How 'bout a sliver-thin wealth tax with a high floor, then disperse revenues to the poorest 20%. I’d bet those poor 20% will spend it and stimulate growth.
Oh right, not in the interest of the moneyed class. WIll not happen.
To be clear: there are not currently negative interest rates in the US. This is a problem for European and Japanese banks.
I don’t think it’s such a nutty scheme. But that’s not based on in-depth knowledge, because I’m not an economist. It’s based on the observation that, generally speaking, people who call for higher interest rates are conservatives trying to protect their savings. Of course, these days we can’t get inflation even when we try, so… it’s a confusing world.
Here’s an idea. Different interest rates for different people. Individual person saving for retirement? 10% interest. Big bank? -10%. Banks will now loan people money, just like you want them to. Problem solved. Where’s my Nobel Prize in economics?
Maybe the central banks are actually trying to get them to invest in security infrastructure and hire more security related personnel? I wonder if their insurance rates are impacted by the amount of physical money they hold? It seems they’ll need to spend some money to keep from having to spend some money.
It’s the “network effect”, but for cash: the fewer that have it, the less valuable it becomes
A way to get around storing huge piles of cash would be to buy or invest sums of money into a representation of a given value. This is actually how money is covertly moved around by wealthy people, by using the art trade as a means to store and move cash around. It’s slightly off topic, but to my point a bank can create or buy something that holds a given value and when they feel the need to liquidize they can sell it to another bank or person.
If I could take out a billion dollar loan with a single balloon payment in 60 years, I would be all for it.
Isn’t that essentially the opposite of a credit default swap? Because when bankers start makin’ shit up, we get 2008’s housing crisis all over again.
How can banking corporations have drifted so very far from the original public interest rationale of corporations? And follow up question, who cares?
Better public options are needed for lending to the people who actually spend the money they have.
It’s already what’s going on in the art world and the market for that is pretty stable. Which starts to dawn on you why some bullshit art pieces that are clearly not really art are bought for millions of dollars.
Here’s a NYT article:
It’s also not terribly different from a bank note. A $20 bill is only worth that much because that’s the value we’ve agreed on for it, sure there is something behind it that backs that value but a group of banks could come up with a way to give a solid high value to an object in order to avoid keeping piles of cash. Granted, this is merely a thought experiment on my end but i think it’s doable.
I wonder if this is a boon to the somewhat niche market for used Cold War apocalypse bunkers?
Those seem like the sort of places that would offer attractive levels of physical security; and if you can get them surplus they’ll be way cheaper than building anything remotely similar yourself.
I’ll say it, since no one else has yet:
Late stage capitalism much?
On big difference, from the perspective of money laundering, is that while the value is purely a matter of consensus in both cases; it’s vastly harder to judge in the case of the art.
If my Totally Legit Import/Export Emporium™ tries to claim that its mysterious income is derived from canny buying low and selling high of $20 bills; or attempts to quietly transfer funds to a ‘supplier’ by agreeing to buy $20 bills from them for $30 each, it’s trivial to suspect that there is something fishy going on.
With art, though, there is no face value; and since most pieces are to some degree unique(even limited editions are usually serialized) so even market price information is only somewhat helpful, especially with more obscure or infrequently traded stuff.
It’s the uncertainty of value that makes it a useful instrument for moving clandestine money around: If instead of overpaying for 20s I overpaid for some painting, it’d be quite easy to argue that I’m of the belief that the artist is currently under-appreciated; or that I just have a strong interest in that particular piece, or that I’m a philistine who got a bit scammed in an attempt to buy class; and there are plenty of all of these, so it’s much easier to fly under the radar. Flexible valuations are also handy when dealing with border controls, taxes, tariffs, etc.
I believe they’ve already been filled with lettuce.
This statement is financially illitereate
The world’s central banks [are]… unwilling to engage in economic stimulus themselves, have been moving interest rates lower and lower
Lowering interest rates is among the most stimulative moves a central bank can make. Traditionally, low interest rates were the preferred stimulus for central banks. So Cory’s post is self-contradicting.
The other traditional stimulus tool available to central banks is lowering reserve ratios, which allows banks to increase their leverage. (borrow more).
Would Cory prefer central banks instead do this?
Remember, central banks runs monetary policy – how many dollars, yen, and euros are floating around the economy. Fiscal policy – how much the government spends – is and should be under the control of national governments, not unelected central bankers.
A great idea. and it worked.
In the US, FDR did it, and called it “Social Security”.
Most of this low hanging fruit has already been picked, unfortunately.
More confused financial thinking
“Do I rely on my working age children, who are themselves trying to save for sky-high property downpayments and support their kids, to support me, too?”
And why are the properties so expensive? Because of those low interest rates. Currently, a $900/month payment will get you a $200,000 loan. In 1981, that same $900/month payment would only have gotten you a $70,000 loan. That alone triples the cost of real estate.
Also, most property in the US is not that expensive. Here is a list of delightful homes under $200,000 in a bustling metropolis with world-class cultural institutions and three storied professional sports teams:
The problem is that so many college-educated people want to crowd into the same few coastal cities, which in turn tend to be tough places to build new housing.
We know how to make housing in these coastal metropolises more affordable: a good tech bust. Remember how “accessible” San Francisco housing became when the dot.com boom went bust?