

Should the Fed go for Negative Interest Rates? - nopinsight
http://www.nytimes.com/2009/04/19/business/economy/19view.html
It May Be Time for the Fed to Go Negative
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Raplh
Suggestions of negative interest rates are clever in the same sense that Swift
suggesting eating Irish children is clever. Its GLARINGLY wrong, but you might
learn something figuring out why. And there isn't just one reason why. There
are plenty, so everybody can play.

Here's my reason: A negative interest rate is the fed giving away money. Now
the fed rates are not available to everybody, so a negative interest rate is
primarily the fed giving away money to banks.

Once you REALIZE it is a subisidy, then you realize the government is just
giving money away to some people. You can then get over the stigma of the
government giving money away to people since you are doing it anyway, and you
can give up on the relatively ineffective plan of giving the money away
inefficiently to rich people (banks and bankers), and proceed with a much more
efficient giveaway.

The fed could just mail people money. Maybe $1000 each every man woman and
child. The poorer amongst us would almost certainly quickly spend it. The
richer amongst us wouldn't, but what the hey, when you are giving away money
you can't expect perfect efficiency. The advantage here: people spending $1000
bucks they got free and clear is a lot less stupid than going into debt to
spend $1000, when they already have too much debt, generally.

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russell
I would call this a pretty brain dead article, esp. for a Harvard Economist.
Pay people to borrow money? Maybe if the negative interest rate is low enough,
I can retire on the mortgage on my house. The article has other equally stupid
ideas like declaring currency ending in a selected digit worthless, e.g. bills
ending in 9 are worthless.

Negative interest actually exists in periods of high inflation. We all know
how much fun that is.

Makes me want to turn in my Harvard economics degree for a refund.

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gasull
No.

[http://globaleconomicanalysis.blogspot.com/2009/04/time-
for-...](http://globaleconomicanalysis.blogspot.com/2009/04/time-for-mankiv-
to-resign.html)

