer confidence show a trend contrary to those with a speculative financial behavior, we become the punisher of our economic recovery. The market reacts like a rubber band because the self proclaimed experts push it in that direction. There is no fundamental support for a company stock to swing the way it has been happening in recent months just because of a single quarter result when all the fundamental is sound.

By: Gaurav Mathur

Gaurav Mathur — Thu, 23 Apr 2009 02:20:03 +0000

One of the ideas expressed on the possible future nature of money in this (http://www.realitysandwich.com/money_a_ new_beginning) article by Charles Eisenstein has an echo to this idea of attaching something akin to a lifetime to a currency. The motivations do not match at all though.

By: Barry Kelly

Barry Kelly — Thu, 23 Apr 2009 00:17:48 +0000

This isn’t the first time I’ve read/heard about the note/digit idea (and it certainly wasn’t Mankiw I was reading), but I’ll be damned if I can find the reference.

It was several months ago. It might have been EconTalk podcast, though.

By: otto

otto — Thu, 23 Apr 2009 00:08:35 +0000

Academics, eh?

By: jerry

jerry — Wed, 22 Apr 2009 22:24:34 +0000

This is the first step in the introduction of the Amero,our new north american currency.It will be pegged to IMF currency.Turn them dollars in!

By: KenG

KenG — Wed, 22 Apr 2009 21:22:06 +0000

Mankiw is just full of great ideas, isn’t he?

So everybody puts all of their cash in the bank, the banks lose 10% of their cash assets that they can’t send to the local federal reserve branch. That would be a huge help for the banking industry, wouldn’t it? Who would want to hold on to dollars at all?

this would effectively be a 10% tax on the cash-based society, the poor and the criminals.

How did he ever get a job as economic adviser? Oh wait, it was adviser to Bush, who probably would have like this idea.

By: jerry

jerry — Wed, 22 Apr 2009 20:40:26 +0000

LET’S DOUBLE THE VALUE OF CURRENCY THAT ENDS IN 666

By: Unsympathetic

Unsympathetic — Wed, 22 Apr 2009 20:21:09 +0000

Most of the money in the world’s economies (especially the US) is digital, not scrip. That check card attached to a bank account we swiped to pay for yesterday’s Wally World purchases? No paper money changes hands.. all that happened was that my digital bank account was debited and Wally’s was credited.

Personally, I only use cash when traveling or going out late at night. This proposal would change ZERO of my personal money velocity.

By: Jacob

Jacob — Wed, 22 Apr 2009 20:20:25 +0000

Bah. its –> it’s

By: Jacob

Jacob — Wed, 22 Apr 2009 20:20:04 +0000

A lot. You’re being sarcastic, right? As evidenced by the voluminous commentary over at Free Exchange (http://www.economist.com/blogs/freeexch ange/2009/04/how_to_really_scare_china.c fm#list-comments) this is a terrible idea for many reasons. Chief among them is the fact that money is fungible, and while you can put an expiration date on paper money, you can’t do so with the rest of the money supply. Putting an expiry date on savings accounts would ensure that no one held any cash balances at all before the expiry date, except perhaps the undereducated. Maybe Zimbabwe put expiry dates on its currency because the government knows its already worthless?