Friday, October 21, 2016

Sounds Good to Me

I'm not sure I agree about the $20 but yes, the main use of the $100 and $50 bills are illegal (tax evasion and illicit purchases/sales).  So drop them.  Of course if we're going to start changing up our money system we should also drop the $1 bill in favor of $1 coins and start minting $2 coins, drop the useless penny and really drop the almost as useless (and also money losing) nickel (note the only multiples of 5 cents that can't be made without a nickel are $0.05 and $0.15).

A part I thought was interesting that I would guess most people aren't aware of was when Rogoff said:
The tax evaders are at the upper part of the income distribution. Payment recipients, like cleaners, don’t owe taxes. And if they’re paid under the table, then when they reach retirement age and try to get their Social Security, there isn't any.
The general understanding of immigrants taking jobs, being paid under the table and not paying into the system is really a case of employers cheating the tax system.  Bringing undocumented immigrants out of the shadows, will help prevent this possibility.  I would guess that it would do a better job than abolishing the $100 and $50 would.

Incidentally after that statement the next back and forth was somewhat nonsensical (going from 2% to 4% inflation target would confuse people but negative interest is perfectly sensible?!?).  I think both issues would actually be solved by NGDP level targeting (say 5%) that doesn't have the inflation only "confusion" (which is really banker hysteria) or the goofiness of negative interest.

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