Off-Topic: CHECK NUMBERS ON YOUR DOLLARS

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	Name:	MartiniMan -
	Subject:	CHECK NUMBERS ON YOUR DOLLARS
	Date:	4/19/2009 8:35:20 PM

Interesting idea and I don't see it as a liberal or conservative issue. Its really a question of whether it would work, what are the unintended consequences and could it really be implemented. Just off the top of my head I can imagine a number of problems.

First of all they would rely on holders of cash to choose a negative 3% interest rate versus negative 10% holding currncy no longer of value. But no one really holds currency other than the Fed and the reserves at banks. In essence it would simply mean that every bank account, every treasury fund, etc. would be reduced in value by 10%. So if you lend the money at -3% before it is devalued wouldn't the recipient see what they borrowed drop by 10%? This would have to be implemented at a date certain and people will behave one way before devaluation and an entirely different way before.

Second, if I had $100M in U.S. dollars that was going to be devalued 10% I would simply convert my dollars to Euro's the day before and back to dollars the day after. The people who would lose would be the tens of millions of small savers that are not that sophisticated.

Finally, and this is the last one off the top of my head, they assume that the dreaded last number on a dollar is equally distributed to someone that has dollars. For example, they assume that 10% of every dollar I own ends in the number 3 and those are no longer any good. What if only 2% of my dollars end in three? Or worse, what if 30% did?

I am sure economists could try to come up with some way to overcome these and the zillion other potential problems. In any event, this will never happen although it was a good mental exercise.

Other messages in this thread:

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CHECK NUMBERS ON YOUR DOLLARS - GoneFishin - 4/19/2009 3:20:53 PM

Way too cranial for me.. - alahusker - 4/19/2009 5:19:52 PM

alahusker and catboat - GoneFishin - 4/19/2009 5:25:58 PM

Uh Huh.... - CAT BOAT - 4/19/2009 6:38:54 PM

CHECK NUMBERS ON YOUR DOLLARS - MartiniMan - 4/19/2009 8:35:20 PM

Have strong feelings both ways - alahusker - 4/19/2009 8:44:25 PM

CHECK NUMBERS ON YOUR DOLLARS - wix - 4/19/2009 8:58:21 PM

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