Wikinvest Wire

And then there's Zimbabwe - Part 64

Thursday, April 23, 2009

Felix Salmon thinks the money "velocity" problem in the U.S. (where plenty of money exists, it's just not being spent fast enough) could be quickly solved if the Treasury Department would apply a "Use on or before" date to the dollar as the Reserve Bank of Zimbabwe does.
IMAGE He finds fault with Greg Mankiw's brainfart from Sunday that would have one out of every ten U.S. bills expire at the end of the year based on the randomly selected last digit of the serial number. Too much unpredictability and potential for panic, apparently.

Makes sense. I'm just dying to know where these Zimbabwe bills end up on the day or two before they expire. Somebody's got to get stuck with them. Don't they? Can you just swap them at a bank on December 31st?


Anonymous said...

Can't we just cut to the chase and go back to the barter system now....
it would side step the Wiemar/Zimbabwean inflation and keep the Gov't & Financial system on the hook for all their past shenanigans and be much more palatable.

NMMM.NU said...

Wonderful post, thanks.

I were noticed the "due" date before but I did not thought much about it. It reminds me about Bulgaria before the changes, we had one currency equivalent called "bon". It was intended to be used only in special shop - Korekom. They had expiration date as well.

Do a search on my blog for Korekom later and you will see one of those (will upload one later today).

Nick said...

That would have some interesting effects, although probably not very significant ones, and also probably not helpful to the overall goals. Most of my financial activity is done electronically these days (credit cards, etc.), and this would encourage a more complete transition to non-cash payments. For barter/carry "money", people would probably move to gold, or something else that held value, and probably start openly defying the law requiring people to accept cash for transactions. Although, if banks still took them as deposits at full value up until the expiration (and presumably gave the physical currency back to the Fed or something), it probably wouldn't have much of an effect; people would just hold less physical cash, and nothing else would change much.

staghounds said...

Why would our masters want the money to expire? Then the holders would get angry, plus everyone would know!

Much better to do it the current way, have five to ten percent expire across a year's time, a little every day. And it's not just the paper ones, but every dollar, even the ones deposited in banks on electronic books! Bonus!


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