This from Quartz from Mankiw from an anonymous graduate student of his - on the zero bound and ineffectiveness of monetary policy - why can't the Fed go below zero in ways other than going below zero?
Like picking a random number out of a hat and announcing that all currency with a serial number ending with that number would cease to be legal tender. On a whole, the expected return on existing currency would be -10% (0 to 9) and the Fed could set at -2% which is far more attractive than the former.
Anyway, I'm not getting into why this wouldn't work apart from the obvious reasons. But this is a theoretical thought that is absolutely inapplicable in a fiat world. I suppose for good reason did Mankiw leave the name unrevealed!
Like picking a random number out of a hat and announcing that all currency with a serial number ending with that number would cease to be legal tender. On a whole, the expected return on existing currency would be -10% (0 to 9) and the Fed could set at -2% which is far more attractive than the former.
Anyway, I'm not getting into why this wouldn't work apart from the obvious reasons. But this is a theoretical thought that is absolutely inapplicable in a fiat world. I suppose for good reason did Mankiw leave the name unrevealed!
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